Employers Should Take Note of the Department of Labor’s Final “Persuader Rule”

By Steven M. Schneider
June 28, 2016

The Department of Labor (“DOL”) recently issued its final rule concerning the controversial “persuader rule” that greatly expands employers’ obligations under the Labor-Management Reporting and Disclosure Act of 1959 (the “LMRDA”). The persuader rule, scheduled to take effect July 1, 2016, not only impacts employers with union-represented employees, but it also may impact employers who presently do not have union-represented employees or union-organizing activities.

Under the LMRDA, any person who pursuant to any “agreement or arrangement” with an employer undertakes to persuade employees to exercise or not exercise their right to organize and bargain collectively, is obligated to report specific information about such agreement or arrangement to the DOL. Historically, the DOL has treated most legal work to be exempt from these reporting requirements, provided that the attorneys avoided direct communication with their clients’ rank and file employees and the client was free to accept or reject the attorney’s advice.  However, the DOL’s revised persuader rule extends the reporting requirements to “indirect persuader activities” engaged in by attorneys.

Indirect persuader activities occur when a law firm advises a client as to ways it can persuade employees with respect to their representation and collective bargaining rights, such as advising managers on what communications to have with employees, drafting a document to be distributed to employees, or even providing a union avoidance seminar to an employer. The persuader rule can apply to activities that appear to have little connection with employees’ collective bargaining rights, such as if a law firm drafts an employer personnel policy and the employer is adopting the policy in order to influence employees with respect to their collective bargaining rights.  In short, the persuader rule impacts advice and representation an employer may request or receive with respect to any of its employees and their potential rights to act collectively.  The persuader rule requires employers and law firms to provide detailed information regarding their engagement agreements, compensation paid pursuant to such agreements, and the types of indirect persuader activities that will be provided.

On June 27, 2016, the federal district court in Lubbock, Texas entered a nationwide injunction against enforcement of the new persuader rule. DOL is likely to appeal that ruling.


What Does the Persuader Rule Mean to Employers?

The DOL has taken the position that the persuader rule only applies to “persuader” agreements entered into on or after July 1, 2016. Accordingly, employers may want to enter into revised engagement agreements with their outside counsel no later than June 30, 2016, as it appears that agreements entered into prior to July 1, 2016, may not be subject to the reporting requirements of the persuader rule.

­Are Employers With a Non-Unionized Workforce Impacted?

Employers who have engaged law firms for ongoing employment advice, regardless of whether their workforce is unionized, should consider entering into revised engagement agreements by June 30, 2016 if there is a possibility that they may later need advice or services covered by the persuader rule (even if they previously have not had any labor issues).

Please contact MSK to determine if a revised engagement agreement is advisable for your business.

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