Associations Press for More Logical Persuader Rulemaking Process

With the DOL's persuader rule nearing final publication, 90 trade associations representing millions of employers sent a letter to the U.S. Office of Management and Budget (OMB) on Friday asking that the rulemaking be returned to the DOL and consolidated with a separate proposal. The persuader advice exemption rule, which was sent to the OMB earlier this month, seeks to broaden the scope of an employer’s reporting obligations under the Labor-Management Reporting and Disclosure Act (LMRDA) by substantially narrowing the "advice exemption" in Section 203(c) of the LMRDA. In essence—using the proposed rule language as a guide—employers would need to disclose any agreements with third parties for advice or services that "directly or indirectly" could be used to persuade employees regarding their right to join a union. A separate rule proposes to make changes to Form LM-21, which the persuader uses to report employer receipts related to the labor advice given. According to the Fall 2015 Regulatory Agenda, this proposal is not expected to be published until September 2016—with a final rule likely to follow months later. The associations have taken exception to this timeline, explaining, "[m]aking changes to the persuader advice exemption without making concurrent changes to Form LM-21 renders the form obsolete and potentially undermines the persuader reporting process."

The associations' main concerns with putting the cart before the regulatory horse are that doing so:

(1) will create confusion for “persuaders” who will be forced to speculate as to what type of information must be recorded on Form LM-21; (2) will lead to duplicative costs as consultants will have to modify their reporting systems twice instead of once; (3) will lead to second-guessing by the Office of Labor-Management Standards as to what should be reported on Form LM-21; and (4) will obscure the true economic burden of the two proposals.

For decades, the DOL used a more "bright line" test—direct communication with employees—to delineate what types of activities triggered the LMRDA's reporting requirements from those covered by the advice exemption. The proposed rule expands these reportable activities to include interactions normally covered by the attorney-client relationship. The associations in their letter to OMB claim the proposed changes would create "a confusing subjective test involving the intent of the agreement between the employer and its attorney or consultant," and expand reportable persuader activities to cover nearly every activity deemed protected by Section 7 of the National Labor Relations Act. If the final persuader rule resembles the proposal, the associations claim:

the onerous reporting scheme and penalties will likely lead to a decrease in the labor-related legal services available to employers. Perversely, this may result in an increase in unfair labor practice allegations, as many employers – particularly small employers who do not have labor relations experts on staff – will be forced to navigate the complexities of federal labor law on their own and without legal counsel.

Whether the OMB agrees to send the persuader rule back to the DOL for consolidation with the LM-21 rule is unclear in this election year.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.