Given to the IFA on April 19, Presented by: Michael J. Lotito, Esq. Littler Mendelson, PC
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1 THE NEW PERSUADER RULE: WHAT IT MEANS FOR EMPLOYERS, ASSOCIATIONS, AND THEIR ADVISORS Given to the IFA on April 19, 2016 Presented by: Michael J. Lotito, Esq. Littler Mendelson, PC
2 THE PRESENTERS Michael Lotito, Esq. Co-Chair, Workplace Policy Institute Littler, San Francisco Michael Layman VP, Regulatory Affairs International Franchise Assn
3 AGENDA Summary of the new Persuader rule Why the rule is bad for employers and lawyers Can the new rule be stopped? (Status of the lawsuits) Compliance issues Questions
4 WHAT THE NEW RULE DOES The new rule drastically narrows the advice exemption from public reporting of persuader activity What was required under the LMRDA before the new Rule How the new rule sweeps aside 50+ years of precedent Indirect persuasion of employees by consultants, including outside lawyers, may now require public reporting by the consultants and their employer clients, even if couched solely as advice to management
5 BEFORE- PREDICTABLE TEST Only direct persuader communication about unions from consultant/lawyer to employees, needs to be publicly reported on LM forms, by both the employer and the consultant. No reporting required for advice given only to management Recommended campaign plans OK Union avoidance seminars OK Training of supervisors OK Talking points for management to deliver to employees OK Written materials/videos OK Association seminars and other guidance OK The LM-21 problem AFTER-AMBIGUOUS TEST Mere advice to employer will be reportable if an object of the advice is to indirectly persuade employees, even if the advisor never contacts employees (In addition to direct communications by the persuader, as before) Reports are supposed to be filed if an employer hires an outside lawyer/consultant, to: Plan, direct, or coordinate a campaign Provide material to the employer for dissemination to employees Conduct training programs for supervisors Develop personnel policies If any of the above are done with an object to persuade employees about unions Many confusing and illogical exceptions under the new Rule 5
6 WHY THE NEW RULE IS BAD Interferes with employers ability to get help in dealing with union organizing and collective bargaining Interferes with lawyers and consultants ability to give confidential advice Chills freedom of speech and association Invades the protected confidentiality of attorney-client communications Violates the plain language of the reporting law in which Congress declared that advice was NOT to be reported
7 EFFECTIVE DATE April 25, 2016 the Rule will take effect But USDOL says the new Rule only applies to persuader agreements and arrangements and fees paid after July 1
8 CAN IT BE STOPPED? Three federal court challenges are pending; ABC was first to file Associated Builders and Contractors of Ark. v. Perez, No. 4:16-CV169 (E.D. Ark. Mar. 30, 2016); National Fed n of Indep. Bus. v. Perez, No. 5:16-CV C (N.D. Tex. Mar. 31, 2016); Worklaw Network v. U.S. Dep t of Labor, No. 0:16-cv (D. Minn. Mar. 31, 2016) Preliminary injunction sought The latest litigation update (Why Arkansas?) Ongoing activity in Congress
9 IF THE NEW RULE CAN T BE STOPPED, WHAT WILL CHANGE? Reports are supposed to be filed if an employer arranges for an outside lawyer/consultant or association to: Plan, direct, or coordinate a campaign Provide material to the employer for dissemination to employees Conduct training programs for supervisors Develop personnel policies If any of the above are done with an object to persuade employees about unions
10 EXAMPLES: REPORTING OBLIGATION? Employer asks lawyer or consultant for advice on what may lawfully be said to employees to try to convince them to resist organizing efforts. Guest speaker at a trade association dinner meeting speaks about the NLRB s recent changes to its union election rules and recommends that employers take immediate steps to prepare for union organizing. Employer asks a benefits consultant to recommend improvements to the employer s group health insurance plan, to help the employer reduce the desire of employees to organize a union. Employer engages a public relations firm during corporate campaign to counter union tactics. Lawyer acting as employer s negotiator at the bargaining table recommends talking points for the employer to use in explaining its proposals to employees
11 WHAT WILL REMAIN EXEMPT FROM REPORTING? Pure legal advice (whatever that is) is still supposed to be exempt from reporting Off the shelf materials (whatever those are) are still supposed to be exempt Association seminars OK if not conducted by association staff; no reports required by employer attendees; but reports still required from guest speakers who indirectly persuade. Vulnerability assessments and attitude surveys still exempt also (but not push surveys) Handbook advice that does not have the object of persuading employees about unions, other than subtly, still exempt Other narrow (and confusing) exceptions from reporting remain
12 HOW THE RULE TREATS FRANCHISES Franchisors and franchisees are considered one corporate entity for reporting purposes so if a franchisor provides franchisees with labor "persuader" services, no report is required between the franchisor and franchisee However, if such support was given, it could be evidence of a joint employer relationship based on "indirect control" under BFI But if a franchisor or a franchisee hires a third party consultant or lawyer for "persuader services" such retention would be reportable
13 IMPACT ON ASSOCIATIONS Could have been much worse Special exceptions will allow associations to give members off the shelf materials (the Rapid Response Toolkit) Association seminars and meetings that discuss unions with members executives still allowed (no reporting) if not conducted by association staff But guest speakers will still have to report if they assist the attending employers in developing anti-union tactics and strategies Association reports still required if staff advise members individually on how to defeat union organizing Questions about websites
14 EMPLOYER REPORTING FORMS: THE NEW LM-10 Prior Form LM-10 only required that the employer describe the circumstances of all payments, including the terms of any oral agreement or understanding. Under the new rule, the Form LM-10 requires that employers disclose each activity performed or to be performed the [p]eriod during which performed the [e]xtent performed New Form LM-10 lists thirteen different activities from which employers must select and [e]xplain fully the circumstances of the payments(s) for such activities.
15 PERSUADER REPORTING FORMS; THE NEW LM-20 Persuaders required to report the following: Each activity performed or to be performed the period during which the activity was performed or will be performed the extent to which the activity has been performed Identification of activity in specific categories: Indirect persuading Materials/communications Seminars Personnel policies/actions
16 THE BIGGEST PROBLEM OF ALL: FORM LM-21 No immediate change to the Form LM-21 DOL has indicated it will revisit in September 2016 Current form requires the persuader to report at the end of the persuader s fiscal year: the names and addresses of all of the employers for which the persuader provided labor relations advice or services during the year, regardless of the purpose of the advice or services all receipts and disbursements from those employers in connection with those services. So one persuader act could force lawyers/consultants to report all of their clients who received non-persuader advice/services (except in the 8 th circuit) And trade associations could be forced to disclose their entire membership and dues
17 PRACTICAL ADVICE FOR ASSOCIATIONS, EMPLOYERS AND ADVISORS IF THE SUIT FAILS ASSOCIATIONS Study the association exceptions (seminars, off the shelf items) and adjust accordingly if practical Otherwise prepare to file reports EMPLOYERS Reevaluate management training efforts for persuader implications Create rapid response materials NOW to reduce the need for persuader advice after July 1 When union organizing starts after July 1, review the reporting issues with outside counsel and/or consultants LAWYERS/CONSULTANTS Learn every part of the new persuader rule Decide whether and how to limit advice to clients to avoid reporting Or decide whether to give persuader advice to clients willing to report
18 PLANNING AHEAD There are strong grounds for overturning the new Rule, and we hope to get a ruling blocking the Rule before July 1 If the new Rule is not blocked by the court prior to July 1, appeals are likely, but some form of additional reporting may be required during the interim Nothing changes until July 1, according to DOL Monitor IFA and Littler alerts about the litigation Join IFA s Franchise Action Network
19 HOW CAN YOU FIGHT BACK? Join at Write letters to your elected leaders, participate in franchise roundtables with lawmakers, or testify before Congress Support IFA s advocacy through financial contributions
20
21 Questions? Contact us anytime: Michael Layman, IFA Michael Lotito, Littler
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