By Pamela Wolf, J.D.
The long-awaited so-called “persuader rule” that would require certain disclosures related to third-party consultants (including attorneys) used by employers in crafting and delivering anti-union messages to workers has been finalized and released by the Labor Department’s Office of Labor-Management Standards (OLMS). The final rule, which is slated for publication in the Federal Register on March 24, revises two public disclosure reporting forms: Form LM-10 (employer report) and the Form LM-20 (agreement and activities report). Generally, with some exceptions, these reports must be filed when an employer and a labor relations consultant make an arrangement or an agreement that the consultant will undertake efforts to persuade the employer’s workers to reject an organizing campaign or collective bargaining effort by a union. First proposed on June 21, 2011, the final rule has been long in the making, yet drew immediate criticism.
Revised forms. The revised forms are not yet available electronically. However, Form LM-20 Facsimile and Form LM-20 Instructions, as well as Form LM-10 Facsimile and Form LM-10 Instructions are now available in pdf. Form LM-20 will be available electronically on July 1, 2016; Form LM-20 will be available on January 1, 2017.
LMRDA Section 203. The final rule makes changes to the employer and labor relations consultant/“persuader” reporting requirements of Section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA). Section 203 requires employers and labor relations consultants to report their agreements or arrangements under which the consultant undertakes activities with an object, directly or indirectly, to persuade workers about their rights to organize and bargain collectively. This requirement is subject to an exemption in Section 203(c), which provides that no one is required to file a report covering the services of a consultant “by reason of his giving or agreeing to give advice” to the employer.
Changes to Section 203 reporting. Under the controversial changes made by the final rule, an employer-consultant agreement is reportable if a consultant engages in “persuader activities.” These are defined as any “actions, conduct or communications that are undertaken with an object, explicitly or implicitly, directly or indirectly, to affect an employee’s decisions regarding his or her representation or collective bargaining rights.” Under a typical reportable agreement or arrangement, a consultant agrees to manage a campaign or program to avoid or counter a union organizing or collective bargaining effort, either jointly with the employer or separately. Under the DOL’s prior interpretation of Section 203(c), the employer and consultant would be required to file a report only if the consultant communicated directlyto the workers. The final rule requires that both direct and indirect activities must be reported.
In addition, the final rule mandates that consultants must also file reports when they hold union avoidance seminars for employers. However, employers are not required to report simple attendance at these seminars.
The Labor Department provided this summary of the final rule.
Activities that trigger reporting. Under the revised Section 203 interpretation set forth in the final rule, consultant activities that trigger reporting include direct contact with employees with an object to persuade them, as well as these categories of indirect consultant activity undertaken with an object to persuade employees:
Planning, directing, or coordinating activities undertaken by supervisors or other employer representatives, including meetings and interactions with employees.
Providing material or communications for dissemination to employees.
Conducting a union avoidance seminar for supervisors or other employer representatives.
Developing or implementing personnel policies, practices, or actions for the employer.
Exempt “advice” activities which do not trigger the reporting requirement are now limited to what the OLMS called “those activities that meet the plain meaning of the term”: an oral or written recommendation regarding a decision or course of conduct.
Old interpretation. The OLMS noted that under the prior interpretation of Section 203, persuader agreements did not need to be reported if the consultant had no direct contact with employees and limited his or her activity to providing the employer with materials that the employer had the right to accept or reject. The earlier interpretation of “advice” purportedly resulted in significant underreporting of persuader agreements because it essentially limited reporting to agreements that involved only direct persuader activities, not indirect activities.
Closing the loophole. The Labor Department also cited what it called a “longstanding loophole” that permitted employers to hire consultants who would create materials, strategies, and policies for organizing campaigns—even scripting managers’ communications with employees—without disclosing anything, so long as the consultant did not directly contact employees. The final rule closes that loophole to align the regulation with the statute, according to the DOL. Under that the same statute, the DOL pointed out, unions already are required to make comprehensive public reports on their expenditures, including expenditures on union-organizing campaigns.
What does the final rule achieve? The Labor Department laid out what it believes the final rule achieves, explaining that “full disclosure of both direct and indirect persuader activities protects employee rights to organize and bargain collectively and promotes peaceful and stable labor-management relations.” The new requirements will provide workers with “essential information about the underlying source of the views, materials, and policies directed at them and designed to influence how they exercise their rights to union representation and collective bargaining,” according to the DOL.
What are the experts saying? To understand more about the final rule and its implications for both employees and employers, Employment Law Daily reached out to a team of experts.
Employees need to know. Paul Secunda, labor law professor at Marquette University Law School, weighed in with a view toward the final rule as it relates to workers facing a decision about whether to vote for union representation: “The DOL union persuader rule is a necessary regulatory disclosure so that employees considering joining a union can understand their employer’s true motivations in union organizing campaigns. Employees about to decide whether to vote for unionization should understand that messages provided to them about the disadvantages of unions by their supervisors and bosses are being scripted by highly paid, anti-union consultants. Of course, employers are entitled to share their views about unionization with their employees in a non-coercive manner, and this new rule will also not interfere with the underlying legal advice that employers receive from their labor attorneys regarding such union campaigns, but employees have the right to know how their employer is pursuing its anti-union agenda and how much it is costing them.”
Historic definition altered and expanded.“The DOL altered the historic definition of ‘advice’ and expanded its definition to now include indirect activities that may be used to persuade employees to oppose union organizing,” according to Sherman & Howard attorney W. V. Bernie Siebert, also a member of the Employment Law Daily Advisory Board. “Previously, only engaging in direct contact with employees in an organizing campaign had to be reported. Now such things as the drafting of materials, providing advice and counsel, and any other activities remotely designed to persuade employees in the absence of contact with employees will need to be reported, including supervisor training.”
Problem for lawyers? According to Siebert, the final rule’s reporting requirements will infringe on lawyers’ duty of confidentiality and the attorney-client privilege. “Lawyers who assist in drafting speeches and answers to employee questions in an effort to insure compliance with applicable law will have to file a report detailing, among other things, the name of the client, the agreement as to fees, the tasks performed for the client, and the total fees received. The new rule was opposed by nearly every employer organization and even the American Bar Association.”
Attorney Chris Bourgeacq ( The Chris Bourgeacq Law Firm, PC), also a member of the Employment Law Daily Advisory Board, similarly saw a potential problem for lawyers. “The DOL pays lip service to observing and protecting attorney-client privilege, but the new rule presents a clear and substantial threat to the privilege,” Bourgeacq said. “The DOL explains for example that if an attorney engages in providing mixed legal advice and ‘persuader’ activities, the entire agreement between the attorney and client would have to be reported and included in a filing. No attorney or client wants detailed attorney-client billing records subject to request and review by the union, or to see that information posted on social media with misleading comments from union organizers.”
DOL’s motivation questionable. Siebert also appeared to question the Labor Department’s motivation in revising the persuader rule. He pointing to this language in the DOL’s report on the final rule: “In the context of an employer’s reliance on a third party to assist it on matters of central importance, it is possible that an employee may weigh differently any message characterizing the union as a third party.” Presumably seeing a tilt toward unions, Siebert said: “It is reassuring to know that the DOL is only seeking a more accurate interpretation of ‘advice.’”
Bourgeacq likewise questioned the impetus for the changes wrought in the final rule: “Under the rubric of providing ‘transparency’ to employees confronted with a union organizing drive, the DOL’s rule changes are nothing short of a full-scaled attempt to chill employers’ rights to counter tactics from unions seeking to infiltrate and organize their employee workforce.”
Too much open to interpretation. According to Bourgeacq, the final rule is “problematic on several fronts and will likely be pared down through inevitable court challenges.” For starters, he suggested that the term “persuader activities” leaves too much open to interpretation. “Although the rule clearly is directed primarily to organizing activities, the DOL repeatedly notes the rule encompasses ‘collective bargaining’ too,” he observed. “Under the NLRA, collective bargaining encompasses substantially more than just organizing and contract negotiation and includes myriad activities dealing with the union after a CBA is in place— e.g., side agreements, grievances, information requests. Will attorneys have to report activities related to collective bargaining in those contexts?”
Indirect persuader activities. In addition, Bourgeacq suggested that the Labor Department “has enlarged the scope of ‘indirect’ persuader activities well beyond any previous meanings.” He queried whether drafting an employee handbook with the following provisions, all of which could indirectly implicate organizing and collective bargaining, requires reporting under LM-10 and LM-20: solicitation/distribution; Internet usage; discipline policies; business codes of conduct; dress codes; and confidentiality provisions. “All of these topics, and certainly others as well, are serious matters with even more serious consequences,” Bourgeacq said. “The vague and ambiguous contours of the new rule unfortunately leave too many activities open to debate as to whether they are covered or not covered, reportable or nonreportable.”
Hobson’s Choice for employers. Bourgeacq also stressed that noncompliance with reporting obligations under the LMDRA carries potential civil and criminal penalties, including fines and imprisonment. “The many ambiguities in the new rule could leave employers, their attorneys, and labor consultants guessing at their peril. Err on the side of not reporting, and you may break the law. Err on the side of reporting, and you could violate attorney-client privilege. In its ‘solution’ in search of a problem, the DOL thus has created a Hobson’s Choice for employers and even more so for attorneys representing management in labor relations.”
Effective date. The final rule is effective April 25; the proposed changes will be applicable to arrangements, agreements, and payments made on or after July 1, 2016.