By Nelson Cary and Allen Kinzer
The DOL has recently interpreted its new Persuader Rule to exclude an agreement or arrangement signed before July 1, 2016, even if the services and payments occur after July 1. In an email exchange between the U.S. Chamber of Commerce and the DOL, the DOL said: “Services and payments made pursuant to a multi-year agreement, even if they occur after July 1, are not required to be reported on the new Form LM-20, so long as the agreement was signed prior to July 1. The prior form applies.”
The DOL published the final rule in March 2016, imposing substantial reporting obligations on employers. The old rule required reporting if the consultant engaged in direct persuader activity (e.g., the consultant directly communicates with employees about union representation). The new rule adds reporting for indirect persuader activities (e.g., providing communication materials to employer to handout to employees). These activities typically, but not exclusively, arise in the context of a union organizing drive.
The final rule announced that it would become “applicable” on July 1, 2016. Specifically, the DOL’s rule provided that the rule applies to “arrangements and agreements as well as payments (including reimbursed expenses) made on or after” that date. The latest development arises out of one of the three lawsuits that have been filed challenging the rule. In a series of communications, starting with a status report filed in that case and culminating in the email exchange referenced above, the DOL has further explained its position on the “applicable” date language. We reported a few days ago on the then-current status of those suits.
As a result, the DOL’s position now is that if the employer and consultant/attorney sign the agreement by July 1, then all payments made pursuant to that agreement are not reportable on the new forms and pursuant to the new instructions, regardless of when the indirect persuader services are performed. It is important to note that direct persuader activity (e.g., directly communicating with employees about union representation) has always been reportable, and remains reportable notwithstanding this development.
This revelation has substantial implications for all employers. Regardless of whether any segment of an employer’s workforce is unionized, and whether the employer has ever been through a union organizing effort, an employer should immediately explore entering into an agreement for indirect persuader services and advice. Indeed, even if an employer never thinks it will be subject to union organizing activity, having an agreement of the type contemplated in the DOL’s most recent communications is vitally important to ensure the privacy of the employer’s communications in the event of such activity.