On March 24, 2016, the Department of Labor (“DOL”) issued the new Persuader Final Rule, which requires increased reporting of an employer’s expenses connected to labor relations consultant services. The Persuader Final Rule is an attempt to increase the reporting required under the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA”), which requires employers and consultants to report expenditures on labor relations consultant services. The reporting is intended to give employees information regarding a labor consultant’s role in providing information to employees regarding union representation.
The LMRDA specifically requires reporting information on compensation to labor relations consultants for “direct” and “indirect” consultant services. Under the LMRDA, “direct” persuader activities involve labor consultants speaking directly to employees, and “indirect” persuader activities involve consultants scripting what employers and managers say to workers. “Indirect” activities include planning, directing or coordinating supervisors’ communication, providing persuader materials, conducting seminars for supervisors or other employer representatives, and developing or implementing personnel policies or actions.
The LMRDA also provides an exemption to the reporting requirement whereby reporting is not required if the labor consultant merely provides “advice,” defined as “recommendations regarding a decision or course of conduct.” Until now, the DOL’s guidance on the exemption has defined “advice” to include “indirect persuasion,” thereby exempting all consultant activity unless they had direct contact with employees.
Under the DOL’s new guidelines set forth in the Persuader Final Rule, the “advice” exemption is more narrowly defined. Reporting is now required when consultants directly persuade employees AND when consultants plan or coordinate manager persuasion, provide materials and coordinate seminars, and develop or implement personnel policies. According to the Department of Labor, the purpose of the Persuader Final Rule more accurately reflects the LMRDA’s purposes of requiring disclosure, eliminates a “reporting gap,” and requires reporting of direct and indirect persuasion activity.
The Persuader Final Rule is effective on April 25, 2016 and will be applicable to arrangements, agreements, and payments (including reimbursed expenses) made on or after July 1, 2016. The DOL Office of Labor-Management Standards also revised the reporting Form LM-10 (Employer Report) and Form LM-20 (Agreement and Activities Report) and their respective instructions to reflect the changes. Form LM-10 must be filed within 90 days after the end of the employer’s fiscal year, and Form LM-20 must be filed within 30 days after entering into a reportable agreement, except for reports covering union avoidance seminars, which are due 30 days after the conclusion of the seminar. Forms will be available online and are to be filed electronically at www.olms.dol.gov.
It should be noted that certain business groups have filed suit in an Arkansas federal court challenging this new rule as infringing on the attorney-client privilege and seeking to temporarily block the rule during the pendency of the case. However, until a contrary decision is made, dealers who hire a labor relations consultant should determine annually whether the consultant is or will be engaging in persuader activities on their behalf. If so, starting with the first fiscal year after July 1, 2016, the dealership will be obligated to file the LM-10 and LM-20 reports electronically with the DOL.
If you have any questions about the DOL’s Final Persuader Rule or would like additional information, please do not hesitate to contact a member of the Dealer Practice Group at 248-645-9300 or by email.
Charles A. LeFevre, Chair – [email protected]
Lawrence F. Raniszeski – [email protected]
Michael J. O’Shaughnessy – [email protected]
Eric R. Bowden – [email protected]
Alycia Pallach Wesley – [email protected]
Coriann Gastol – [email protected]
