As we previously reported, the U.S. Department of Labor’s (DOL) new “Persuader Rule” is set to take effect July 1, 2016. The rule is highly controversial because it requires employers and labor relations consultants, including attorneys, to file reports with the DOL regarding any arrangements to assist the employer in “persuading” employees regarding their rights to engage in, or refrain from engaging in, union organizing activities or to collectively bargain. Under the new Persuader Rule, many legal services that labor consultants and lawyers typically provide to employers will have to be reported to the federal government effective July 1, 2016. Examples of activities that will have to be reported under the new rule include:
- Planning, directing or coordinating activities undertaken by supervisors or other employer representatives, including meetings and interactions with employees
- Providing material or communication for dissemination to employees
- Conducting a union avoidance seminar for supervisors and other employer representations
- Develop or implement personnel policies, practices, or actions for the employer that are intended to influence or persuade employees regarding their rights to engage or abstain from engaging in union organizing activities
In addition, the Persuader Rule requires employers to tell employees when any speeches made or materials provided to them about union organizing were prepared by consultants or attorneys.
The new Persuader Rule has met with staunch opposition by a variety of employer groups and by the American Bar Association. Currently, there are at least four lawsuits pending in federal courts in Arkansas, Michigan, Texas and Wisconsin. The hope is that one or more of these courts will enjoin the implementation of the new Persuader Rule prior to July 1. However, whether a court will do so is difficult to predict.
However, another option may be available for employers. In the case pending in Arkansas, the DOL filed a status report on the Persuader Rule which included the following statement:
While the effective date of the Rule is April 25, 2016, the rule is only applicable to arrangements and agreements made on or after July 1, 2016, and to payments made pursuant to arrangements or agreements entered into on or after July 1, 2016…. The Department will not apply the Rule to arrangements or agreements entered into prior to July 1, 2016, or payments made pursuant to such arrangements or agreements.
Also, at a presentation representatives of the DOL recently gave regarding the new Persuader Rule, a presenter stated that arrangements and agreements entered into by an employer and a consultant prior to July 1, 2016 are subject to the interpretation of the DOL’s prior Persuader Rule, which generally exempted indirect “persuader” activities such as the four listed above from the reporting requirements. Further, in a communication to the U.S. Chamber of Commerce, a DOL representative stated that the new reporting form will not apply to services and payments made pursuant to a multi-year agreement even if they occur after July 1, so long as the agreement was signed prior to July 1.
In light of these statements by the DOL, employers that want to continue their relationship with their employment lawyers under the DOL’s old interpretation of the Persuader Rule may want to seriously consider entering into a written engagement letter with that lawyer or law firm prior to July 1, 2016. The engagement letter should specifically include reference to the indirect “persuader” activities to be performed or that could be performed in the future on the employer’s behalf.
If you have any questions or would like more information on this topic, please feel free to contact Fred Pressley, Mike Underwood, Franck Wobst or any other Porter, Wright attorney with whom you work.