“Persuader Rule” Considerations

The U.S. Department of Labor (“DOL”) has revised its “persuader rule” regulations. By way of background, if an employer hires a consultant (including attorneys) to persuade employees regarding their views on union organizing, the employer and the consultant must file certain financial reports with the DOL. There is an exception to the report filing requirement where the consultant provides advice and does not have direct interaction with employees. Since the early 1960’s, the DOL found that attorney assistance with counter-organizing campaigns fell within the advice exemption so long as the attorney did not have direct contact with employees. Under the new rule, set to take effect July 1, 2016, attorney assistance with counter-organizing campaigns will no longer fall within the advice exemption if the attorney provides any counsel that is designed to persuade, as opposed to simply commenting on the legality of a proposed communication.

Several business groups have filed lawsuits seeking to overturn the newly announced rule. Those suits are ongoing and no decision has been made.

Meanwhile, the DOL has recently stated that the longstanding view of the advice exemption will apply to consultant agreements entered into before July 1, 2016, even if the consultant’s work performed pursuant to that agreement takes place later. In other words, employers who wish to use the services of counsel and retain the advice exemption may do so IF they enter an agreement with counsel before July 1, 2016.

There are pros and cons to entering such an agreement. For example, entering such an agreement would allow the employer to use the services of counsel and avoid the financial reporting requirement. On the other hand, under the rule that is set to take effect on July 1, attorneys who provide assistance designed to persuade could have direct contact with employees. In some circumstances, that may be an advantage for the employer.

Any employer who may have an interest in entering an agreement before July 1, 2016 should quickly contact labor counsel for further discussion. Obviously, there is a short window for the time to make a decision, and it will close on July 1.