How employers can prepare for DOL’s new ‘persuader’ rule

How employers can prepare for DOL’s new ‘persuader’ rule

By David Katz

“Pay no attention to that man behind the curtain. The great Oz has spoken.” Invoking scenes from the Wizard of Oz, U.S. Secretary of Labor Thomas E. Perez and the Department of Labor unveiled last week the finished product of its highly-anticipated union “persuader” rule, requiring employers and their advisers to report any arrangement (i.e. third-party consultants, legal counsel, etc.) to persuade employees, directly or indirectly, concerning their right to organize.

Sec Perez

The controversial final rule, which amends the previous rule interpreting the “advice exemption” of the federal Labor Management Reporting and Disclosure Act (LMRDA), closely resembles the rule first proposed back in 2011, and represents a sea change in how employers combat union organizing campaigns. Taking effect on July 1, 2016, employers and consultants will now be required to report, in detailed fashion, the types of consulting or legal services provided and the amount of fees paid in connection with advice on organizing campaigns. The rule does not prohibit employers from hiring consultants or constrain them in what information they can provide.

In a press release, the DOL stated that because “[w]orkers often do not know when employers engage consultants behind the scenes to influence their decisions,” the “persuader” rule “address[es] this lack of transparency, … resulting in better information for workers making decisions on whether or not to form a union or bargain collectively.”

Secretary Perez said in a statement, “Workers should know who is behind an anti-union message. It’s a matter of basic fairness.” He continued, “[t]his new rule will allow workers to know whether the messages they’re hearing are coming directly from their employer or from a paid, third-party consultant. Full disclosure of persuader agreements gives workers the information they need to make informed choices about how they pursue their rights to organize and bargain collectively. As in all elections, more information means better decisions.”

“The union “persuader” rule is just the latest volley in the Obama administration’s imprint on pro-union labor policy and may be a portent of what’s to come in the final months of the administration.”

According to the DOL, the final rule addresses a longstanding “loophole” in the LMRDA, which allows employers to hire consultants to create materials, strategies and policies for organizing campaigns — and even to script managers’ communications with employees — without disclosing information related to those consultants, as long as the consultants do not directly contact employees. The new rule, however, requires reporting on “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.”

The union “persuader” rule is just the latest volley in the Obama administration’s imprint on pro-union labor policy and may be a portent of what’s to come in the final months of the administration. Understandably, the “persuader” rule has been met with sharp criticism from employers and business groups on the basis that it curtails employers’ first amendment free speech rights and improperly encroaches on the attorney-client relationship and confidentiality obligations. Though it appears likely that the final rule will be challenged in court by business groups, for the time being at least, employers and consultants should be prepared to comply beginning this summer.

Katz is an associate at
the law firm Mintz Levin