DOL's Persuader Rule Advances


After years in regulatory limbo, the Department of Labor’s final revisions to the so-called “persuader” rule have moved one step closer to publication.  On December 7, the DOL’s Office of Labor-Management Standards (OLMS) submitted the final rule to the Office of Management and Budget (OMB), which is the final step before the rule can be published in the Federal Register. Although the DOL’s regulatory agenda had estimated this rule would be published in March 2016, given the OMB’s traditional review timetable, the measure could be released even earlier in 2016. If the final rule resembles the proposal issued in 2011, it will have a significant impact on employers.

The rule in its proposed form broadens 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. For decades, this advice exemption excluded from the reporting requirements circumstances in which a person or entity provided advice to an employer regardless of whether that advice included a “persuasive” component – i.e., recommendations that would influence whether an employee should/should not join a union. Under the proposed rule, “persuader activity” involves communications that, “in whole or in part, have the object directly or indirectly to persuade employees concerning their rights to organize or bargain collectively. Reporting is thus required in any case in which the agreement or arrangement, in whole or part, calls for the consultant to engage in persuader activities, regardless of whether or not advice is also given.” Thus, “persuasion” would be expanded to cover any activity that influences an employee’s decision with respect to protected concerted activity.

This broad interpretation would have a drastic impact on the confidential nature of the attorney/client relationship, as it would expand the types of union-related activities that would trigger reporting requirements from both employers and law firms. Small employers would be at a particular disadvantage, as they often lack in-house counsel to assist with the LMRDA’s reporting requirements.

Employers must report these persuader activities on Consultant Form LM-21: Receipts and Disbursements Report. Notably, the OLMS also intends to issue a proposed rule revising this form, but not until September 2016, according to the agency’s regulatory agenda.  This means an employer’s reporting obligations would change before companion changes are made to the form, which is a major component of the persuader reporting process.

The stalled persuader rule has been on organized labor’s wish list for some time. With only one more year left to the Obama Administration, it is not surprising that the DOL has made this final push to see it materialize before the November 2016 elections. The resurgence of the persuader rule could be a harbinger of things to come. Ordinarily, publication deadlines on agency regulatory agendas are more aspirational than accurate. With the election clock ticking, however, this year’s agenda might provide a realistic timeline for the publication of other contentious rules, such as the DOL’s rule revising the overtime exemptions, and the FAR Council’s final rule implementing the Fair Pay and Safe Workplaces Executive Order for federal contractors.

We will continue to monitor the persuader and other rules as they move through the regulatory process. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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