March 30, 2016

DOL Releases Final 'Persuader' Rule, Touting Transparency

In a move highly anticipated and supported by unions, the U.S. Department of Labor (DOL) issued its final “persuader” rule on March 23, 2016. The revised rule expands the information which must be disclosed by employers and their consultants related to activities intended to persuade employees about their rights to union representation and collective bargaining. Praising the new rule, AFL-CIO President Richard Trumka stated, “Working men and women deserve to know who their employer is hiring and exactly how much they are spending to discourage workers from forming a union.”

Background

Section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA) requires employers and their labor relations consultants to report to the federal government any activities “undertaken with an object, directly or indirectly, to persuade employees about how to exercise their rights to union representation and collective bargaining.” However, “advice” has always been exempted from this reporting requirement. For nearly 40 years, so long as a consultant did not have direct contact with employees, it was considered “advice” and, therefore, not subject to reporting. Unfortunately for employers (and their labor consultants), the DOL determined this interpretation resulted in underreporting, as well as an increased use of outside consultants by employers, which needed to be addressed.

Expansion of Reportable Activities and Electronic Filing

The new rule has narrowed the long-standing interpretation of the “advice” exemption, which effectively expands the activities which must be reported to the government on Forms LM-10 and LM-20. “Advice” is now limited only to “an oral or written recommendation regarding a decision or course of action.” The DOL explained this is different from “those activities that have as their object the persuasion of employees — activities that manage or direct the business’s campaign to sway workers against choosing a union — that must be reported.” In short, both direct and indirect persuader activity must be reported. Additionally, if a “consultant engages in both advice and persuader activities ... the entire agreement or arrangement must be reported.”

Further, Forms LM-20 and LM-10 must now be filed electronically with the DOL.

Republican Lawmakers Speak Out

Congressional Republicans spoke out against this latest move to benefit organized labor and vow to “push back.” In a joint statement issued the same day the new rule was released, Chairman of the Senate Labor Committee, Lamar Alexander (R-Tenn.), stated:

If you’re a small business owner and some of your employees just petitioned to form a union, there is a mountain of rules and regulations you must follow … Now the administration, which just sped up the [union] election process … has made a new rule to discourage employers from seeking the legal advice they need to fulfill their obligations … I will be reviewing the final rule and working in the Senate on ways to prevent this rule from causing harm to America’s workplaces.

When Is Compliance Under the New Rule Required?

The final rule is effective April 25, 2016. It is applicable, however, to covered arrangements, agreements and payments made on or after July 1, 2016.

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