Final Rules on Persuader Activity Published

The Department of Labor’s Office of Labor Management Standards (“OLMS”) has released its long-anticipated revisions to its interpretation of the rules for the reporting of employer engagements with third parties to provide services designed to influence employees’ choices of collective bargaining representation. This is known as “persuader activity.” Employers who enter an agreement with an outside organization for persuader services must report the agreement on an official form, the LM-10 within 90 days of the end of the year. The outside organization must also file a report, the LM-20. These forms must be filed within 30 days of the making of the agreement. Then, after the end of each calendar year, the persuader must file an LM-21 form, which reports all of its labor-related activities (even non-persuader activity) for all employers.

Up until this new rulemaking, the DOL took the position that persuader activity included contact with employees. If the third party did not have contact with employees, but only advised the employer (who was free to accept or reject the advice), the activity fell within a specific exemption for “advice” and did not trigger reporting obligations. The new rule drastically limits the scope of the advice exemption (essentially to the point where it applies only where there is no persuader activity in the first place.)

The new rule expands the scope of reportable activity to things that are remote from actual communication to employees, such as drafting materials, compiling reference materials on union activities and meeting with supervisors to ensure that they are performing their work of communicating the employer’s positon to their subordinates. It requires reporting by consultants of the attendance of employers at seminars that discuss union avoidance strategies.

The rule as published is an improvement for employers over the version included in the Notice of Proposed Rulemaking, in that it clarifies that revising materials for legality and grammatical correctness does not require reporting. It says that developing programs (such as benefit programs) is not reportable even if that has a potential impact on union support, unless an “object” of the programs is to persuade employees not to support a union. Providing “off-the shelf” materials to an employer for use in a campaign is generally not reportable, either.

The new rule becomes effective April 25, 2016 and the rule will be applicable to arrangements and agreements as well as payments made on or after July 1, 2016.

The logical and logistical problems with the new rule are substantial. As drafted, it raises freedom of speech issues that the prior interpretation (in effect since 1962) avoided. The forms have been revised to require electronic filing under a “check the box” format that may not reflect reality or the nuances of what actually occurred. The distinction between advising an employer to make a particular argument and engaging in persuader activity by describing the argument to the employer is impossible to draw. Since the forms must be filed correctly under penalty of a felony violation, the consequences of such new vagueness are frightening, especially for the CEO’s and Treasurers who must sign the reports.

While the final rule is better than the first draft, it is sure to face court challenges. Meanwhile, starting July 1 (unless the rule is enjoined), employers and their labor relations advisors will need to review their arrangements carefully to ensure that there is no persuader activity or, if there is, that reports are timely made.