ACTION REQUIRED BY JULY 1 – NEW PERSUADER ACTIVITY REPORTING REQUIREMENTS

KEY POINTS

  • Employers and their lawyers and consultants will be required to report all indirect persuasion activities, including legal advice, for activities performed pursuant to an agreement entered into on or after July 1, 2016
  • DOL indicates the new rule will not apply to persuader activities performed pursuant to agreements entered into before July 1, 2016
  • The rule applies to all entities regardless of whether you currently have a union in place or not
  • Thus, to avoid the new rule’s reporting requirements, you should consider entering into a specific agreement with your legal counsel for labor relations before July 1, 2016
  • Such an agreement does not obligate you to use those services in the future, but may provide you with significant protection if and when you do use those services

NARROW OPPORTUNITY TO AVOID NEW PERSUADER RULE

You may be able to avoid the Department of Labor’s (“DOL”) expanded “Persuader Activity” reporting requirements if you enter into a specific agreement with your legal counsel for labor relations before July 1, 2016.  Even if you do not currently use legal counsel for these services and/or do not have or anticipate union activity, you may wish to consider entering a separate agreement for such services now should the need arise in the future. If you do not enter into a separate and specific agreement for these services and they are needed in the future, you may be required to report all work performed by your legal counsel to the DOL who will make it publicly available. The disclosure of this information could unfairly prejudice employers in their attempts to address employee and labor issues.

THE RULE

The DOL has long required employers to file public reports under the Labor-Management Reporting and Disclosure Act (“LMRDA”) when utilizing a consultant in connection with its labor relations.  Under the LMRDA, employers (and the consultants) are required to report the nature of the relationship as well as specific information regarding the arrangement, including how much is paid to the consultant. The information in these reports is then made publically available on the DOL’s website.

Historically, this rule predominantly applied when the consultant – which includes attorneys – had direct contact with the employer’s employees – this is generally known as “Persuader Activity”.   While technically there was a provision requiring reporting in cases of indirect persuasion, there was an exception for situations where an employer was merely receiving advice on how to communicate with its employees on labor issues.

Under the DOL’s new rule, the reporting obligation will be greatly expanded.  Employers (and their consultants – including attorneys) will be obligated to report even indirect persuasion and there will be no exception for legal advice.  What this means is that if your legal counsel advises you regarding labor relations issues that may be construed to be intended to persuade employees in connection with their rights under the National Labor Relations Act, you (and we) will be obligated to report that to the DOL.  The report will need to list all work performed under the arrangement and the fees that were paid.  This raises serious concerns regarding attorney-client privilege and confidentiality.

Under current DOL guidance, such indirect persuasion could include items such as advising on employee issues; assisting in drafting handbooks, policies and procedures; providing management training on a variety of labor relations issues; assisting with organizing campaigns; assisting with collective bargaining; representing you in connection with grievances and/or litigation before the National Labor Relations Board.  The regulations are still new, and we fear there may be a very expansive definition of “indirect persuasion.”

TIMING IS URGENT

The DOL has stated that if such consultation or advice is provided pursuant to an agreement signed before July 1, 2016, the new rules will not apply.  In other words, indirect persuasion will not need to be reported by either you or your consultant.  Thus, all employers who use legal counsel for such matters (and those who think that they might want to do so in the future) should consider entering into an engagement for this purpose before July 1, 2016.  Entering into such an engagement need not necessarily include any obligation to use the legal counsel’s services.

If you would like more information, please contact Robert Pivonka at Pivonka@ROLFLaw.com or 1-866-495-5608.

 Please note that this alert is intended to be informational only, and is not intended to be nor should it be relied upon as legal advice. Rolf Goffman Martin Lang LLP will not be responsible for any actions taken or arrangements structured based upon this alert. The receipt of this alert by an organization that is not a current client of Rolf Goffman Martin Lang LLP does not create an attorney-client relationship between the recipient and the law firm.

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