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What do DOL’s final ‘persuader’ rules mean for employers?

by Kevin C. McCormick

On March 23, 2016, the U.S. Department of Labor (DOL) issued its long-awaited persuader rules, which significantly expand certain reporting requirements for employers and their attorneys. Under the Labor Management Reporting and Disclosure Act of 1959 (LMRDA), labor relations consultants hired to influence or persuade employees not to unionize are required to disclose, on forms filed with the DOL, all fees they are paid and services they provide. 

Since the enactment of the LMRDA more than 50 years ago, the DOL has generally interpreted the statute as excluding attorneys’ fees from the disclosure requirement as long as the lawyer’s role was limited to giving “advice” to the employer and not dealing directly with the employees considering unionization. Under the new persuader rules, however, the “advice” exempted from disclosure under Section 203 of the LMRDA would be significantly limited to “an oral or written recommendation requiring decision or course of action.” Let’s take a closer look at what this means for employers.

Expanded definition of ‘advice’
According to the DOL, reportable persuader activities would include any action, conduct, or communication by a consultant on behalf of an employer that would directly or indirectly persuade workers with regard to their rights to organize and bargain collectively, regardless of whether the consultant has direct contact with the workers. Any lawyer who works on written materials to be distributed to employees would be considered a persuader even if there is no direct contact between the lawyer and the employees. As a result, the lawyer’s fees generated for those activities must be disclosed.

The revised DOL rules should be of great concern for most employers. The scope of the services that would fall within the expanded definition of “advice” is very broad. The DOL has identified the following actions by a lawyer or a labor consultant that it considers to be reportable:

  • Drafting, revising, or providing materials or communication of any sort to an employer for presentation, dissemination, or distribution to employees directly or indirectly;
  • Developing or administering employee attitude surveys to gauge union awareness, sympathy, or “proneness”;
  • Training supervisors or employer representatives to conduct individual group meetings designed to persuade employees;
  • Coordinating or directing the activities of supervisors where employer representatives engage in the persuasion of employees;
  • Establishing or facilitating employee committees;
  • Developing personnel policies and practices designed to persuade employees;
  • Deciding which employees to target for persuader activity or disciplinary action; and
  • Coordinating the timing and sequencing of persuader tactics and strategies.

As you can see, that laundry list of suspect actions covers virtually most of the services that experienced labor relations attorneys provide for clients who are concerned about union organizing or want to remain union-free.

In addition to the report on fees generated for “persuader” services, the new rules require that the details of the agreement or arrangement between the labor attorney and the employer be reported. Lawyers must disclose as a matter of public record all fees received from clients for all labor relations advice as well as the clients’ identity. Most troublesome, the failure to abide by the LMRDA’s disclosure requirements can potentially lead to criminal penalties.

Reports that will be required
According to the DOL, an employer and its labor relations consultants, including lawyers, must file various reports with the DOL’s Office of Labor Management Standards (OLMS) whenever they enter into an agreement or arrangement under which the consultants undertake activities with either of the following objectives:

  1. To persuade employees about exercising their rights to organize and bargain collectively; or
  2. To supply the employer with certain information about the activities of employees or a labor organization in connection with a labor dispute involving the employer.

It is anticipated that the new rules, which are scheduled to take effect on July 1, 2016, will be challenged in court. However, a legal challenge may be unsuccessful. As a result, we’ve provided an overview of the various forms employers and their legal counsel will be required to file with the OLMS.

Employer report form LM-10. The LMRDA requires an employer to file an LM-10 with the OLMS if it makes certain expenditures or engages in certain activities, including entering into agreements or arrangements with any third-party consultant (or attorney) to persuade employees about their collective bargaining or organizing rights or to obtain certain information. The report must be signed by the president and treasurer or the corresponding principal officers of the reporting employer or by the sole proprietor, as appropriate.

When must an LM-10 be filed? The LM-10 report must be filed electronically within 90 days after the end of the employer’s fiscal year. An employer is required to file only one LM-10 report each fiscal year covering all reportable activity even if the activity occurs at multiple locations or the employer enters into more than one consultant agreement. Employers are not required to file LM-10 reports covering their attendance at union avoidance seminars, although consultants who present the seminars may be required to file an LM-20 report.

LM-20 agreement and activity report. An LM-20 report requires any person, including a labor relations consultant or attorney, to file a report to disclose agreements or arrangements with an employer to undertake activities with the intent to persuade employees about their collective bargaining or organizing rights or to obtain certain information. The consultant or attorney must file a separate LM-20 for each agreement or arrangement with an employer and attach a copy of any written agreement. The report must be signed by the president and treasurer or the corresponding principal officers of the consulting firm or, if the filer is self-employed, by the individual consultant.

When must an LM-20 be filed? Anyone required to file an LM-20 must do so within 30 days after entering into a reportable agreement. Reports covering union avoidance seminars are due 30 days after the conclusion of the seminar.

LM-21 receipts and disbursements report. Any person required to file an LM-20 must also file a Form LM-21 receipts and disbursements report for any year in which payments were made or received as the result of an arrangement that requires an LM-20 report.

When must an LM-21 be filed? Consultants must file the LM-21 within 90 days after the end of their fiscal year. The report must be signed by the president and treasurer or the corresponding principal officers of the consulting firm or, if the filer is self-employed, by the individual consultant.

In addition to information about payments and arrangements related to activities reportable on the LM-20, the LM-21 must include financial information about other receipts and disbursements related to labor relations advice or services for employers.

What constitutes a reportable persuader agreement?
An agreement or arrangement is reportable if a consultant engages in “persuader” activities, which include any actions, conduct, or communications undertaken, explicitly or implicitly and directly or indirectly, with an intent to affect an employee’s decision about union representation or collective bargaining rights. Under the typical reportable agreement or arrangement, a consultant agrees to manage a campaign or program to avoid or counter a union organizing or collective bargaining effort, either separately or jointly with the employer, or conducts a union avoidance seminar.

The requirement to report an agreement or an arrangement is triggered when:

  1. A consultant engages in direct communication or contact with any employees with the objective of persuading them; or
  2. A consultant who has no direct contact with employees undertakes the following activities with the objective of persuasion:
    1. Providing material or communications for dissemination or distribution to employees in oral, written, or electronic form;
    2. Conducting a union avoidance seminar for supervisors or other employer representatives; or
    3. Developing or implementing personnel policies, practices, or actions for the employer.

To be reportable, such activities must be undertaken with an objective of persuading employees as evidenced by the agreement, any accompanying communications, the timing, or other circumstances relevant to the undertaking.

Examples of exempt agreements
A report is required if a labor relations consultant gives or agrees to give advice to an employer. An oral or written recommendation about a decision or course of conduct constitutes “advice.” For example, a consultant who exclusively counsels employer representatives on what they may lawfully say to employees, ensures a client’s compliance with the law, offers guidance on personnel policies and best practices, or provides guidance on National Labor Relations Board (NLRB) practices or precedent is providing reportable “advice.”

As a general principle, no reporting is required if the agreement or arrangement exclusively covers legal services. For example, if a lawyer or another consultant revises persuasive materials, communications, or policies created by the employer to ensure their legality rather than enhance their persuasive effect, no report is required. In that case, the consultant has no objective of persuading employees.

Additionally, reports are not required for agreements that exclusively involve a consultant representing the employer before a court, administrative agency, or tribunal of arbitration. Engaging in collective bargaining on the employer’s behalf with respect to wages, hours, and other terms and conditions of employment or negotiating a labor agreement also doesn’t require a report.

Bottom line
Ensuring compliance with the new persuader rules will take considerable training and time. Once the information is reported, it will be available for review by the general public, including unions. A union will most likely use the information to argue that the company is spending too much money on outside labor relations consultants in an attempt to defeat the union organizing drive rather than providing better pay, benefits, and working conditions for employees.

A company or its lawyer who fails to comply with the persuader reporting requirements will undoubtedly face a challenge by the OLMS and possible criminal sanctions. At a minimum, any employer that plans to consult an experienced labor and employment attorney or labor relations consultant must be mindful of the various reporting requirements and the timing for filing the required reports in order to stay out of jail.

Kevin McCormick is an attorney with Whiteford, Taylor & Preston, L.L.P., practicing in the firm’s Baltimore, Maryland, office. He may be contacted at

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