On March 23, 2016, the U.S. Department of Labor (DOL) finalized the long-awaited “persuader” rule requiring employers and their labor relations consultants, including attorneys, to report any activities by these consultants that could be construed as an attempt to “persuade” employees regarding their right to organize a union and bargain collectively. Although employers were required to report when consultants spoke to employees under existing law, the new rule will require employers and consultants to report activities where a consultant is only tangentially involved in giving advice, even if that advice is never considered or followed by the company. The rule will have a major impact on businesses as it overturns long-standing precedent regarding how employers can legally manage organizing campaigns.
The DOL’s insistence on imposing stricter reporting requirements on employers stems from what the DOL perceived as a loophole in the Labor Management Reporting and Disclosure Act of 1959 (LMRDA). The LMRDA requires labor organizations, consultants, and employers to file reports and disclose expenditures on labor-management activities. The law was designed primarily to prevent abuse, corruption, and improper practices by labor organizations, employers, and labor relations consultants. It requires two sets of reports: (1) labor organizations have to report a wide array of financial information, including information about how much they spend on organizing campaigns; and (2) employers who hire labor relations consultants to directly persuade employees one way or another on organizing and bargaining issues must also report these relationships, including the amount of money spent on these activities. However, Section 203(c) of the LMRDA does not require employers to report when they hire a consultant simply for advice, which is commonly referred to as the advice exemption. In the past, “advice” was interpreted as including “indirect” persuasion, thus relieving employers from reporting guidance they received from consultants regarding what to say to employees. Continue reading