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Beware the [Persuader Rules] of March

By Cary Burke

Earlier this week, the U.S. Department of Labor (USDOL) sent the most recent version of its much-maligned “persuader rules” to the Office of Management and Budget (OMB) for review.  Designed to amend certain provisions of the Labor Management Reporting and Disclosure Act (LMRDA), the new persuader rules, slated to take effect in March 2016, will impose onerous reporting obligations upon employers, and may disrupt the attorney/client relationship.  

As a general matter, the LMRDA requires employers to disclose in a public filing any arrangement with a lawyer or labor relations consultant to indirectly or directly persuade employees concerning their rights to organize or collectively bargain.  But the “advice exception,” found in Section 203(c) of the Act, carves out certain activities from the Act’s reporting requirements.  Specifically, employers need not disclose any services rendered by an attorney or labor relations consultant if the attorney or labor relations consultant merely provides advice to the employer regarding organizing activities.

If adopted in their current form, the persuader rules will narrow the advice exception significantly.  Under the proposed rules, the definition of “advice” would be limited to oral or written recommendations only.  Troublingly, employers receiving advice from lawyers or labor relations consultants concerning organizing activities may be required to disclose such services in a public filing, even if the lawyer or labor relations consultant did not have any contact with the employer’s employees.  As but two examples, employers may have to disclose whether a lawyer or labor relations consultant drafted any communications sent to employees regarding organizing activities, or authored any PowerPoint presentations regarding organizing that were shown to employees.  

The persuader rules also may impact the confidential nature of the attorney/client relationship.  To the extent employers will have to disclose to the public their dealings with attorneys and labor relations consultants concerning organizing activities, there could be a chilling effect on employers’ willingness to seek legal advice.    

Of course, the persuader rules will likely face staunch opposition prior to their enactment.  Republicans in Congress have already lambasted the proposed rules to the press, and so have management-side trade groups.  The American Bar Association has even gone so far as to refer to the rules as “an unjustified and intrusive burden on lawyers, law firms and their clients.”  Moreover, labor watches expect the rules to be challenged in the courts.  

For now, employers that may be subject to organizing activities should be watching the persuader rules closely.   Should the rules go into effect in March 2016 as expected, employers will be subject to onerous and time-consuming reporting obligations.  Further, employers will have to seriously consider the public relations ramifications of hiring attorneys or labor relations consultants to assist them with organizing activities, as having to disclose such services could paint the employer as a “union buster.”      

Please stay tuned to Polsinelli at Work, where we will continue to monitor the persuader rules.