DOL's Controversial Final 'Persuader Activity' Rule Expands Employer Reporting Requirements

Author: Rena Pirsos, XpertHR Legal Editor

Update: The DOL is currently barred from enforcing its persuader activity rule, which was to take effect on July 1, 2016, under a nationwide injunction issued by a Texas federal district court that has questioned the validity of the rule due to its affect on the LMRDA's advice exemption.

March 29, 2016

On March 24, the US Department of Labor (DOL) published a controversial and long-awaited final rule under the Labor Management Reporting and Disclosure Act (LMRDA) that expands an employer's obligation to report persuader activity - activity engaged in to directly or indirectly persuade employees concerning their rights to organize and collectively bargain.

The LMRDA already requires disclosure but, historically, it has only applied narrowly to direct contact by attorneys or labor consultants with employees to persuade them not to unionize or collectively bargain. Under the advice exemption, the LMRDA has not applied to attorneys or consultants providing legal advice to employers about their federal labor law rights and duties, if the employer could freely accept or reject the advice and the attorney did not communicate directly with employees.

The new rule, however, now requires employers, attorneys and other labor consultants to electronically file reports with the DOL disclosing indirect persuader activity as well as direct activity. The final rule revises the Form LM-20 Agreement and Activities Report and the Form LM-10 Employer Report to require public reporting of indirect persuader activities and agreements.

As part of the report, employers will be required to disclose all financial information and expenditures related to such activities. Once a report is filed, the information becomes public.

Legal advice remains exempt under the final rule, but only if no persuasive attempts are involved. Once the purpose of an arrangement is to persuade employees about their right to organize or collectively bargain, the attorney and employer must both file a report.

Specifically, reporting is required when there is direct contact or communication by an attorney with an employee. Reporting is also required when an attorney/consultant does any of the following things without direct employee contact:

  • Plans, directs, or coordinates activities (e.g., meetings) with employees undertaken by supervisors or other employer representatives;
  • Provides materials or communications to an employer (verbally, in writing or electronically) for dissemination or distribution to employees;
  • Conducts a seminar for supervisors or other employer representatives on how to persuade employees; or
  • Develops or implements personnel policies, practices, or actions for an employer with the objective of persuading employees.

Although the rule is expected to take effect on April 25, its implementation is uncertain due to strong opposition by several groups challenging its legality and its potential to infringe on an employer's privileged attorney-client communications with legal counsel. Employer groups and the American Bar Association are among those opposed. If the final rule is implemented, it will apply to agreements, arrangements and payments (including reimbursed expenses) made on or after July 1.