Client Alerts News / 04.06.2016

Department of Labor Issues Final Rule Requiring Greater Disclosure from Employers, Labor Consultants, and their Attorneys

Authored By: Melissa Yasinow

On March 24, 2016, the Department of Labor (“DOL”) published a final rule—known as the “Persuader Rule”—requiring employers, labor consultants, and their attorneys to report financial information related to both direct and indirect “persuader activities.” The Persuader Rule, which was first proposed in 2011, will take effect on April 25, 2016 and will apply to all “arrangements and agreements as well as payments (including reimbursed expenses)” made on or after July 1, 2016.

Under the previous rule, employers and their consultants were required to file reports with the DOL only when they engaged in “direct persuasion”—such as face-to-face communications, telephone calls, email, or mail—with workers concerning their rights to organize and bargain collectively.

Under the Persuader Rule, however, employers, consultants, and their attorneys are now required to file financial disclosures with the DOL even when they don’t have direct contact with workers, but merely engage in “indirect persuasion.” Examples of such “indirect persuasion” include:

  • A consultant—with an object to persuade—planning or coordinating activities undertaken by an employer representative;
  • A consultant drafting, revising or selecting persuader material for the employer to distribute to employees;
  • A consultant conducting a seminar on a range of labor-management relations matters, including how to persuade employees about their unionization and bargaining rights; or
  • A consultant developing or implementing personnel policies or actions for the employer with an object to persuade employees.

The DOL believes that the Persuader Rule will not have a chilling effect on free speech or impinge upon the attorney-client relationship. However, attorneys may be required to disclose as a public record the fact of a client consultation, the scope and nature of the consulting relationship, their clients’ identities, and their attorney fees. One of the fiercest critics of the Persuader Rule is the American Bar Association, which opined that it would “seriously undermine the confidential client-lawyer relationship.”

Two lawsuits have already been filed against the DOL challenging the constitutionality the Persuader Rule. The first case, which was filed in the Eastern District of Arkansas on March 30, and the second case, which was filed in the District of Minnesota on March 31, assert that the Persuader Rule violates, among other protections, the plaintiffs’ First Amendment rights to free speech and association. Both of these cases were filed within the jurisdiction of the Eighth Circuit Court of Appeals. It is likely that sister cases will be filed within other courts soon.

In light of this new Persuader Rule, employers, consultants, and their attorneys should review their current practices to ensure compliance with this soon-to-be-in-effect federal regulation.