New DOL “Persuader” Rule Stimulates Exaggerated Persuader Activities by Proponents and Opposition

04 April 2016 Labor & Employment Law Perspectives Blog

We will try to keep this straightforward and polemic free. We will try.

The last time there were any significant changes to the National Labor Relations Act was in 1959, when Congress passed the Landrum-Griffin bill which, among other “reforms,” imposed new reporting and disclosure obligations on unions, management, and “labor relations consultants.” One of these reporting obligations was the following: every person (e.g. “consultant”) who, on behalf of an employer agreed to conduct “persuader activities” – i.e. activities principally intended to dissuade employees from voting for a union in an election – must file a report within 30 days of the agreement. In addition, employers and consultants who enter into such agreements have to report their “transactions” annually. Apart from a brief period of time, from 1959 until now, the federal Office of Labor Management Services (OLMS) in the Department of Labor (DOL) adopted a bright line test to set standards for “persuader activities.” If the consultant had direct contact with the target employees, it was acting as a “persuader” and it had to file reports If the consultant had no direct contact with employees, it fell under the “advice” exemption and was not reportable. However, these qualifiers for “persuader activities” and “advice” have now been called into question by the OLMS and the rule, long left alone, is now changing.

Setting aside for the moment the question of whether this direct contact/indirect contact interpretation was a valid interpretation of the law, it did have the virtue of clarity and, as a simple litmus test, it worked well. Employers, consultants, attorneys, and presumably the OLMS, all knew where they stood and knew what was and was not reportable.

However, in keeping with a recent pattern of rethinking long-established norms relating to the rules governing unions and employers, after years of certainty and consistency, in 2011 the OLMS took the first steps toward a realization that for all these years it had been wrong. In fact, according to the agency, the direct/indirect contact principle was not an accurate interpretation of the law. Instead, it stated it would now examine the services of the consultants to see if they fell within the definition of “advice” (not reportable) and, if not, the activities were reportable even if there was no direct contact with the target employees. Given the general atmosphere of revisionist thinking that currently prevails in the DOL and the National Labor Relations Board (NLRB), this proposed “reinterpretation” was not altogether surprising.

Predictably, the proposed “reinterpretation” has stimulated a storm of outrage and opposition on one side, while provoking equally strong support and advocacy on the other. Opponents argue that it will produce “massive confusion,” interfere with attorney/client relationships and the privileged character of those relationships, and even frighten employers away from seeking the services of attorneys and consultants. Proponents, including the OLMS, trundle out the now oft-used “transparency” refrain, arguing in ways that are less than transparent that the mere filing of these reports with the government will somehow convert confused employees into “informed” voters who will then magically be better equipped to make rational decisions about whether or not to join a union.

We can likely leave it up to common sense for a reliable indication as to whether employees will ever see these reports. But even if they do, as the current national election cycle certainly suggests, furnishing voters with more information does not appear to produce more rational voting patterns. Kate Bronfenbrenner, a professor of labor law at Cornell University has taken a more measured assessment of the impact of this new “reinterpretation.” Professor Bronfenbrenner claims that she sees the rule as a “small” change in the “overall effort of labor law reform. In this over-hyped debate, Professor Bronfenbrenner’s modest assessment is refreshingly restrained.

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