Labor Relations Insight

by Phil Wilson

Persuader: The Good, The Bad, and the Ugly

The persuader rule went final today. I’ve read the rule. All 446 pages (I don’t have a life so you can have one). Okay, I may have skimmed a few pages. Here is what you need to know about the new rule. The Good Here’s the good news: This rule is much improved over the proposed rule from 2011. The Department of Labor deserves some credit for listening to its regulated community. They rolled back a number of proposals from the original rule. People who provide employee surveys or draft handbooks are (mostly) off the hook. You’re not going to have to report your association dues or conference fees. I’m just cynical enough to believe that many of these items were originally proposed just so they could be removed. But they didn’t make it into the final rule. That’s good. Nevertheless, the final rule still creates a giant administrative burden, interferes with a lot of attorney-client relationships, and leaves open a huge number of questions. I believe the Department did a thorough job of dealing with the comments they received (a number of ours were quoted directly – most were promptly ignored). Unfortunately, they left in a lot of very troubling new rules. The Bad: Indirect Persuasion – The One Thing You Need To Know The main change relates to indirect persuasion. Indirect persuasion now triggers the reporting obligation and includes the following categories:

• Planning, directing or coordinating supervisors or managers (interviewing managers, coaching communicators, drafting campaign calendar, planning meetings, etc.);
• Providing persuader materials (anything other than off-the-shelf communications drafted or developed for communication to employees including written, online, video, etc.);
• Providing a seminar for supervisors or other employer representatives (most supervisory training related to how to communicate to employees during a campaign);
• Developing or implementing personnel policies or actions (policies intended to change how someone feels about a union, or targeting individual employees to change how they feel about a union);

These activities are performed by most law firms or consulting firms during union campaigns today. Any of them trigger a reporting obligation from the attorney or consultant and the client. The first report is due within 30 days of entering the agreement to provide the indirect persuasion service. The second report, outlining the disbursements from the client and the receipts to the attorney or consultant are due within 90 days of the close of each entity’s fiscal year. The new rule applies to any consulting agreement entered into on or after July 1, 2016. Other highlights:

• As mentioned above, the vast majority of employee surveys, vulnerability assessment, handbook and policy changes will not trigger a reporting requirement;
• Most open enrollment union avoidance seminars and employee relations conferences are safe from reporting;
• Associations that do not provide persuasion services to members will not trigger the rule (they can provide off-the-shelf products to members);
• The rule does not target “protected concerted activity” and applies only to union organizing activity or collective bargaining –the lines between these areas are blurry, but protected concerted activity is virtually limitless under current NLRB interpretation and the DOL really appears focused on situations where a labor union is engaged in visible organizing activity;
• Off-the-shelf product purchases (written, video, websites, etc.) do not trigger a reporting requirement, but customizing those materials does;
• The Department is requiring all reports to be filed electronically;
• In some cases attorneys or consultants may have to report on seminars where they teach persuasion tactics and strategies for use by the employers’ supervisors, even though those employers will not have to report (this is a confusing new addition)
• Legal advice is not reportable – the DOL distinguishes between the drafting of a communication and a review (even if that includes editing or redrafting sections) where the purpose of the changes is to keep them legal.

The entire rule is over 440 pages, so there are a lot of details I’m not covering. But these are the main changes you’ll be hearing about over the next few months. The Ugly: There are still a LOT of open questions. The most important relates to exactly what law firms will have to report if they trigger the reporting requirement. The DOL punted on the most important reporting issue: do firms only have to report on actual indirect persuasion work, or do they also have to report on other labor relations advice for clients who they have done no persuasion work for during the year? Historically the DOL has taken the position that attorneys must report all persuasion and advice activities for all clients (even clients who received no persuader services during the year). The 8^th Circuit stated in the 1985 Rose Law Firm decision (ironically this was Hillary Clinton’s old firm) that this interpretation could not have been what Congress intended. Unfortunately this is the only Circuit to rule this way. DOL for its part decided not to decide the issue. Instead they stated that this question relates to the LM-21 form (a form they say they will propose changes to in September of 2016). This was a really disappointing section of the rule (see pages 324-325). Law firms and the ABA strongly objected that this interpretation requires attorneys to violate attorney-client confidentiality. This is no small issue. In many states following the DOL interpretation forces attorneys to violate their state bar’s ethics rules. This will certainly be the subject of new litigation. What’s Next? There will be a number of lawsuits attempting to stop the rule. My guess is that DOL rolled back enough to avoid getting the rule blocked. I think they would have really helped themselves by following the Rose Law Firm case on reporting advice work for other clients but they obviously aren’t listening to me. We will see. In the meantime you need to plan on a future where you have to report indirect persuasion. Most companies have been sitting on the sideline waiting to see what the playing field was going to look like. Now we know. It’s time to get in the game. We will host a webinar to go over the new rule and your next actions on next Thursday, March 31, 2016. You can sign up here. Talk to you then.