The DOL Persuader Rule Is Put On Hold

Miller & Martin PLLC Alerts | June 21, 2016

by Megan Welton

UPDATE: A federal judge in Texas has blocked the DOL from enforcing this expanded “persuader rule,” granting a nationwide injunction against the new federal regulation. So, for now, this new regulation is NOT in effect.


The U.S. Department of Labor's (DOL) recent expanded interpretation of the "persuader rule" places a host of new compliance obligations and constraints on employers when obtaining services from an attorney or consultant. Applicable to agreements or arrangements entered into on or after July 1, 2016, the expanded reading of the persuader rule requires employers to report any communication or strategic guidance received from attorneys or consultants which is intended to directly or indirectly persuade employees concerning their right to organize or engage in other protected concerted activity. The attorneys and consultants who provide the services also face similar requirements.

What Are the Reporting Requirements?

The DOL's expanded interpretation of the rule requires both the attorneys or consultants and employers to report persuader activity. Within 30 days after being engaged by a client, attorneys/consultants must file a Form LM-20, identifying the name of the client, the purpose and terms of the engagement, the activities performed or to be performed on behalf of the client, and the group of employees or union involved. Employers have 90 days from the date of the engagement to file a Form L-10, which must contain the following:

1. The date of each reportable engagement.

2. The date and amount of each transaction which is part of the engagement.

3. The name, address, and position of the person with whom each transaction is engaged.

4. A full explanation of the circumstances of all payments made, including the terms of any agreement or understanding pursuant to which they are made. Employers also must attach a copy of the written agreement memorializing the engagement.

5. The signatures of both the president and treasurer, or corresponding principal officers of the employer.

Once filed, these reports will be published on the DOL's website within a few weeks.

What Triggers the Reporting Requirements?

Previously, under the so-called "advice exemption," neither employers nor attorneys or consultants had to report advice relating to union organizing or other protected concerted activity so long as the attorneys or consultants communicated directly with management (rather than rank and file employees). Abandoning this bright-line test, the DOL's expanded interpretation of the persuader rule now applies to the "indirect persuasion" of employees, regardless of whether an employer is actually engaged in a union campaign, has a union, or is even directly addressing union-related issues.

In defining the scope of "reportable activity," the rule now creates a murky distinction between pure legal advice (i.e., "this is legal; this is illegal") and legal advice where one purpose of such advice is to persuade (or perhaps more accurately "dissuade" employees) from joining a union or engaging in other protected concerted activity such as distributing literature or discussing their pay or other terms and conditions of employment or the pros and cons of union representation.

Under the DOL's expanded interpretation of this rule, arrangements between employers and attorneys or consultants that were formerly exempt from disclosure will trigger a duty to report if an object (regardless of whether it is the sole object) of the activity at issue or advice sought is to persuade employees about whether to seek union representation or the outcomes of collective bargaining. This expands reportable activity to topics that previously would have been considered human resource-related matters or employee relations issues.

Examples

For example, seeking an attorney or consultant's counsel regarding personnel policies in an employee handbook, or the drafting of communications or materials to be distributed to employees regarding changes in pay, benefits or other terms and conditions of employment, or to provide or assist in choosing employee training modules now will be covered by the persuader rule if one of the objectives of the policies, communications, or training is to persuade employees not to engage in union organizing or other protected concerted activity. Seeking an attorney or consultant's assistance in drafting or selecting persuader materials to disseminate to employees also will be reportable. While union avoidance seminars do not trigger a reporting obligation for employers, the attorneys or consultants conducting the seminars will have to report which employers attend them.

As of July 1, if there is a question about whether an attorney or consultant's services will be covered by the persuader rule, employers should consult with the attorney or consultant about whether there will be a reporting requirement before entering into such an arrangement.

Next Steps for Employers

  • Because the new interpretation of this rule applies to arrangements or agreements entered into on or after July 1, 2016, make sure your engagements with attorneys or consultants are in place and up-to-date before this deadline.
  • Implement procedures for determining what should be reported and consider how your organization will coordinate with outside counsel and other consultants regarding reportable advice or other persuader activity.
  • Determine who will be the point person or persons to make the determination as to what activity should be reported, and direct all those who deal with attorneys and consultants regarding human resource or employee relations matters to consult with these point people before entering into any new agreement or arrangement after July 1.
  • Determine if and how you will respond to inquiries about the information contained in the reports, which as noted above will be available publicly on the DOL website.
  • Review and revise employee handbook and personnel policies, such as your statement concerning the company's position on unionization and your non-solicitation and non-distribution of literature policies, for compliance with current National Labor Relations Board (NLRB) standards before July 1.
  • Stay up to date on the legal challenges and other guidance relating to this expanded interpretation of the persuader rule. Several lawsuits are currently pending challenging the legality of this new regulation and seeking to prevent it from becoming effective.

Also, feel free to contact Megan Welton or any other member of our Labor & Employment Law Practice Group with any questions you have about this expanded interpretation of the persuader rule and your organization's reporting obligations under it.

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