Department of Labor Further Delays Publication of its Final “Persuader” Rules

Department of Labor Further Delays Publication of its Final “Persuader” Rules

Apr 2, 2014

The U.S. Department of Labor (DOL) has once again delayed publication of its final rule on “persuader activities.” The DOL’s final rule was initially scheduled for publication in November 2013. As that date approached, the DOL rescheduled publication for March 2014. Having now hit that mark, the DOL once more has pushed off publication—this time without setting a future date. The new date is expected to be announced in the DOL’s Spring 2014 Regulatory Agenda.

In June 2011, the DOL published revisions to the persuader rule which broaden the scope of an employer’s reportable union-related activities by substantially limiting the application of the “advice” exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act (LMRDA).

The LMRDA imposes certain financial reporting and disclosure requirements for labor organizations, their officers and employees, employers, labor relations consultants, and surety companies. The LMRDA defines a labor relations consultant as “any person who, for compensation, advises or represents an employer, employer organization, or labor organization concerning employee organizing, concerted activities, or collective bargaining activities.” 29 U.S.C. 402(m). Sections 203(a) and (b) of the LMRDA currently require employers and their labor relations consultants to report any agreement or arrangement between them where the consultant will undertake activities, directly or indirectly, to “persuade” employees regarding their right to organize a union and bargain collectively (i.e., “persuader activity”). If employers and consultants fail to comply with these reporting requirements, they could face jail for a year and a $10,000 fine. Section 203(c) provides an exemption to the reporting requirements for labor relations consultants who give or agree to give merely “advice” to employers. The DOL originally interpreted the advice exemption to exclude from the reporting requirement any agreement or arrangement where the consultant has no direct contact with employees and the agreement limits the consultant’s activity to providing the employer and its management team with advice or materials for use in persuading employees regarding union-related activities.

However, the DOL concluded that this created a loophole which led to substantial under-reporting of persuader activities. To rectify the problem, the DOL proposed a new rule that required an agreement or arrangement to be reported if the consultant engages in activities that go beyond the “plain meaning” of advice. The term “advice” is defined as “an oral or written recommendation regarding a decision or a course of conduct.”

By contrast, “persuader activity” is expanded to include “providing material or communications to, or engaging in other actions, conduct, or communications on behalf of an employer that, in whole or in part, have the object directly or indirectly to persuade employees concerning their rights to organize or bargain collectively, regardless of whether or not the consultant has direct contact with workers.” Under the proposed rule, persuader activities include:

  • drafting, revising, or providing materials or communication of any sort, to an employer for presentation, dissemination, or distribution to employees, directly or indirectly;
  • developing or administering employee attitude surveys concerning union awareness, sympathy, or “proneness”;
  • training supervisors or employer representatives to conduct individual or group meetings designed to persuade employees;
  • coordinating or directing the activities of supervisors or employer representatives to engage in the persuasion of employees;
  • establishing or facilitating employee committees;
  • developing employer personnel policies or practices designed to persuade employees;
  • deciding which employees to target for persuader activity or disciplinary action; and/or
  • coordinating the timing and sequencing of persuader tactics and strategies.

Reporting persuader activities would be required whether or not the agreement or arrangement also calls for advice. Under the proposed rule, if the object is to persuade employees then the reporting requirement is triggered: [W]here the lawyer or labor consultant has gone beyond mere recommendation and has engaged in actions, conduct, or communications with the object to persuade employees, either directly or indirectly, about the employees’ protected, concerted activity … these activities, whether or not the consultant is in direct contact with the employees, trigger the duty to report.

“Reportable activity” would also include supplying information to an employer concerning the activities of employees or a labor organization in connection with a labor dispute.

No report would be required if the agreement or arrangement exclusively provided advice to an employer, such as when a consultant exclusively counsels employer representatives on what they may lawfully say to employees, ensures a client’s compliance with the law, or provides guidance on NLRB practice or precedent.

If the DOL’s final rule tracks the one proposed in June 2011, employers who hire consultants and attorneys to advise them regarding union-related activities will have to publicly file reports with the government detailing the engagement agreement, the scope of work, and the payment for such work, even if the consultant has no direct contact with employees. If the employer is a federal contractor, the final rule would run in conjunction with Executive Order 13494, which requires federal contractors to exclude from any billing, claim, proposal, or disbursement the costs incurred in undertaking activities to persuade employees regarding their right to organize and collectively bargain. The government will need to reconcile this conflict, most likely by amending the Executive Order to conform to the final rule. Legal challenges to the DOL’s proposed changes are almost certain to occur. But until the final rule is published, the ultimate fate of the revised “advice exemption” remains to be seen.

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