29 March 2016

U.S. Department of Labor’s New Persuader Rule Finally Hits

Last week the U.S. Department of Labor (DOL) announced its new “Persuader Rule.” This rule imposes reporting requirements on employers and labor relations consultants, including law firms, who engage in certain “indirect” activities on behalf of an employer for the purpose of persuading employees to defeat a union organizing drive. The rule is scheduled to take effect on April 25, 2016 and will apply to agreements, arrangements, and payments that occur on or after July 1, 2016.

Because the Persuader Rule is highly controversial and changes more than 50 years of settled law, it will be challenged in court. The full impact of the new rule and whether it will withstand judicial scrutiny remains to be seen, but here is a quick summary of the changes.

New Obligations to Report “Indirect” Persuader Activity

Employers and third-party consultants have always had the obligation to report agreements, arrangements, and payments for direct persuader activities, i.e. when a third-party consultant communicates directly with employees in an effort to sway them against union organizing. But since 1962, those obligations were never triggered if only the employer communicated with employees and remained free to accept or reject any advice or materials provided by the consultant.

That changes under the new rule. It creates reporting obligations for “indirect” persuader activity in four broad categories, which as the DOL put it: “occurs when an employer hires a consultant to help defeat a union organizing campaign.” Beginning July 1, 2016, employers and third-party consultants must report when they:

  1. plan, direct, or coordinate an employer’s managers to persuade employees;
  2. provide persuader materials to employers who disseminate them to employees;
  3. conduct union avoidance seminars (but only if the consultants develop or assist the attending employers in developing anti-union tactics); or
  4. develop or implement personnel policies or actions to persuade employees.

Required Reports

Employers who engage consultants to perform services in one of these four areas will be required to file an annual report with the DOL that identifies the consultant, describes the types of direct and indirect persuader services provided, and details payments made to that consultant. That report must be filed within 90 days after the employer’s fiscal year ends. Failure to comply can result in civil or criminal penalties for employers and their officers.

Consultants have two reporting obligations. They must first report an agreement or arrangement to provide direct or indirect persuader activities within 30 days after its creation. They must also file an annual report describing the type of persuader services rendered and the payments received from employers for the provision of labor relations advice.

We are tracking this new rule closely and will provide relevant updates. In the meantime, please contact a member of Miller Johnson’s Labor and Employment Section with any specific questions on how this new rule may impact your organization.