United States: Department of Labor's Changes to "Persuader Activity" Rules Are Imminent

Last Updated: October 27 2010
Article by Jay Sumner and Jeffrey Kauffman

The U.S. Department of Labor (DOL) has announced its intent to publish in November 2010 proposed new standards for interpretation and enforcement of the Labor-Management Reporting and Disclosure Act (LMRDA) as applied to employers regarding persuader activity. The new standards are expected, at the very least, to narrow significantly the scope of the "advice exemption" in LMRDA Section 203(c), thereby broadening the scope of what is treated as direct persuader activity that must be reported to the DOL. Other changes are possible as well, including new standards regulating conduct and speech by an employer's own managers and supervisors. The exact details will not be known until DOL publishes its notice of proposed regulations in the Federal Register, but the DOL has signaled its intent to radically change rules that will affect employers' rights in dealing with union organizing activity.

Background: LMRDA, Current Persuader Rules, and the "Advice" Exemption

The LMRDA was passed in 1959. Mostly focused on reporting and disclosure by labor organizations, it also contains sections requiring employers and outside labor relations consultants to file disclosure reports as to any arrangement where the consultant was retained to: (1) persuade employees regarding union organizing or collective bargaining, and/or (2) obtain information about employee or union activities related to a "labor dispute." These reportable activities are often called "persuader activities," and the reporting consultants are often called "third party persuaders." When there is reportable persuader activity, both the employer and the third party consultant must file respective reports with the DOL that disclose detailed financial and other information as prescribed on the report forms.1 The persuader activity that triggers the duty to report is not unlawful in itself. Rather, it is the failure to file properly that is a violation of the LMRDA.

LMRDA Section 203(c) provides an exemption for "advice" an employer receives. Since exempt advice is not considered reportable persuader activity, the advice exemption permits employers to consult with labor counsel about what is lawful for the employer to do during a union campaign. In short, the exemption preserves the right to counsel, often critical for employers who want to speak directly and lawfully with their own employees regarding union representation matters.

What is reportable persuader activity, and what is not because it falls within the "advice exemption," is covered by regulations historically developed by the DOL's Office of Labor-Management Services (OLMS). The current standard has been in place for decades. The historical view, traceable to 1962, is that speech and materials delivered directly to employees by an outside consultant or attorney is reportable persuader activity. But if an outside attorney has no employee contact or communication, the advice exemption includes preparation of draft communications for an employer to consider using with its employees, as long as the employer has the ability to decide whether to use those materials or not, and whether to modify them.

What Will the New Standards Be?

No one can know for sure what OLMS will do now, but there are two sources for clues. First, at a public meeting on May 24, 2010, OLMS sought comments on persuader reporting. The OLMS stated "this so-called 'advice exception' has been broadly interpreted to exclude from the reporting any agreement under which a consultant engages in activities on behalf of the employer to persuade employees concerning their bargaining rights but has no direct contact with employees, even where the consultant is orchestrating a campaign to defeat a union organizing effort." The OLMS said a narrower construction will result in reporting that more closely reflects the intent of the LMRDA.

The second source for clues is the unsuccessful attempt to change the standard in the final "lame duck" weeks of the Clinton Administration. In January 2001, DOL issued a notice of revised interpretation, to be effective 30 days later (after President Bush was sworn in), to narrowly limit the advice exemption. This lame duck attempt was nullified by the new Bush Administration before it became effective, and the historical standards continued. But the attempt is a clue as to what the DOL may have in mind now.

The revision proposed in January 2001 provided that "the duty to report can be triggered ... without direct contact between a consultant or lawyer and employees, if persuading employees is an object (direct or indirect) of the person's activity ...." Thus, "when such person prepares or provides a persuasive script, letter, videotape, or other material for use by an employer in communicating with employees, no exemption applies and the duty to report is triggered." That proposed "test" or standard – whether persuading employees is an object (direct or indirect) of the activity – is obviously vague and overbroad. Such a standard could encompass many important services, including legal advice, that have never been treated as reportable before. It also could include something as basic as training programs for supervisors and managers about how to stay within the law when talking to employees about unionization.

Likely Effects of New Standards

The DOL Regulations, if enacted in the manner suggested by the DOL, would have serious negative impacts on employers by creating new impediments on employer speech rights and the right to legal counsel during union organizing campaigns. Employer free speech will be limited due to the chilling effects on access to outside counsel. Legal advice during union organizing campaigns, historically treated as exempt from LMRDA reporting, is often critical given the complexities of labor law. If companies are without access to counsel in such circumstances, they may feel inhibited and will limit or stop open discussions with employees regarding unionization in order to avoid violating the law.

New restrictions on employer access to legal counsel are only part of the anticipated changes that could have a "gag rule" effect for employers. Based on what the OLMS said at its public meeting in May 2010, the new persuader activity standards may also include changes making activity by an employer's own managers and other in-house personnel reportable persuader activity.

Changed DOL standards would give organized labor additional opportunities for making allegations of unlawful employer action, and for seeking government agency investigations and enforcement actions. A common corporate campaign tactic is to initiate "investigations" of a targeted employer where the validity of the allegations are secondary to the primary objectives of forcing the company to defend against the charge and allowing the union to cast the company in a negative light. Also, because failure to report persuader activity can carry both civil and criminal penalties, any overly vague standards would have increased chilling effect because the corporate officers required to sign the disclosure reports will likely try to avoid the risk of criminal sanctions by not engaging in activity that might remotely be construed as triggering reporting obligations.

We will continue to monitor the DOL's progress in issuing proposed regulations and will provide a detailed analysis of the proposed regulations when they are issued.

Footnote

1. Employer reporting is on the Form LM-10 ("Employer Report"). LM-10s must be filed for each fiscal year in which the employer entered into an agreement or arrangement for persuader activity, and for each fiscal year in which it made any persuader payments (LMRDA Section 203). Consultant reporting is on Form LM-20 ("Agreement and Activities Report"), and Form LM-21("Receipts and Disbursements Report"), with the latter detailing all labor relations advice provided by the persuader to other employers, even if that other advice is not persuader activity itself and otherwise not reportable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Jay Sumner
 
In association with
Related Video
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.