Department of Labor Proposes Major Changes to the "Persuader" Rule

The U.S. Department of Labor is re-proposing a rule it had second thoughts about in 2011. At that time, the DOL proposed—but then withdrew—a rule that would severely alter something known as the "Persuader Rule." DOL's new rule is due sometime this month—March of 2016. And after a brief comment period, the rule could become effective this summer.
 

Under the proposed DOL rule, companies are required to report the names of private law firms and consultants who advise them regarding union matters. Conversely, those attorneys and consultants are required to name all other clients they advise regarding union issues and the fees those clients paid for the advice.
 
The proposed rule dramatically alters a labor law known as the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). The original intent of the LMRDA is transparency. It requires employers to identify the names of attorneys or consultants who directly address employees about union-organizing efforts. The objective is to ensure that employees know who the people addressing them actually represent-management or labor.
 
But an exemption known as the "Persuader Rule" provides that employers are not required to report the names of attorneys or consultants who do not directly interact with employees. The specific language of the "Persuader Rule" is found in section 203(c) of the LMRDA:
 
Nothing in this section shall be construed to require any employer or other person to file a report covering the services of such person by reason of his giving or agreeing to give advice to such employer.
 
DOL justifies the proposed change in the rule to clarify the difference between "advice" and "persuasion." But it seems clear that an attorney or consultant who directly addresses "rank and file" employees regarding the merits of a union vs. no union is engaged in persuasion, while an attorney who advises management about what should be said to employees-without directly addressing those employees-is giving confidential advice. And the latter has always enjoyed protection from disclosure under the attorney-client privilege.
 
Three DOL forms are currently required and the proposed rule alters one dramatically. Significantly, the information provided becomes public information. DOL Form LM-10 is completed by employers. Forms LM-20 and 21 are completed by attorneys and consultants. LM-20 discloses the agreement between the employer and attorney/consultant. And the new version of LM-21 requires attorneys and consultants to list all of their labor clients and all receipts received from those clients. YIKES!
 
The probable effect of the new rule is that it will prevent most management-side attorneys from representing clients facing union-organizing efforts. The American Bar Association opposes the proposed rule on the basis that it will "seriously undermine" the confidential nature of the attorney-client relationship and employers' right to counsel. Notably, unions and union-side attorneys and consultants are not required to report and disclose similar information.
 
WHAT CAN YOU DO?

The proposed rule will be published with a "comment" period, after which the proposal can become a final rule. Anyone with an interest, pro-management or pro-union, is entitled to voice his or her opinion with the DOL. Feel free to contact us for more information.
 
This article is intended as a general guide to its subject matter and does not constitute legal advice. Please seek professional advice about specific circumstances.