On March 23, 2016, the U.S. Department of Labor (DOL) issued new regulations that revised the DOL’s interpretation of Section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA) by substantially narrowing the exception for "advice" and requiring the reporting of "indirect" persuader activities and agreements. The new so-called Persuader Rules can be found at https://www.gpo.gov/fdsys/pkg/FR-2016-03-24/pdf/2016-06296.pdf.
The new Persuader Rules will become effective on April 23, 2016 and will apply to engagements entered into after July 1, 2016. Under the new Persuader Rules, employers and their labor relations consultants (including attorneys) will need to file detailed reports with the DOL when the consultants provide advice or services to the employer that are designed to persuade employees regarding their rights to organize and bargain collectively – even if the consultants have no direct contact with the employer’s employees.
Reporting Requirement Exception for "Advice"
Section 203(b) of the LMRDA requires employers and labor relations consultants to report their agreements pursuant to which the consultants provide services or undertake activities with "an object . . . directly or indirectly" to persuade employees concerning their rights to organize and bargain collectively. Section 203(c) exempts "advice" from triggering the reporting requirement. Since the early 1980s, the "advice" exception meant no employer or consultant had to file a report with the DOL if the consultant just gave advice to the employer and did not directly engage with employees.
New Persuader Rules Narrowly Redefine "Advice"
Under the new Persuader Rules, employers and their labor relations consultants now must report any arrangement to persuade employees, whether directly or indirectly, regarding the right to organize or bargain collectively. The term "advice" is now confined to those activities "that meet the plain meaning of the term: an oral or written recommendation regarding a decision or course of conduct."
As examples of excluded "advice," the DOL stated that reporting is not required when a consultant "revises persuasive materials, communications or policies created by the employer in order to ensure their legality rather than enhance their persuasive effect …. Additionally, reports are not required for an agreement that involves a consultant merely representing the employer before any court, administrative agency, or tribunal of arbitration, or engaging in collective bargaining on the employer’s behalf."
However, "activities that have as their object the persuasion of employees -- activities that manage or direct the business' campaign to sway workers against choosing a union" -- must be reported. For example, even if the consultant has no direct contact with employees, the following activities will need to be reported if they have the object of persuading employees:
- Planning, directing or coordinating activities undertaken by supervisors;
- Providing materials or communications to employers for dissemination to employees; and
- Developing or implementing personnel policies, practices or actions for employer.
Reporting Obligations Under The Persuader Rules
The New Persuader Rules do not materially change the reporting obligations, however, by dramatically narrowing the "advice" exception, many employers and consultants will now need to comply with the reporting obligations.
Employers will need to file a Form LM-10 to report any agreements or arrangements with labor relations consultants who provide covered persuader services that are entered into during the fiscal year. The report must be filed within 90 days after the end of the employer’s calendar year and include, inter alia, the identity of the consultant, the date of the agreement/arrangement, the terms and conditions of the agreement/arrangement, the specific persuader activities that were performed, the period of performance, the extent of the performance, the individual performing the activities, the group of employees or labor unions subject to the performance and detailed information about the payments. In addition, a copy of any agreements will have to be attached to the Form.
Labor consultants must file Forms LM-20 and LM-21 if they perform any covered persuader services. Form LM-20 must be filed within 30 days after entering into an agreement or arrangement to perform persuader services, or after conducting a union avoidance seminar. The information reported on the Form LM-20 is similar to that required of employers on the Form LM-10.
In addition, labor relations consultants must file Form LM-21 within 90 days after completion of the consultant’s fiscal year. The Form LM-21 report must include financial information about payments and arrangements related to the consultant’s activities reportable on the Form LM-20, however, the consultant also must report on Form LM-21 financial information regarding all labor relations services it performs for each employer for whom it provides covered persuader services, along with financial information regarding it officers and employees who provide those services.
The new Persuader Rules will require many employers and labor relations consultants to begin reporting information that has not previously been reportable. Fortunately, however, the new Persuader Rules will be challenged in lawsuits that will seek to bar or delay their enforcement. Nonetheless, unless a court enjoins the application of the new Persuader Rules, they will apply to employers and labor relations consultants starting on July 1, 2016.