DOL Issues Final “Persuader” Rule

On March 23, the Department of Labor issued its final “persuader” regulations revising the interpretation of “advice” as it pertains to the employer and labor relations consultant persuader reporting requirements of Section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA).

The final rule expands reporting requirements for employers facing union organizing campaigns on almost any communication with employees about unions if a consultant or attorney has assisted the employer. Currently, under the LMRDA, an employer must report any agreement or arrangement with a third-party consultant to persuade employees about union organizing. However, attorneys and other consultants hired to provide advice to employers facing organizing campaigns generally do not trigger the reporting requirement unless they speak directly to employees. The new rule will significantly narrow this “advice exemption,” requiring employers to report substantially more information, including correspondence with attorneys.

Under the final rule, employers and consultants or attorneys will need to file extensive forms detailing their agreements, salaries paid and other clients if they participated in “persuader activity.” Failure to comply with the filing requirements could result in criminal sanctions.

In light of the severe impacts the final rule could have on employers and outside attorneys, the Coalition for a Democratic Workplace, of which CUPA-HR is a member, filed a lawsuit on March 30, 2015, in the federal district court in Arkansas. The lawsuit asserts that the rule:

• infringes on the right of those who seek to give labor relations advice to employers, including the plaintiff associations, attorneys and other third-party consultants … to render such advice without fear of criminal penalties for failing to file the reports newly required by the rule;
• violates the plaintiffs’ First Amendment rights of freedom of speech and freedom of association; and
• infringes on the confidentiality of the plaintiffs’ attorney-client communications and impermissibly invades the attorney-client relationship.

These concerns have been expressed and shared widely by the American Bar Association, arguing that the rule would violate attorney-client privilege, and Congressional Republicans and the Arkansas attorney general, who fear it will harm small business owners, “chill employer free speech,” and “continue to discourage job growth and hinder economic development.” More than 9,000 comments were filed on the proposed rule in 2011, including comments filed by the American Council on Education, CUPA-HR and other higher education associations.

Two other suits have been filed in the District of Minnesota and in the Northern District of Texas. The effective date of the new regulation is April 25, 2016, and the rule will apply to all arrangements and agreements made on or after July 1, 2016.