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Final "Persuader" Rule published – employer reporting obligations to begin

March 24, 2016

Yesterday we reported that changes to the so-called "Persuader" Rule (Rule), under consideration for nearly five years, would be published today. Many employers seek counsel and many hire consultants to help them address a union organizing effort in their company. The Rule does not prohibit employers from doing so, but it does require that more information be disclosed concerning such activities. Here are some details concerning the Rule.

This Rule requires employers and the consultants they hire to file reports, not only for direct persuader activities, such as consultants talking to workers, but also for indirect persuader activities, including consultants scripting what managers and supervisors say to workers. The Rule reaches activities where the consultant assists the employer by scripting speeches by managers, talking points, letters, and other documents that may be used in a campaign.

The Rule requires employers and their hired consultants to report when the consultants directly persuade workers or when the consultants provide services in one of the following four categories:

  • Planning, directing, or coordinating managers to persuade workers;
  • Providing persuader materials to employers to disseminate to workers;
  • Conducting union avoidance seminars; and
  • Developing or implementing personnel policies or actions to persuade workers.

Under the Rule, employers and the consultants they hire will have to report any of the following activities: planning or conducting employee meetings; training supervisors or employer representatives to conduct meetings; coordinating or directing the activities of supervisors or employer representatives; establishing or facilitating employee committees; drafting, revising or providing speeches; developing employer personnel policies designed to persuade employees and identifying employees for disciplinary action, reward or other targeting. This list is not exhaustive.

Thankfully, the Rule still exempts agreements by which the consultant agrees to merely provide “advice” to the employer, defined in the Rule as “recommendations regarding a decision or course of conduct.” The Rule also exempts any agreement that involves only the provision of legal services.

The Rule does not restrict employers from using consultants or limit their services. Consultants can provide employers the same services as currently provided, but consultants and employers must now file the appropriate reports disclosing the persuader activities. The reports, LM-10 and LM-20, must be filed electronically within the timelines required by the Rule.

According to the U.S. Department of Labor (DOL), the Rule is not intended to affect attorney-client privileged communications. It does, however, require the disclosure of the identity of the client, the fee arrangement and the scope and nature of the persuader agreement in cases where the consultant has agreed to provide services other than mere legal services—specifically, when the engagement includes taking action with the intent to persuade employees regarding union representation or collective bargaining. DOL claims that this basic information is not privileged. That is just one question of many questions that need to be resolved.

Section 204 of the Labor Management Reporting and Disclosure Act (LMRDA) exempts from reporting “any information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship” and has been construed to encompass all privileged communications, including legal advice.

DOL predicts that it will receive almost 4,200 reports from consultants and almost 2,780 reports from employers annually under the Rule.

Several business groups announced possible challenges to the Rule. We will monitor the implementation of the Rule and challenges, if any. In the meantime, employers should consider their reporting obligations under the Rule.

The Rule becomes effective in thirty days, but it will apply to consulting agreements entered into on or after July 1, 2016. You can find a copy of the Rule as published here.

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