Interpretation of the “Advice” Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act, 15923-16051 [2016-06296]

Agencies

• DEPARTMENT OF LABOR
• Office of Labor-Management Standards

[Federal Register Volume 81, Number 57 (Thursday, March 24, 2016)]
[Rules and Regulations]
[Pages 15923-16051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06296]



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Vol. 81

Thursday,

No. 57

March 24, 2016

Part IV





 Department of Labor





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 Office of Labor-Management Standards





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29 CFR Parts 405 and 406





 Interpretation of the ``Advice'' Exemption in Section 203(c) of the 
Labor-Management Reporting and Disclosure Act; Final Rule

Federal Register / Vol. 81 , No. 57 / Thursday, March 24, 2016 / 
Rules and Regulations

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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Parts 405 and 406

RIN 1215-AB79; 1245-AA03


Interpretation of the ``Advice'' Exemption in Section 203(c) of 
the Labor-Management Reporting and Disclosure Act

AGENCY: Office of Labor-Management Standards, Department of Labor.

ACTION: Final rule.

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SUMMARY: The Office of Labor-Management Standards of the Department of 
Labor (``Department'') is revising the Form LM-20 Agreement and 
Activities Report and the Form LM-10 Employer Report upon review of the 
comments received in response to its June 21, 2011 Notice of Proposed 
Rulemaking (NPRM). In the NPRM, the Department proposed to revise its 
interpretation of the advice exemption in section 203(c) of the Labor-
Management Reporting and Disclosure Act (LMRDA) to better effectuate 
section 203's requirement that employers and their labor relations 
consultants report activities undertaken with an object, directly or 
indirectly, to persuade employees about how to exercise their rights to 
union representation and collective bargaining. Under the prior 
interpretation, reporting was effectively triggered only when a 
consultant communicated directly with employees. This interpretation 
left a broad category of persuader activities unreported, thereby 
denying employees important information that would enable them to 
consider the source of the information about union representation 
directed at them when assessing the merits of the arguments and 
deciding how to exercise their rights. The Department proposed to 
eliminate this reporting gap. The final rule adopts the proposed rule, 
with modifications, and provides increased transparency to workers 
without imposing any restraints on the content, timing, or method by 
which an employer chooses to make known to its employees its position 
on matters relating to union representation or collective bargaining. 
The final rule also maintains the LMRDA's section 203(c) advice 
exemption and the traditional privileges and disclosure requirements 
associated with the attorney-client relationship. The Department has 
also revised the forms and instructions to make them more user-friendly 
and to require more detailed reporting on employer and consultant 
agreements. Sections of the Department's regulations have also been 
amended consistent with the instructions. Additionally, with this rule, 
the Department requires that Forms LM-10 and LM-20 be filed 
electronically. This rule largely implements the Department's proposal 
in the NPRM, with modifications of several aspects of the revised 
instructions as proposed.

DATES: This final rule is effective on April 25, 2016. The rule will be 
applicable to arrangements and agreements as well as payments 
(including reimbursed expenses) made on or after July 1, 2016.

FOR FURTHER INFORMATION CONTACT: Andrew R. Davis, Chief of the Division 
of Interpretations and Standards, Office of Labor-Management Standards, 
U.S. Department of Labor, 200 Constitution Avenue NW., Room N-5609, 
Washington, DC 20210; olms-public@dol.gov; (202) 693-0123 (this is not 
a toll-free number), (800) 877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Executive Summary
    A. Purpose, Justification, and Summary of the Rule
    B. Benefits of the Rule and Estimated Compliance Costs
II. Authority
III. Statutory and Regulatory Background/Justification for the Final 
Rule
    A. Statutory and Regulatory Requirements for Employer and Labor 
Relations Consultant Reporting
    B. History of the LMRDA's Reporting Requirements and 
Justification for the Final Rule
    1. Dealing With a Growing Phenomenon--1960 and Earlier
    2. A Disclosure Vacuum--From 1962 Until Today
    3. Transparency Promotes Worker Rights by Creating a More 
Informed Electorate
    4. Underreporting of Persuader Agreements
    5. Transparency Promotes Peaceful and Stable Labor-Management 
Relations, a Central Goal of the Statute
    C. History of the Department's Interpretation of Section 203(c)
IV. Revised ``Advice'' Exemption Interpretation
    A. Summary of the Revised Interpretation
    B. Revised Advice Exemption Overview
    1. Categories of Persuasion
    2. Exempt Agreements or Arrangements
    3. Changes From the NPRM
    4. Reportable Information-Supplying Agreements
    C. The Statutory Basis for the Revised Interpretation
    D. Revised Form LM-20, LM-10, and Instructions
    1. Mandatory Electronic Filing for Form LM-20 and Form LM-10 
Filers
    2. Detailing the Activities Undertaken Pursuant to a Reportable 
Agreement or Arrangement
    3. Revised Form LM-20 and Instructions
    4. Revised Form LM-10 and Instructions
V. Review of Comments Received
    A. General Comments
    B. Comments on the Statutory Analysis of LMRDA Justifying the 
Revised ``Advice'' Exemption Interpretation
    1. Comments That the Revised Interpretation Is Contrary to 
Statute
    2. Department's Response to Comments on the Statutory Analysis
    a. General Response
    b. How To Read Section 203
    c. Legislative History
    d. ``Advice'' or ``Legal advice''
    C. Comments Concerning Department's Policy Justification for 
Revised Interpretation
    1. Benefit to Workers
    a. Comments in Support of NPRM
    b. Comments in Opposition to NPRM
    c. Comments on the Disclosure of the Source of Persuader 
Communications
    d. Comments on the Term, ''Middlemen,'' in the Legislative 
History
    e. Comments on the Comparisons of Persuader Disclosure to Other 
Disclosure Regimes
    f. Comments on Timeliness of Disclosure
    2. Underreporting of Persuader Agreements and Research Studies
    a. Review of Comments Received
    b. Comments on Research Studies
    c. Comments on the Underreporting of Persuader Agreements
    d. Comments on the Consultant Industry Growth
    e. Comments on Election Outcomes
    3. Disclosure as a Benefit to Harmonious Labor Relations
    D. Comments on Clarity of Revised Interpretation
    E. Comments on Scope of Persuader Activities and Other 
Provisions of Section 203
    1. Comments on Specific Persuader Activities and Changes Made to 
Proposed Advice Exemption Instructions
    a. Direct Interaction by Consultant With Employees
    b. Planning, Directing, or Coordinating Supervisors and Other 
Employer Representatives
    c. Providing and Revising Materials
    d. Seminars
    e. Personnel Policies
    f. Employee Attitude Surveys/Employer Vulnerability Assessments
    2. Comments on the Scope of Employee Labor Rights Included in 
Section 203
    3. Comments on the Scope of ``Agreement or Arrangement''
    4. Comments on the Scope of ``Labor Relations Consultant'' and 
the Perception by Some Commenters That the Proposed Rule Favors 
Unions
    a. Reporting by Employer's ``In-House'' Labor Relations Staff
    b. Industry-Specific Reporting Requirements
    c. Perceived Bias Between Reporting Requirements for Employers 
and Those for Unions
    d. Railway Labor Act
    e. Extraterritorial Application
    F. Comments on Revised Forms and Instructions

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    1. Proposed Form LM-20/Form LM-10, Part C
    a. Contact and Identifying Information
    b. Hardship Exemption
    c. Reporting the Terms and Conditions of the Agreement or 
Arrangement
    d. Identifying Persuader Activities
    e. Identifying Information-Supplying Activities
    f. Identifying Targeted Employees
    2. Comments Received on Other Aspects of Form LM-10
    G. Comments Asserting Constitutional Infirmities With Revised 
Interpretation, Including First Amendment Concerns, and Alleged 
Inconsistency With Employer Free Speech Rights Under NLRA
    1. Comments Involving First Amendment Concerns
    2. Comments on Revised Interpretation's Impact on NLRA Section 
8(c)
    3. Comments Alleging Vagueness of Revised Interpretation
    H. Comments Alleging Conflict Between Revised Interpretation and 
Attorney-Client Privilege and Attorney's Duty To Protect 
Confidential Information
    1. Comments Involving the Attorney-Client Privilege and LMRDA 
Section 204
    2. Confidential Information and Attorneys' Ethical Obligations
    3. ``Chilling'' the Ability To Obtain Attorneys
    4. Comments on Form LM-21 and Client Confidentiality
VI. Regulatory Procedures
    A. Executive Orders 13563 and 12866
    B. Unfunded Mandates Reform
    C. Small Business Regulatory Enforcement Fairness Act of 1996
    D. Executive Order 13132 (Federalism)
    E. Executive Order 13175 (Consultation and Coordination With 
Indian Tribal Governments)
    F. Executive Orders 12866 and 13563
    G. Paperwork Reduction Act
    1. Overview and Response to Comments Received
    2. Overview of the Revised Form LM-20, LM-10, and Instructions
    3. Methodology for the Burden Estimates
    H. Regulatory Flexibility Analysis and Executive Order 13272
Appendix A: Revised Form LM-10 and Instructions
Appendix B: Revised Form LM-20 and Instructions

I. Executive Summary

A. Purpose, Justification, and Summary of the Rule

    The purpose of this rule is to revise the Department's 
interpretation of section 203 of the Labor-Management Reporting and 
Disclosure Act (LMRDA) to require reporting of ``indirect'' persuader 
activities and agreements. The LMRDA and the National Labor Relations 
Act (NLRA) address generally the obligations of unions and employers to 
conduct labor-management relations in a manner that protects the rights 
of employees to exercise their right to choose whether to be 
represented by a union for purposes of collective bargaining. While the 
NLRA, enforced by the National Labor Relations Board (NLRB), ensures 
compliance with these rights by investigating and prosecuting unfair 
labor practice complaints, the LMRDA promotes these rights by requiring 
unions, employers, and labor relations consultants to publicly disclose 
information about certain financial transactions, agreements, and 
arrangements.
    Section 203(b) of the Labor Management Reporting and Disclosure Act 
(LMRDA), 29 U.S.C. 433(b), requires employers and labor relations 
consultants to report their agreements pursuant to which the consultant 
undertakes activities with ``an object . . . , directly or indirectly'' 
to persuade employees concerning their rights to organize and bargain 
collectively. (Emphasis added). The Department's authority to 
promulgate regulations implementing section 203 is established by 
sections 203 and 208 of the LMRDA. The Secretary of Labor has delegated 
this authority to the Office of Labor-Management Standards (OLMS).
    Section 203(c) of the LMRDA exempts ``advice'' from triggering the 
reporting requirement. Specifically, employers and consultants are not 
required to file a report covering the services of a consultant ``by 
reason of his giving or agreeing to give advice'' to the employer. 
Under the Department's original, 1960 interpretation of the ``advice'' 
exemption, labor relations consultants were required to report 
arrangements to draft speeches or other written materials to be 
delivered or disseminated to employees for the purpose of persuading 
them as to their right to organize and bargain collectively. Two years 
later, the Department revised its position to say that reporting was 
not required if the consultant limited his or her activity to providing 
the employer with materials that the employer had the right to accept 
or reject. In the early 1980s, the Department again reduced the 
reporting obligation of contractors: No reporting was required unless 
they had direct contact with employees. Under this interpretation, 
labor relations consultants to employers avoided reporting a broad 
category of activities undertaken with a clear object to persuade 
employees regarding their rights to organize or bargain collectively. 
In this rule, the Department revises its interpretation of the advice 
exemption, consistent with the Department's original interpretation of 
section 203, to better effectuate section 203's requirement that 
consultants report persuader activities. Based upon the Department's 
consideration of contemporary practices under the federal labor-
management relations system, and the comments received on its proposal, 
the final rule expands reporting of persuader agreements and provides 
employees with information about the use of labor relations consultants 
by employers, both openly and behind the scenes, to shape how employees 
exercise their union representation and collective bargaining rights. 
The final rule promotes the statute's purposes while also protecting 
employer free speech rights and the relationship between an attorney 
and his or her client. Although employees may hear a strong message 
from their employer about how they should make choices concerning the 
exercise of their rights, in the absence of indirect persuader 
reporting requirements, they generally do not know the source of the 
message. By knowing that a third party--the consultant hired by their 
employer--is the source of the information, employees will be better 
able to assess the merits of the arguments directed at them and make an 
informed choice about how to exercise their rights. This information 
promotes transparency and helps employees assess the applicability of 
those messages and the extent to which they reflect the genuine view of 
their employer and supervisors about issues in their particular 
workplace or instead, may reflect a strategy designed by the consultant 
to counter union representation whenever its services are hired.
    As noted above, this rule requires employers and their consultants 
to report not only their agreements for ``direct persuader 
activities,'' but also to report their agreements for ``indirect 
persuader activities.'' The rule takes fully into account section 
203(c), which exempts from reporting ``services of [a consultant] by 
reason of his giving or agreeing to give advice to [an] employer.'' 
Based on the traditional meaning of ``advice,'' the Department 
believes, contrary to its prior interpretation, that section 203(c) 
(known as the ``advice exemption'') does not shield employers and their 
consultants from reporting agreements in which the consultant has no 
face-to-face contact with employees but nonetheless engages in 
activities behind the scenes (known as indirect persuader activities) 
where an object is to persuade employees concerning their rights to 
organize and bargain collectively.
    This rule ensures that indirect reporter activity, as intended by 
Congress, is reported and disclosed to

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workers and the public. Indirect persuader activity occurs when an 
employer hires a consultant to help defeat a union organizing campaign. 
The consultant has no direct contact with employees, but it directs a 
campaign, often formulaic in its design and implementation, for the 
employer to persuade employees to vote against union representation. 
Under this arrangement, the consultant often scripts the campaign, 
including drafting letters, flyers, leaflets, and emails that the 
employer distributes to its employees, writing speeches that management 
gives to employees in mandatory meetings, providing statements for 
supervisors to use in meetings they are required to hold with employees 
who report to them, often in one-on-one settings, and controlling the 
timing, sequence, and frequency of each of these events. Employers hire 
consultants to engage in this type of indirect persuasion in over 70 
percent of organizing campaigns. See n. 9, 76 FR 36186.
    Although the statute explicitly requires reporting of agreements 
involving the consultant's direct or indirect persuasion of employees, 
the Department's prior interpretation had the practical effect of 
relieving employers and labor relations consultants from reporting any 
persuader agreements, except those involving direct communication with 
employees. The Department had based its position on its interpretation 
of section 203(c), known as the ``advice'' exemption. The previous 
interpretation left workers unaware of the majority of persuader 
agreements. In fact, the Department only receives a small number of 
direct persuader reports, covering only a fraction of organizing 
campaigns. This lack of awareness by workers of consultant activity is 
reflected in many of the comments submitted on the NPRM.
    It is the Department's view, based on its experience in 
administering and enforcing the LMRDA and its review of comments 
submitted in response to the proposed rule, that full disclosure of 
both direct and indirect persuasion activities protects employee rights 
to organize and bargain collectively and promotes transparency and the 
peaceful and stable labor-management relations sought by Congress. The 
disclosure required under this rule will provide employees with 
essential information about the underlying source of the views, 
materials, and policies directed at them and designed to influence how 
they exercise their statutory rights to union representation and 
collective bargaining. They will be better able to understand the role 
that labor relations consultants play in their employers' efforts to 
shape their views about union representation and collective bargaining.
    As explained in the NPRM and in this preamble, the Department 
maintains that section 203 is better read to require employers and 
labor relations consultants to report activities that clearly are 
undertaken with an object to persuade employees, but which were viewed 
under the prior interpretation as the giving of ``advice'' to the 
employer. The prior interpretation failed to achieve the very purpose 
for which section 203 was enacted--to disclose to workers, the public, 
and the Government activities undertaken by labor relations consultants 
to persuade employees--directly or indirectly, as to how to exercise 
their rights to union representation and collective bargaining. Under 
this rule, exempt ``advice'' activities are now limited to those 
activities that meet the plain meaning of the term: An oral or written 
recommendation regarding a decision or course of conduct. The rule 
restores the traditional meaning to the term whereby an attorney or a 
labor relations consultant does not need to report, for example, when 
he counsels a business about its plans to undertake a particular action 
or course of action, advises the business about its legal 
vulnerabilities and how to minimize those vulnerabilities, identifies 
unsettled areas of the law, and represents the business in any disputes 
and negotiations that may arise. It draws a line between these 
activities, which do not have to be reported, and those activities that 
have as their object the persuasion of employees--activities that 
manage or direct the business's campaign to sway workers against 
choosing a union--that must be reported. An employer's ability to 
``accept or reject'' materials provided, or other actions undertaken, 
by a consultant, common to the usual relationship between an employer 
and a consultant and central to the prior interpretation's narrow scope 
of reportable activity, no longer shields indirect persuader activities 
from disclosure.
    The prior interpretation construed the advice exemption in a manner 
that failed to give full effect to the requirement that indirect 
persuasion of employees, as well as direct persuasion, triggers 
reporting. It did so in a manner that allowed the advice exemption to 
override this requirement. Upon our consideration of the comments 
received on the proposal and further review of the issue, we can find 
no policy justification, and only slender legal support, for the 
Department's earlier interpretation of section 203. The position 
effectively denied employees, the public, and the Government 
information about labor relations consultants that Congress had 
determined was necessary for employees to effectively exercise their 
rights to support or refrain from supporting a union as their 
collective bargaining representative, thereby impeding the national 
labor policy as established in the NLRA and the LMRDA. Under the 
interpretation embodied in this final rule, both the language of the 
advice exemption and the other components of section 203 are given 
effect in a manner that clearly tracks the language of section 203 more 
closely and better effectuates the purposes underlying the section.
    The rule imposes no restrictions on what employers may say or do 
when faced with a union organizing campaign. Rather, the premise of the 
rule is that with knowledge that the source of the information received 
is an anti-union campaign managed by an outsider, workers will be 
better able to assess the merits of the arguments directed at them and 
make an informed choice about how to exercise their rights. With this 
information, they will be able to better discern whether the views and 
specific arguments of their supervisors about the benefits and 
drawbacks of union representation are truly the supervisors' own, 
reflect their company's views, or rather reflect a scripted 
industrywide (or even wider) antipathy towards union representation and 
collective bargaining. Once they have learned that a consultant has 
been hired to persuade them, employees will be able to consider whether 
the consultant is serving as a neutral, disinterested third party, 
hired to guide the employer in adhering to NLRB election rules or 
rather as one who has been hired as a specialist in defeating union 
organizing campaigns. They will also be better able to consider the 
weight to attach to the common claim in representational campaigns that 
bringing a union, as a third party, into the workplace will be 
counterproductive to the employees' interests. In the context of an 
employer's reliance on a third party to assist it on a matter of 
central importance, it is possible that an employee may weigh 
differently any messages characterizing the union as a third party. In 
these instances, it is important for employees to know that if the 
employer claims that employees are family--a relationship will be 
impaired, if not destroyed, by

[[Page 15927]]

the intrusion of a third party into family matters--it has brought a 
third party, the consultant, into the fold to achieve its goals. 
Similarly, with knowledge that its employer has hired a consultant, at 
substantial expense, to persuade them to oppose union representation or 
the union's position on an economic issue, employees may weigh 
differently a claim that the employer has no money to deal with a union 
at the bargaining table.
    In crafting the final rule, the Department has focused on providing 
workers with information about the source of persuader activities so 
they can make informed decisions. The Department has been careful, just 
as Congress was in prescribing reporting by employers and consultants, 
to allow unions and employers to engage in an informed debate about the 
advantages and disadvantages of union representation, consistent with 
the First Amendment and the NLRA. Neither the statute nor the final 
rule restrains in any way the content of an employer's message--whether 
delivered by itself or with the assistance, directly or indirectly of a 
consultant--its timing, or the means by which it is delivered on 
matters relating to union representation and collective bargaining. 
Likewise, as discussed below, the rule also does not infringe upon the 
attorney-client relationship. The affected employees and the public 
interest benefit from the exchange of competing ideas. This can best be 
done by requiring that employers and labor relations consultants 
disclose their agreement to engage in persuader activities. Both the 
statute and this regulation fulfill the Government's important interest 
in ensuring that workers and the public are informed about such 
agreements. Regardless of the choices made by employees on whether to 
support or oppose representation in their workplace, the rule will 
ensure that they are more informed decision makers, which will result 
in more stable and peaceful labor-management relations.
    The Department recognizes that most employers and their 
consultants, like most unions, conduct their affairs in a manner 
consistent with federal law. The law encourages debate, imposing only 
broad bounds in the labor relations context, imposing sanctions only in 
limited circumstances and without prior restraint--where employers 
``interfere with, restrain or coerce employees in the exercise of their 
rights guaranteed in [29 U.S.C. 157] or unions ``to restrain or 
coerce'' employees in the exercise of those rights. 29 U.S.C. 
158(a)(1); 29 U.S.C. 158(b)(1). Congress intended the LMRDA, including 
the reporting requirements, to complement the NLRA, a result achieved 
by the final rule without abridging the right of employers and their 
consultants to engage in a robust debate about the advantages and 
disadvantages of union representation and collective bargaining. Thus, 
it is important to note that the Department has not attempted to 
regulate the content, timing, or veracity of communications by labor 
relations consultants or employers.
    Research indicates that the number of firms engaged in persuader 
activities has grown substantially since the LMRDA was enacted. Recent 
studies show that in somewhere between 71% and 87% of employee 
organizing drives, the employer retains one or more consultants. See n. 
9. 76 FR 36186. The size of the industry, per se, is not a concern of 
the Department's, but its growth exacerbates the transparency concerns: 
As the size has increased, employees in a substantial majority of 
representation campaigns are increasingly left unaware of information 
that may be important to them and may affect their decisions to support 
or oppose union representation in their workplaces. As noted in the 
NPRM, these studies demonstrate that employer campaigns against unions 
have become standardized, almost formulaic, because employers 
frequently turn to labor relations consultants, including law firms, to 
manage their efforts to oppose unionization. Those efforts utilize 
indirect persuasion almost exclusively. Despite the growth of this 
industry, historically, only a relatively small number of reports about 
persuader agreements and arrangements have been filed with the 
Department. The Department attributes this fact to the overly narrow 
view of the activities reportable under the prior interpretation, which 
essentially restricted reporting to just direct persuasion. By issuing 
this rule, the Department ensures that persuader activities receive the 
transparency that Congress intended, but was never attained under the 
prior rule--a need that has become more important over time as the use 
of consultants by employers to resist union representation has become 
the norm.
    The rule, by revising the instructions to forms filed by employers 
(Form LM-10) and labor relations consultants (Form LM-20) to report 
persuader agreements and arrangements, helps them to comply with their 
reporting obligations. Reports must be filed if the labor relations 
consultant undertakes activities that fall within the categories 
described below:
Direct Persuasion
     The obligation to report direct persuasion by consultants 
remains. Consultants must report if they engage in any conversation or 
other direct communication with any employee, where the consultant has 
an object to persuade the employee about how he or she should exercise 
representation or collective bargaining rights. For example, reporting 
would be required if the consultant speaks directly with employees (in 
person or by telephone or other medium) or disseminates materials 
directly (such as by email or mail) that are intended to persuade. This 
contrasts, as it also does in indirect persuader activities, with 
situations in which the employer or its regular staff communicates 
directly with employees, a situation in which reporting is not 
required, as provided by 29 U.S.C. 433(e). This aspect of the rule is 
unchanged from the Department's prior interpretations.
Indirect Persuasion
     Planning, Directing, or Coordinating Supervisors or 
Managers. Reporting is required if the consultant--with an object to 
persuade--plans, directs, or coordinates activities undertaken by 
supervisors or other employer representatives. This includes both 
meetings and other less structured interactions with employees.
     Providing Persuader Materials. Reporting is required if 
the consultant provides--with an object to persuade--material or 
communications to the employer, in oral, electronic (including, e.g., 
email, Internet, or video documents or images), or written form, for 
dissemination or distribution to employees. Reporting would be 
required, for example, if the consultant drafted, revised, or selected 
persuader materials for the employer to disseminate or distribute to 
employees. In revising employer-created materials, including edits, 
additions, and translations, a consultant must report such activities 
only if an ``object'' of the revisions is to enhance persuasion, as 
opposed to ensuring legality. The sale, rental, or other use of ``off-
the-shelf'' persuader materials, such as videos or stock campaign 
literature, which are not created for the particular employer who is 
party to the agreement, will not be reportable unless the consultant 
helps the employer select the materials. A consultant who created 
literature previously, without any knowledge of the specific employer 
requesting the literature, including the labor union involved, 
industry, or employees, and has no role thereafter in disseminating

[[Page 15928]]

the literature for the specific employer, cannot be said to have acted, 
pursuant to an agreement with the employer in question, with a purpose 
of persuading these employees.
     Conducting a Seminar for Supervisors or Other Employer 
Representatives. Some labor relations consultants hold seminars on a 
range of labor-management relations matters, including how to persuade 
employees concerning their organizing and bargaining rights. Seminar 
agreements must be reported if the consultant develops or assists the 
attending employers in developing anti-union tactics and strategies for 
use by the employer, the employers' supervisors or other 
representatives. As explained below, however, employers whose 
representatives attend such seminars generally will have no reporting 
obligation. Additionally, trade associations are required to report 
only if they organize and conduct the seminars themselves, rather than 
subcontract their presentation to a law firm or other consultant. We 
note that not all seminars will be reportable. For example, a seminar 
where the consultant conducts the seminar without developing or 
assisting the employer-attendees in developing a plan to persuade their 
employees would not be reportable, nor would a seminar where a 
consultant merely makes a sales pitch to employers about persuader 
services it could provide.
     Developing or Implementing Personnel Policies or Actions. 
Reporting is only required if the consultant develops or implements 
personnel policies or actions for the employer with an object to 
persuade employees. For example, a consultant's identification of 
specific employees for disciplinary action, or reward, or other 
targeting based on their involvement with a union representation 
campaign or perceived support for the union would be reportable. As a 
further example, a consultant's development of a personnel policy 
during a union organizing campaign in which the employer issues bonuses 
to employees equal to the first month of union dues, would be 
reportable. On the other hand, a consultant's development of personnel 
policies and actions are not reportable merely because they improve the 
pay, benefits, or working conditions of employees, even where they 
could subtly affect or influence the attitudes or views of the 
employees. Rather, to be reportable, the consultant must undertake the 
activities with an object to persuade employees, as evidenced by the 
agreement, any accompanying communication, the timing, or other 
circumstances relevant to the undertaking.
    These aspects of the rule effectuate the statute's requirement, 
largely negated by the Department's longstanding interpretation, that 
``indirect activities'' undertaken by a labor relations consultant must 
be reported. The final rule, however, ensures that no reporting is 
required by reason of a consultant merely giving ``advice'' to the 
employer, such as, for example, when a consultant offers guidance on 
employer personnel policies and best practices, conducts a 
vulnerability assessment for an employer, conducts a survey of 
employees (other than a push survey, i.e., one designed to influence 
participants and thus undertaken with an object to persuade), counsels 
employer representatives on what they may lawfully say to employees, 
conducts a seminar without developing or assisting the employer in 
developing anti-union tactics or strategies, or makes a sales pitch to 
undertake persuader activities. Reporting is also not required for 
merely representing an employer in court or during collective 
bargaining, or otherwise providing legal services to an employer.
    As noted above, the final rule does not require employers to file a 
report solely by reason of their attendance at a union avoidance 
seminar. The Department determined that the aggregated burden 
associated with such reporting by large numbers of employers outweighed 
the marginal benefit that would be derived by requiring reports from 
both attendees and the firms presenting the seminars. Under the rule, 
the firms presenting the seminar will report essentially the same 
information that would have been reported by the attending employers.
    To further reduce burden under the rule, the Department has 
determined that it is appropriate to treat trade associations somewhat 
differently than other entities insofar as reporting is concerned. 
Trade associations as a general rule will only be required to report in 
two situations--where the trade association's employees serve as 
presenters in union avoidance seminars or where they undertake 
persuader activities for a particular employer or employers (other than 
by providing off-the shelf materials to employer-members). The 
Department expects that trade associations typically will sponsor union 
avoidance seminars but rely on other consultants to actually present 
the seminar.
    In response to comments, the Department emphasizes that the 
interpretation embodied in this rule does not interfere with free 
speech or other rights under the U.S. Constitution or free speech under 
section 8(c) of the National Labor Relations Act. Similarly, contrary 
to the view of some commenters, the Department's revised interpretation 
does not infringe on the common law attorney-client privilege, which is 
still preserved by section 204, or on an attorney's ethical duty of 
confidentiality. None of the information required to be reported under 
the revised interpretation is protected by the attorney-client 
privilege. To the extent the agreement provides confidential details 
about services other than reportable persuader/information-supplying 
activities, the principles of attorney-client privilege would apply and 
such information is not reportable absent consent of the client. We 
have carefully reviewed comments submitted by the American Bar 
Association (ABA), other associations of attorneys, law firms 
representing employers, and other commenters, urging the Department to 
adopt an interpretation that would differentiate between attorneys and 
other labor relations consultants and essentially exempt attorneys from 
reporting any activities other than those in which they communicate 
directly with employees. Importantly, although the ABA sought to 
include a provision in the bill that became the LMRDA that would have 
achieved this result, Congress struck that provision from what became 
law. The commenters' position has been rejected by the courts in cases 
where attorneys engaged in persuader activities unsuccessfully raised 
this privilege argument as a defense to their failure to report such 
activities. Moreover, the ABA and other commenters on this point have 
failed to advance any argument that attorneys who engage in the same 
activities as non-attorney consultants to counter union organizing 
campaigns--activities and circumstances significantly different from 
those typically involved with legal practice--should be able to avoid 
disclosing activities identical to those performed by their non-
attorney colleagues in guiding employers through such campaigns. While 
some of the comments submitted in this rulemaking concern issues that 
may arise in connection with the Form LM-21 Receipts and Disbursements 
Report, such as the scope and detail of reporting about service 
provided to other employer clients, that report is not the subject of 
this rulemaking.
    In the final rule, the Department has eliminated the term 
``protected concerted activities'' from the definition of ``object to 
persuade employees,'' as

[[Page 15929]]

had been proposed in the NPRM. Instead, reporting is required only for 
agreements in which the consultant engages in activities with an object 
to persuade employees concerning representational and collective 
bargaining activities, but not ``other protected concerted 
activities.'' This better comports with the language of section 203, 
which, in contrast to the National Labor Relations Act, does not 
expressly refer to ``concerted activities.''
    Finally, the Department has revised the forms and instructions to 
require more detailed reporting on persuader agreements and to make the 
forms and instructions more user-friendly. The final rule requires that 
they be filed electronically with the Department.

B. Benefits of the Rule and Estimated Compliance Costs

    The qualitative benefits associated with the rule are substantial. 
As discussed in the preceding section and throughout the preamble, 
employees, unions, the public, and this Department will benefit from 
the disclosure associated with this rule by requiring that both direct 
and indirect persuader activities be reported. This disclosure will 
particularly benefit employees involved in a representation campaign, 
enabling them to better consider the role that labor relations 
consultants play in their employer's efforts to persuade them about how 
they should exercise their rights as employees to union representation 
and collective bargaining matters. This rule promotes the important 
interests of the Government and the public by ensuring that employees 
will be better informed and thus better able to exercise their rights 
under the NLRA.
    The Department estimates annual totals of 4,194 Form LM-20 reports 
and 2,777 Form LM-10 reports under this rule (the first number compares 
to the 2,601 estimate in the NPRM; the second figure compares to 3,414 
in the NPRM). The Form LM-20 total represents an increase of 3,807 Form 
LM-20 reports over the total of 387 reports estimated in the 
Department's most recent Information Collection Request (ICR) 
submission to the Office of Management and Budget (OMB). The Form LM-10 
total represents a 1,820 increase over the average of 957 Form LM-10 
reports estimated in the Department's most recent ICR submission to 
OMB. The total estimated annual burden for all reports is approximately 
6,851 hours for Form LM-20 reports and 6,804 hours for Form LM-10 
reports. The total annual cost for the estimated 4,194 Form LM-20 
reports is $633,932.16, which is $576,743.16 greater than the $57,189 
estimated for the most recent ICR submission. The total annual cost for 
the estimated 2,777 Form LM-10 reports/filers is $629,567.34, which is 
$417,003.34 greater than the $212,564 estimated for the most recent ICR 
submission. The average cost per Form LM-20 form is $151.14. The 
average annual cost per Form LM-10 filer is $226.70.

II. Authority

    The legal authority for this rule is set forth in sections 203 and 
208 of the LMRDA, 29 U.S.C. 432, 438. Section 208 of the LMRDA provides 
that the Secretary of Labor shall have authority to issue, amend, and 
rescind rules and regulations prescribing the form and publication of 
reports required to be filed under Title II of the Act and such other 
reasonable rules and regulations as she may find necessary to prevent 
the circumvention or evasion of the reporting requirements. 29 U.S.C. 
438. The Secretary has delegated her authority under the LMRDA to the 
Director of the Office of Labor-Management Standards and permits re-
delegation of such authority. See Secretary's Order 8-2009, 74 FR 58835 
(Nov. 13, 2009).

III. Statutory and Regulatory Background

A. Statutory and Regulatory Requirements for Employer and Labor 
Relations Consultant Reporting

    Section 203(a) of the LMRDA, 29 U.S.C. 433(a), requires employers 
to report to the Department of Labor ``any agreement or arrangement 
with a labor relations consultant or other independent contractor or 
organization'' under which such person``undertakes activities where an 
object thereof, directly or indirectly, is to persuade employees to 
exercise or not to exercise,'' or how to exercise, their rights to 
union representation and collective bargaining. 29 U.S.C. 433(a)(4).\1\ 
``[A]ny payment (including reimbursed expenses) pursuant to such an 
agreement or arrangement must also be reported. 29 U.S.C. 433(a)(5).
---------------------------------------------------------------------------

    \1\ The LMRDA defines a ``labor relations consultant'' as ``any 
person who, for compensation, advises or represents an employer, 
employer organization, or labor organization concerning employee 
organizing, concerted activities, or collective bargaining 
activities.'' 29 U.S.C. 402(m).
---------------------------------------------------------------------------

    The report must be one ``showing in detail the date and amount of 
each such payment, . . . agreement, or arrangement . . . and a full 
explanation of the circumstances of all such payments, including the 
terms of any agreement or understanding pursuant to which they were 
made.'' 29 U.S.C. 433. The Department of Labor's implementing 
regulations require employers to file a Form LM-10 (``Employer 
Report'') that contains this information in a prescribed form. See 29 
CFR part 405.
    LMRDA section 203(b) imposes a similar reporting requirement on 
labor relations consultants and other persons. It provides, in part, 
that every person who enters into an agreement or arrangement with an 
employer and undertakes activities where an object thereof, directly or 
indirectly, is to persuade employees to exercise or not to exercise, or 
how to exercise, their rights to union representation and collective 
bargaining ``shall file within thirty days after entering into such 
agreement or arrangement a report with the Secretary . . . containing . 
. . a detailed statement of the terms and conditions of such agreement 
or arrangement.'' 29 U.S.C. 433(b). Section 203(b) also requires 
persons subject to this requirement to report receipts and 
disbursements of any kind ``on account of labor relations advice and 
services.'' \2\ The Department of Labor's implementing regulations 
require labor relations consultants and other persons who have engaged 
in reportable activity to file a Form LM-20 ``Agreement and Activities 
Report'' within 30 days of entering into the reportable agreement or 
arrangement, and a Form LM-21 ``Receipts and Disbursements Report'' 
within 90 days of the end of the consultant's fiscal year, if during 
that year the consultant received any receipts as a result of a 
reportable agreement or arrangement. See 29 CFR part 406.
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    \2\ Under LMRDA section 202, 29 U.S.C. 432, union officers and 
employees are required to report anything of value received 
``directly or indirectly'' from an employer (including payments or 
benefits received by an official's spouse or minor child) that would 
present a conflict of interest with their obligation to the union. 
The reason for this requirement, as explained in the legislative 
history, is similar to the reason given for consultant reporting. 
See S. Rep. No. 86-187, at 38 (1959), reprinted in 1 NLRB, 
Legislative History of the Labor-Management Reporting and Disclosure 
Act of 1959 (1 LMRDA Leg. Hist.), at 397, 434 (``Reports are 
required as to matters which should be public knowledge so that 
their propriety can be explored in the light of known facts and 
conditions'').
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    LMRDA section 203(c) ensures that sections 203(a) and 203(b) are 
not construed to require reporting of ``advice.'' Section 203(c) 
provides in pertinent part that ``nothing in this section shall be 
construed to require any employer or other person to file a report 
covering the services of such person by reason of his giving or 
agreeing to give advice to such employer.'' 29 U.S.C.

[[Page 15930]]

433(c). Section 203(c) is referred, in this final rule, as the 
``advice'' exemption.
    Finally, LMRDA section 204 exempts from reporting attorney-client 
communications, which are defined as ``information which was lawfully 
communicated to [an] . . . attorney by any of his clients in the course 
of a legitimate attorney-client relationship.'' 29 U.S.C. 434.

B. History of the LMRDA's Reporting Requirements and Justification for 
the Final Rule

    The Secretary of Labor administers and enforces the Labor-
Management Reporting and Disclosure Act of 1959, as amended (LMRDA), 
Public Law 86-257, 73 Stat. 519-546, codified at 29 U.S.C. 401-531. The 
LMRDA, in part, establishes labor-management transparency through 
reporting and disclosure requirements for labor organizations and their 
officials, employers, labor relations consultants, and surety 
companies.\3\
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    \3\ The LMRDA and the NLRA are the two federal statutes that 
address generally the obligations of unions and employers to refrain 
from actions that interfere with the exercise by employees of their 
rights to union representation, collective bargaining, and union 
membership. While the NLRA, enforced by the NLRB, ensures compliance 
with these rights by investigating and prosecuting unfair labor 
practice complaints, the LMRDA promotes these rights by requiring 
unions, employers, and labor relations consultants to publicly 
disclose information about identified financial transactions, 
agreements, and arrangements. These foundational statutes are 
discussed in many texts and scholarly articles, too numerous to 
mention. To appreciate the historical significance of the statutes, 
see generally Philip Taft, Organized Labor in American History 
(1964), chapters 36, 44, and 51.
---------------------------------------------------------------------------

1. Dealing With a Growing Phenomenon--1960 and Earlier
    In enacting the LMRDA in 1959, a bipartisan Congress expressed the 
conclusion that the public interest is served by continuing ``to 
protect employees' rights to organize, choose their own 
representatives, bargain collectively . . . that it is essential that 
labor organizations, employers, and their officials adhere to the 
highest standards of responsibility and ethical conduct in 
administering the affairs of their organizations, particularly as they 
affect labor-management relations,'' and that ``[this Act] will afford 
necessary protection of the rights and interests of employees and the 
public generally as they relate to the activities of labor 
organizations, employers, labor relations consultants, and their 
officers and representatives.'' 29 U.S.C. 401(a), (b).
    The LMRDA was the direct outgrowth of a highly-publicized 
investigation conducted by the Senate Select Committee on Improper 
Activities in the Labor or Management Field, commonly known as the 
McClellan Committee, which convened in 1958. The committee's 
investigation focused on racketeering and corruption among certain 
unions, union officials, employers, and labor relations consultants. 
See generally, Interim Report of the Select Committee on Improper 
Activities in the Labor or Management Field, S. Rep. No. 85-1417 
(1957). Enacted in 1959 in response to the report of the McClellan 
Committee, the LMRDA addressed various issues identified by the 
Committee through a set of integrated provisions aimed, among other 
areas, at shedding light on labor-management relations, governance, and 
management. These provisions include financial reporting and disclosure 
requirements for labor organizations, their officers and employees, 
employers, labor relations consultants, and surety companies. See 29 
U.S.C. 431-36, 441.
    Among the concerns that prompted Congress to enact the LMRDA was 
conduct by some labor relations consultants retained by employers, 
usually undertaken behind the scenes, that Congress had found impeded 
the right of employees to organize labor unions and to bargain 
collectively under the National Labor Relations Act (NLRA), 29 U.S.C. 
151 et. seq. See, e.g., S. No. 86-187. Rep, at 6, 10-12, reprinted in 1 
LMRDA Leg. Hist., at 397, 402, 406-408. Congress was concerned that 
some labor consultants, acting on behalf of management, worked directly 
or indirectly to discourage legitimate employee organizing drives and 
engage in activities with the aim to undercut employee support for 
unions. S. Rep. No. 86-187, at 10, 1 LMRDA Leg. Hist., at 406. The 
Senate Report explained that under section 203 ``every person who 
enters into an agreement with an employer to persuade employees as 
regards the exercise of their right to organize and bargain 
collectively or to supply an employer with information concerning the 
activity of the employees or labor organizations in connection with a 
labor dispute would be required to file a detailed report.'' \4\ The 
report explained that ``this public disclosure will accomplish the same 
purpose as public disclosure of conflicts of interest and other union 
transactions which are required to be reported'' under other sections 
of the bill that was to become the LMRDA. S. Rep. No. 86-187, at 5, 12, 
reprinted in 1 LMRDA Leg. Hist., at 401, 408. (Emphasis added).\5\ 
Congress was clearly aware that some consultant activity designed to be 
reported was accomplished ``indirectly.'' See S. Rep. No. 86-187, at 
10, 12; 1 LMRDA Leg. Hist., at 406-407 (there have been direct or 
indirect management involvements involving middlemen; ``[i]n some cases 
they work directly on employees or through committees to discourage'' 
organizing efforts). The report noted an exception from reporting: ``An 
attorney or consultant who confines himself to giving legal advice, 
taking part in collective bargaining and appearing in court or 
administrative proceedings would not be included among those required 
to file reports.'' S. Rep. No. 86-187, at 5, 12, reprinted in 1 LMRDA 
Leg. Hist., at 401, 408.
---------------------------------------------------------------------------

    \4\ Congress recognized that some of the persuader activities 
occupied a ``gray area'' between proper and improper conduct and 
chose to rely on disclosure rather than proscription, to ensure 
harmony and stability in labor-management relations. See S. Rep. No. 
86-187, at 5, 12; 1 LMRDA Leg. Hist., at 401, 408.
    \5\ H.R. Rep. No. 86-741 (1959), at 12-13, 35-37, reprinted in 1 
LMRDA Leg. Hist., at 770-771, 793-795, contained similar statements. 
However, it should be noted that the House bill contained a much 
narrower reporting requirement--reports would be required only if 
the persuader activity interfered with, restrained, or coerced 
employees in the exercise of their rights, i.e., if the activity 
would constitute an unfair labor practice. The House bill also 
contained a broad provision that would have essentially exempted 
attorneys, serving as consultants, from any reporting. In 
conference, the Senate version prevailed in both instances, 
restoring the full disclosure provided in the Senate bill. See H. 
Rep. No. 86-1147 (Conference Report), at 32-33; 1 LMRDA Legis. 
Hist., at 936-937.
---------------------------------------------------------------------------

    The reporting requirements on employers and their consultants under 
LMRDA section 203 resemble those prescribed for labor organizations and 
their officials under LMRDA sections 201 and 202, respectively. 29 
U.S.C. 431, 432. Under LMRDA section 208, the Secretary of Labor is 
authorized to issue, amend, and rescind rules and regulations 
prescribing the form and publication of required reports, as well as 
``such other reasonable rules and regulations . . . as he may find 
necessary to prevent the circumvention or evasion of such reporting 
requirements.'' 29 U.S.C. 438. The Secretary also is authorized to 
bring civil actions to enforce the LMRDA's reporting requirements. 29 
U.S.C. 440. Willful violations of the reporting requirements, knowing 
false statements made in a report, and knowing failures to disclose a 
material fact in a report are subject to criminal penalties. 29 U.S.C. 
439.
    A notable, contemporary account of the McClellan hearings 
demonstrates the breadth of the activities to be reported. Prior to 
becoming Attorney General and then Senator, Robert F. Kennedy served as 
staff director for the special committee that conducted those hearings. 
In his book, The Enemy

[[Page 15931]]

Within (1961), Kennedy discussed the activities that had been engaged 
in by Nathan Shefferman, who had served as labor relations consultant 
for several prominent companies. Kennedy's description of Shefferman's 
activities and those of his associates belies any notion that Congress, 
in later enacting the LMRDA, was limiting reporting to activities 
involving direct communication with employees. As described by Kennedy, 
Shefferman regularly hid his firm's activities in opposing union 
representation, preferring instead to orchestrate behind the scene an 
employer's actions to oppose a union. To illustrate Shefferman's advice 
to employers, Kennedy draws from a memorandum prepared by Shefferman 
for one of his clients: ``Don't dignify them. Call them bums and 
hoodlums. Cheap common bums. Don't argue wage differential. Don't 
answer it. Stay away from it. Ridicule leaders.'' The Enemy Within, at 
218-219. Against this backdrop, it is clear that Congress intended that 
employers and their labor relations consultants were to report both 
their direct and indirect persuader activities. Moreover, as will be 
discussed in the next section of the preamble, the same activities that 
Shefferman was among the first to ``perfect'' continue to be utilized 
by labor relations consultants today.
2. A Disclosure Vacuum--From 1962 Until Today
    With the Department's 1962 interpretation of the advice exemption 
to require reporting in only limited circumstances in which the 
employer was not free to ``accept or reject'' materials offered by the 
consultant, the reporting of persuader activities (activities which, by 
their nature, are most often ``indirect'') largely came to an end. At 
the same time, the consultant industry expanded as employer use of its 
services became increasingly common until the present day, where an 
employer's decision to rely solely on its own existing staff to meet a 
union campaign is uncommon. As a consequence, without the disclosure 
intended by Congress in enacting section 203, the work of consultants 
in helping employers oppose union representation remains undisclosed to 
employees.
    Many employers engage consultants to conduct union avoidance or 
counter-organizing efforts to prevent workers from successfully 
organizing and bargaining collectively. In recent times, the use of law 
firms in particular to orchestrate such campaigns has been documented 
by several industrial relations scholars. John Logan, The Union 
Avoidance Industry in the U.S.A., 44 British Journal of Industrial 
Relations 651, 658 (2006), citing Bruce E. Kaufman and Paula E. 
Stephan, The Role of Management Attorneys in Union Organizing 
Campaigns, 16 Journal of Labor Research 439 (1995); John Logan, Trades 
Union Congress, U.S. Anti-Union Consultants: A Threat to the Rights of 
British Workers 11 (2008) (hereafter ``Logan, U.S. Anti-Union 
Consultants''); 1984 Subcommittee Report, at 2; John Logan, 
Consultants, Lawyers, and the `Union Free' Movement in the U.S.A., 33 
Industrial Relations Journal, 197, 199-212 (2002) (hereafter ``Logan, 
Union Free Movement''); Terry A. Bethel, Profiting from Unfair Labor 
Practices: A Proposal to Regulate Management Representatives, 79 Nw. U. 
L. Rev. 506, 519-525 (1984). As Kaufman and Stephan reported, 
consultants, who often are attorneys, provide employers with a range of 
services, and have varying degrees of involvement with employees, 
during union avoidance campaigns:

    Typically at the first sign of union activity at a facility 
management seeks the advice and counsel of one or more attorneys. In 
some cases the attorney's role is largely one of providing legal 
assistance, such as advising supervisors on what constitutes an 
unfair labor practice under the NLRA, with overall direction of the 
firm's campaign entrusted to either top management or an outside 
consultant. In other situations, the attorney not only provides 
legal counsel but also plays an important (sometimes dominant) role 
in developing and implementing the company's anti-union strategy and 
campaign tactics.

Kaufman and Stephan, at 440.\6\ The literature reports a wide range of 
activities conducted or directed by consultants, many of which are 
lawful means to oppose the formation of the union (though some are 
not). To provide a sense of the kinds of activities engaged in by a 
labor relations consultant, we have compiled a list from activities 
mentioned in a study about union organizing and representation in the 
United States. The list does not differentiate between ``persuader 
activities'' and non-persuader activities, whether a particular 
activity would constitute ``direct'' or ``indirect'' persuasion,'' or 
whether the undertaking of a particular activity, by itself, would 
trigger reporting. The activities mentioned in the study include--

    \6\ A 1980 Congressional subcommittee report noted the increase 
in the use of law firms to assist employers in their union avoidance 
activities:
    Many lawyers no longer confine their practice to traditional 
services such as representing employers in administrative and 
judicial proceedings or advising them about the requirements of the 
law. They also advise employers and orchestrate the same strategies 
as non-lawyer consultants for union ``prevention,'' union 
representation election campaigns, and union decertification and de-
authorization. Lawyers conduct management seminars, publish widely, 
and often form their own consulting organizations.
    Subcommittee on Labor-Management Relations, H. Comm. on 
Education and Labor, Pressures in Today's Workplace (Comm. Print 
1980) (``1980 Subcommittee Report''), at 28-29.

 Monitor NLRB daily dockets to get a jump on union activity and 
to offer their services to the targeted employer even before it is 
aware of the union's activity
 Encourage employers to write, publicize and enforce a clear 
policy against solicitation on a company premises by non-employees
 Inform employees that signing a union authorization card is 
akin to a power of attorney or blank check
 Have supervisors (falsely) state the union's campaign is going 
badly and that the union has been intimidating, harassing, and 
pressuring employees to sign union authorization cards
 Convey the false impression that support for a union is 
eroding by distributing sample letters to employees asking the union to 
return signed authorization cards
 Argue in favor of bargaining units that group together 
employees opposed to the union
 Argue that union advocates are supervisors, thereby removing 
them from voting and advocating on behalf of the union
 Tell supervisors that union representation will be ``a 
personal calamity'' for them by undermining their authority on the shop 
floor
 Warn supervisors they can be terminated for refusing to 
participate in the employer's anti-union campaign
 Relieve supervisors from any concern that they could be held 
culpable for their actions during the campaign by explaining that the 
NLRB holds the employer, not individual supervisors, responsible for 
any violation of the law
 Require supervisors to talk daily to employees on a one-to-one 
basis to gauge their support for the union, requiring that they report 
to the consultant on a daily or more frequent basis
 Organize ``vote no'' committees
 Script messages that predict violent strikes and permanent 
replacement of workers, highlight restrictive clauses in union 
constitutions, emphasize high salaries of union officials, the union's 
interest in obtaining dues payments from employees, and alleging union 
corruption
 ``[W]rite or help employers to write anti-union letters signed 
by senior

[[Page 15932]]

management, which are delivered to employees on the job by supervisors 
in order to witness each employee's response and to `stimulate 
discussion' between supervisors and employees''
 ``Utiliz[e] gimmicks such as anti-union comic books, cartoons, 
competitions and `vote-no' t-shirts and buttons. Competitions typically 
include `the longest Union Strike contest' (the correct answer being 
the greatest to three possible choices) or `true or false' quizzes 
(sample question: the union president earns $150,000 per year and has a 
chauffeur-driven limousine') with a cash prize worth six months union 
dues money''
 Train employers how to conduct captive audience meetings with 
large and small groups of employees, taking place on the company 
premises on paid time

    Adapted from Logan, Union Free Movement, at 203-205.\7\
---------------------------------------------------------------------------

    \7\ Consultants offer a complete slate of persuader services. As 
described by one consultant: ``[We] prepare all counter union 
speeches, small group meeting talks, letters to employees' homes, 
bulletin board posters, handouts to employee, etc., and schedules 
dates for each counter union communication media piece to be used. 
We have assembled a very large library of counter union materials, 
much of what is customized to a particular union.'' Logan, Union 
Free Movement, at 203.
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3. Transparency Promotes Worker Rights by Creating a More Informed 
Electorate
    Employees are often unaware that their employer has retained a 
third party to orchestrate a campaign against the union. See Logan, 
Union Free Movement, at 201. As described by Logan: ``[E]mployees are 
often blissfully unaware of the consultant's presence in the workplace 
because consultants use first-line supervisors to spearhead their anti-
union campaigns. This allows the consultant to remain in the 
background, avoid becoming the focus of the union reporting 
requirements of the LMRDA.'' Logan, Union Free Movement, at 201. 
Quoting a lawyer-consultant about the importance of remaining 
anonymous: ``I don't want the union to have the political advantage. 
They will tell the workers, ``Look the company hired this guy from New 
York City.'' Id. Later, the article states; ``Management's efforts to 
label the union an outside influence indicates the importance of 
keeping the consultant, obviously an outsider, well hidden during the 
counter-[organizing] campaign.'' Id. at 206. Further, even if employees 
know that a consultant has been hired, they may be unaware that the 
consultant is in the business of defeating employee efforts to form, 
join, or assist a union, rather than only serving the employer as an 
advisor on legal requirements.
    The purpose of this rule is disclosure--not to express a view 
regarding the hire of labor relations consultants, the utility of their 
services, the growth of the industry, nor to single out particular 
firms or tactics for praise or criticism. The Department agrees with 
comments submitted in this rulemaking suggesting diversity in the labor 
relations consultant arena--both in terms of the types of services 
offered by consultants and the reasons employers seek to retain 
consultants. We acknowledge that the consultants may, in fact, be hired 
solely to help employers adhere to the law. The disclosure of the 
employer's persuader agreement or arrangement with a consultant allows 
workers to evaluate the source of the arguments and information 
designed to influence the exercise of their representation and 
collective bargaining rights. With this information, employees can 
better evaluate the merits of the views expressed by the employer's 
supervisors and managers, allowing employees to make more informed 
choices regarding their protected rights.
    Union avoidance efforts often utilize supervisors and other 
management representatives to persuade employees. The reason for this 
approach is that these individuals, as co-workers, are generally known 
and more easily trusted by the employees than would be an outside 
consultant. See Logan, Union Free Movement, at 201-203. Employees may 
evaluate the message and methods of their supervisors and managers 
differently when they have information that reveals that a consultant 
is coaching these supervisors, drafting talking points, and scripting 
their interactions with employees. Without this information, employees 
are unable to provide necessary context to a common employer argument 
that a union is a ``third party'' that employees do not need to further 
their interests. Id. at 201, 206.
    In contrast to the limited information available to employees about 
consultants under the Department's prior interpretation, employees 
already have a great deal of information available to them concerning 
the union or unions seeking to represent or currently representing 
them, including the amount that unions spend on organizing activities 
and who they engage to assist them in those organizing activities.\8\ 
This information is publicly available in reports filed by unions with 
OLMS pursuant to section 201 of the LMRDA. For example, a union that 
files the Form LM-2 annual financial report is required to identify the 
percentage of time that its officers and employees spend on 
``Representational Activities.'' See the Instructions for Form LM-2 
Labor Organization Annual Report, at 19-20. On Schedule 15 of the Form 
LM-2, the union provides a further accounting of its direct and 
indirect disbursements related to representational activities, which 
include organizing efforts and collective bargaining. If a disbursement 
of $5,000 or more was made in this category, the union is required to 
itemize the disbursement by identifying the full name and address, and 
the type, of business or individual that received the disbursement and 
a statement of the reason for the disbursement. Id. at 25-26. 
Additionally, workers may view Form LM-30 reports from union officials 
disclosing potential conflicts of interest, as well as the results of 
union audits, union officer elections and civil and criminal cases 
against union officials, and Office of Labor-Management Standards 
(OLMS) annual reports and enforcement data. See LM reports and other 
information on the Department's Web site at www.dol.gov/olms; see also 
S. Rep. No. 86-187, at 39-40, 1 LMRDA Leg. Hist., at 435-436, stating, 
in part, that ``if unions are required to report all their 
expenditures, including expenses in organizing campaigns, reports 
should be required from employers who'' use consultants. This 
disclosure advances the goals of an informed electorate able to 
distinguish between well-reasoned and accurate information and campaign 
pressure. It is a reasonable approach to restore more transparency for 
workers.
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    \8\ As noted by an international union in its comments on the 
proposed rule, it is routine for labor relations consultants to 
include information from Form LM-2 reports in their efforts to 
undermine employee support for a union.
---------------------------------------------------------------------------

    Under this rule, employees, as intended by Congress in requiring 
the reporting of direct and indirect persuader activities, will gain 
considerable information about the amount of money involved in 
disbursements to the consultant, and many details about the nature and 
extent of the persuader agreement. They will benefit from publicly-
available information that bears on the exercise of their rights as 
employees. Employers and consultants already have access to 
comprehensive reports filed with the Department pursuant to the LMRDA 
by unions and union officers that detail various financial arrangements 
and transactions. This rule restores the

[[Page 15933]]

missing piece from overall reporting requirements--by unions, union 
officers, employers, and labor relations consultants--established by 
the LMRDA.
    The Department addresses comments concerning the rule's impact on 
employees' need for transparent information in Sections V.C.1, 3.
4. Underreporting of Persuader Agreements
    The impetus for this rulemaking was the Department's recognition 
that, while employers routinely use consultants to orchestrate counter-
organizing campaigns, most agreements or arrangements with such 
consultants went unreported. Underlying the paucity of reports was the 
Department's interpretation to essentially require consultants to 
report only agreements in which a consultant agrees to directly 
persuade employees on matters relating to union representation and 
collective bargaining. We recognized that despite the significant 
growth of the persuader industry and employers' increasing reliance on 
their services since the LMRDA's enactment, there had been no uptick in 
the number of reports received on persuader activity.\9\
---------------------------------------------------------------------------

    \9\ The use of consultants to orchestrate union avoidance and 
counter-campaigns appears to have increased tremendously since 1959. 
See the NPRM at 76 FR 36182, 85-86.
---------------------------------------------------------------------------

    As stated in the NPRM, recent studies place the contemporary 
consultant-utilization rate of employers who face employee organizing 
drives somewhere between 71% and 87%.\10\ 76 FR 36186. Although there 
is some variation from year to year, the average number of 
representation cases filed with the National Mediation Board (NMB) 
during fiscal years 2010 to 2014 is 40; the average number of NLRB 
representation petitions filed during the most recent period available, 
2009-2013, is 2,658.\11\ Using the mean utilization rate of consultants 
by employers from the studies discussed above, the Department would 
expect that 78% of the combined NLRB and NMB representation matters 
would result in about 2,104 arrangements or agreements requiring a Form 
LM-20 consultant report annually during the same five-year period.\12\ 
However, the Department received an average of about 545 LM-20's 
annually,\13\ only 25.9% of those it could expect.\14\ It appears clear 
that only a small fraction of the organizing campaigns in which 
consultants were utilized to manage counter-organizing campaigns 
resulted in the filing of a Form LM-20. When such a small proportion of 
persuader consulting activity is reported, employees are not receiving 
the information that would enable them to make an informed decision on 
organizing and collective bargaining.\15\
---------------------------------------------------------------------------

    \10\ See Kate L. Bronfenbrenner, Employer Behavior in 
Certification Elections and First-Contract Campaigns: Implications 
for Labor Law Reform, in Restoring the Promise of American Labor Law 
80 (Sheldon Friedman et al. eds. ILR Press 1994) (hereafter 
``Bronfenbrenner, Employer Behavior'') (71% of employers); Logan, 
Union Avoidance Industry, at 669 (75% of employers); Kate 
Bronfenbrenner, Economic Policy Institute, No Holds Barred: The 
Intensification of Employer Opposition to Organizing 13 (2009) 
(hereafter ``Bronfenbrenner, No Holds Barred'') (75% of employers in 
period 1999-2003); Chirag Mehta and Nik Theodore, American Rights at 
Work, Undermining the Right to Organize: Employer Behavior during 
Union Representation Campaigns 5 (2005) (hereafter ``Mehta and 
Theodore, Undermining the Right to Organize'') (82% of employers); 
James Rundle, Winning Hearts and Minds in the Era of Employee 
Involvement Programs, in Organizing to Win: New Research on Union 
Strategies 213, 219 (Kate Bronfenbrenner, et al. eds., Cornell 
University Press 1998) (hereafter ``Rundle, Winning Hearts and 
Minds'') (87% of employers). See also Subcommittee on Health, 
Employment, Labor and Pensions, H. Comm. on Education and Labor, The 
Employee Free Choice Act (Feb. 8, 2007) (testimony by Professor 
Harley Shaiken, quoting an article in Fortune, finding that most 
employers hire consultants to block organizing drives).
    \11\ See NLRB Annual Report Data, Table 1, for FYs 2009-10 at 
https://www.nlrb.gov/reports-guidance/reports/annual-reports, as well 
as the NLRB Summary of Operations for FYs 2011-12 at https://www.nlrb.gov/reports-guidance/reports/summary-operations. See also 
NLRB data for FY 2013 at https://www.nlrb.gov/news-outreach/graphs-data/petitions-and-elections. See also the NMB FY 2014 Annual Report 
at https://storage.googleapis.com/dakota-dev-content/NMB-2014-Annual-Report.pdf for NMB FY 2010-2014 data.
    \12\ This figure may still under represent the total, as it does 
not take into account employers who hire multiple consultants or 
consultants who hire sub-consultants, each of whom would need to 
file separate Form LM-20 reports.
    \13\ Information on the number of LM reports received for FYs 
2010-14 is available through the Department's Electronic Labor 
Organization Reporting System (e.LORS).
    \14\ The Department notes that it has updated the NLRB, NMB, and 
LM reports data used in the NPRM. The data in the final rule 
reflects the most recent fiscal years: 2010-14 (2009-2013 for the 
NLRB data), whereas the NPRM utilized a prior period: FYs 2005-09. 
See the Paperwork Reduction Act analysis in Section VI.G.1.
    \15\ See Charles B. Craver, The Application of the LMRDA ``Labor 
Consultant'' Reporting Requirements to Management Attorneys: Benign 
Neglect Personified, 73 Nw. U. L. Rev. 605 (1978) (reporting on 
survey of lawyers engaged in legal advice and persuader activities, 
noting pervasive noncompliance with disclosure even where activity 
obviously involved direct persuader activity and noting the 
particular problems where employees are unaware that an attorney is 
acting as the employer's representative).
---------------------------------------------------------------------------

    The lack of reporting of employer-consultant agreements, despite 
the increase in employer utilization of consultants to orchestrate 
anti-union campaigns and programs, stems from the interpretative 
decisions of the Department. The prior interpretation effectively 
exempts agreements for activities consisting of indirect persuasion of 
employees. Indeed, the prior interpretation did not properly take into 
account the widespread use of indirect tactics, such as directing the 
persuader activities of the employer's supervisors and providing 
persuasive materials to the employer for dissemination to employees, 
and thus did not result in the reporting of most persuader agreements. 
This conclusion has also been reached by observers of the consultant 
industry. See John Logan, ``Lifting the Veil'' on Anti-Union Campaigns: 
Employer and Consultant Reporting under the LMRDA, 1959-2001, 15 
Advances in Industrial and Labor Relations 295, 297 (2007) (hereafter 
Logan, Lifting the Veil) (``As the size and sophistication of the 
consultant industry has grown, the effectiveness of the law on 
consultant disclosure and reporting has diminished.''). Indeed, the 
charge is that ``[e]nforcement of the consultant reporting requirements 
had practically ground to a halt by the mid-1980s--all during a time 
when, according to organized labor, employers and consultants were ever 
more actively, boldly, and creatively fighting unionization.'' Id. at 
311.\16\
---------------------------------------------------------------------------

    \16\ See also Assistant Secretary Hobgood's testimony, discussed 
supra, ``acknowledg[ing] that Department [enforcement] activity had 
`declined significantly' since the first few years after the 
enactment of [the LMRDA].'' 1980 Subcommittee Report, at 45.
---------------------------------------------------------------------------

    Members of the consultant industry have also cited the Department's 
interpretation as the cause of underreporting of persuader agreements. 
A former consultant, Martin Jay Levitt, observed:

    The law states that management consultants only have to file 
financial disclosures if they engage in certain kinds of activities, 
essentially attempting to persuade employees not to join a union or 
supplying the employer with information regarding the activities of 
employees or a union in connection with a labor relations matter. Of 
course, that is precisely what anti-union consultants do, have 
always done. Yet I never filed with [LMRDA] in my life, and few 
union busters do . . . As long as [the consultant] deals directly 
only with supervisors and management, [the consultant] can easily 
slide out from under the scrutiny of the Department of Labor, which 
collects the [LMRDA] reports.

Martin Jay Levitt (with Terry Conrow), Confessions of a Union Buster, 
at 41-42 (New York: Crown Publishers, Inc. 1993). Mr. Levitt describes 
consultant strategies that he employed to avoid reporting his 
activities:

    Within a couple of weeks I had identified the few supervisors 
who were willing to

[[Page 15934]]

work extra hard for me . . . . Through that handful of good soldiers 
I set to work establishing a network of rank-and-file employees who 
would serve as spies, informants, and saboteurs. Those so-called 
loyal employees would be called upon to lobby against the union, 
report on union meetings, hand over union literature to their 
bosses, tattle on their co-workers, help spread rumors, and make 
general pests of themselves within the organizing drive. I rarely 
knew who my company plants were. . . . It was cleaner that way. 
Nobody could connect me to the activities, I steered clear of the 
reporting requirements of [the LMRDA], and the workers' `pro-
company' counter campaign was believed to be a grass-roots movement.

Id. at 181.\17\
---------------------------------------------------------------------------

    \17\ Mr. Levitt's description of the actual practice of labor 
relations consultants is consistent with prior statements by other 
consultants. See 1980 Subcommittee Report, at 44 (quoting testimony 
of labor relations consultant and stating that the ``current 
interpretation of the law has enabled employers and consultants to 
shield their arrangements and activities''). See also Unionbusting 
in the United States, at 112, which states that ``most modern union 
busters employed a standardized three-pronged attack. Cognizant of 
LMRDA guidelines requiring consultants to report their activity only 
when engaged directly in persuading employees in regards to their 
right to bargain collectively, most consulting teams utilized 
supervisory personnel as `the critical link in the communications 
network.''' (Italics in original.)
---------------------------------------------------------------------------

    As discussed further below, a congressional subcommittee concluded 
that there is significant underreporting of persuader agreements, as a 
result of the Department's interpretation. The 1980 Subcommittee Report 
characterizes the extent and effectiveness of employer and consultant 
reporting under the LMRDA as a ``virtual dead letter, ignored by 
employers and consultants and unenforced by the Department of Labor.'' 
1980 Subcommittee Report, at 27. The Subcommittee concluded that the 
``current interpretation of the law has enabled employers and 
consultants to shield their arrangements and activities[,]'' and called 
upon the Department to ``adopt . . . a more reasonable interpretation 
so the Act can reach consultants who set and control the strategy for 
employer anti-union efforts but who do not themselves communicate 
directly with employees.'' Id. at 44.
    This recommendation came about, in part, as the result of testimony 
before the Subcommittee by Assistant Secretary of Labor for Labor-
Management Relations William Hobgood, who ``acknowledged that 
Department [enforcement] activity had `declined significantly' since 
the first few years after the enactment of [the LMRDA].'' 1980 
Subcommittee Report at 45. Hobgood testified that the Department's 
interpretation of advice `` `troubles' him,'' and that the Department 
was ``reviewing the question of where advice ends and persuasion begins 
to make sure the Department's position is consistent with the law and 
adequate to deal with the approaches to persuader activities that have 
evolved since the law was enacted more than 20 years ago.'' Id. at 44.
    Subsequent subcommittee hearings, conducted in 1984, also addressed 
labor relations consultants' and employers' compliance with the LMRDA's 
reporting and disclosure requirements. Subcommittee on Labor-Management 
Relations, H. Comm. on Education and Labor, The Forgotten Law: 
Disclosure of Consultant and Employer Activity Under the L.M.R.D.A. 
(Comm. Print 1984) (1984 Subcommittee Report). The 1984 Subcommittee 
admonished the Labor Department for failing to act on its 
recommendations from 1980 regarding the need for more vigorous 
enforcement of employer and consultant reporting requirements, 1984 
Subcommittee Report at 4, and suggested that lack of robust enforcement 
of employer and consultant reporting requirements of section 203 
``frustrated Congress' intent that labor-management relations be 
conducted in the open.'' Id. at 18.
    The Department addresses comments concerning the underreporting of 
persuader agreements in Section V.C.2.
5. Transparency Promotes Peaceful and Stable Labor-Management 
Relations, a Central Goal of the Statute
    The Department views disclosure of third-party persuader 
agreements, as did Congress, as a key ``to protect employee rights to 
organize, choose their own representatives, [and] bargain 
collectively.'' 29 U.S.C. 401(a). The Senate Labor Committee explained 
why the provision that ultimately became section 203(b) of the LMRDA 
was necessary, stating that just as ``unions are required to report all 
their expenditures, including expenses in organizing campaigns, reports 
should be required from employers who carry on, or engage such persons 
to carry on, various types of activity, often surreptitious, designed 
to interfere with the free choice of bargaining representatives by 
employees and to provide the employer with information concerning the 
activities of employees or a union in connection with a labor 
dispute.'' S. Rep. No. 86-187, at 39-40, 1 LMRDA Leg. Hist., at 435-
436. As this passage suggests, section 203(b) requires not only the 
disclosure of consultant activity that interferes with, restrains, or 
coerces employees in their protected rights under the NLRA, i.e., 
constitutes an unfair labor practice, but also requires reporting of 
activity to persuade employees that involves conduct that is otherwise 
legal under the NLRA. S. Rep. No. 86-187, at 11, 12, 1 LMRDA Leg. 
Hist., at 406, 407.\18\ Only by providing such information would the 
interest of workers, the public, and the government be protected. 
Anything less would deny employees information necessary for them to 
fully exercise their rights to union representation and collective 
bargaining.
---------------------------------------------------------------------------

    \18\ Labor relations consultants may be held liable by the 
National Labor Relations Board for unfair labor practices committed 
on behalf of employers. See, e.g., Blankenship and Associates, Inc. 
v. N.L.R.B., 999 F.2d 248 (7th Cir. 1993), enforcing 306 N.L.R.B. 
994 (1992). Employers may also be held liable, based on the actions 
of their consultants. See, e.g., Wire Products Manufacturing Corp., 
326 N.L.R.B. No. 62 (1998).
---------------------------------------------------------------------------

    Although the Department's primary role insofar as Title II of the 
Act is concerned is to prescribe, administer, and enforce regulations 
implementing the Act's reporting and disclosure provisions, this role 
also comes within the Department's charge in its organic statute ``to 
foster promote, and develop the welfare of the wage earners of the 
United States, to improve their working conditions, and to advance 
their opportunities for profitable employment,'' a role congruent with 
the Department's responsibility to assist in ensuring ``industrial 
peace.'' Act to Create the Department of Labor, Public Law 426, 37 
Stat. 736 (1913), sections 1, 8 (codified as amended at 29 U.S.C. 551). 
As we have noted, this rule effectuates the intention of Congress to 
require the disclosure of persuader activity--both direct and indirect. 
In fashioning this rule, our target has been to achieve this purpose--
not to encourage or discourage the use of labor relations consultants, 
nor to attribute to the industry as a whole the recognized failure by 
some members of the industry to adhere to responsible, lawful 
standards.
    Insofar as questions concerning employee choice about union 
representation are concerned, the integrity of the union election 
certification process is strengthened when voters become better 
informed--by virtue of union disclosure, as well as by consultant and 
employer disclosure. Even if the votes of certain workers are not 
affected by the knowledge of the persuader agreement with a consultant 
where this information is provided to the employees, they, along with 
the employer and the public, can be more confident in the integrity of 
the election process and that the election outcomes reflect the sound 
and informed intent of

[[Page 15935]]

the voters. Such a process for determining union representation issues 
creates more stable and peaceful labor-management relations. Even if a 
union is defeated in its efforts to gain representation, an informed 
workforce will be in a better position to maintain stable labor-
management relations.
    The need to disclose an employer's use of consultants during an 
organizing campaign is a pivotal theme in this rulemaking. However, 
such disclosure also is important where an employer has engaged the 
persuader services of a consultant following a union's certification 
while the parties are negotiating a first contract. See 29 U.S.C. 
401(a) (a purpose of LMRDA is to protect employees right to bargain 
collectively); 29 U.S.C. 143 (under the NLRA, it is the declared policy 
of the United States to ``encourage[ ] the practice and procedure of 
collective bargaining . . . for the purpose of negotiating the terms 
and conditions of their employment''). As further explained in the 
margin, industrial relations research demonstrates that newly certified 
unions are much less likely to secure a first contract in cases in 
which the employer has hired a consultant.\19\ See Logan, Union Free 
Movement at 198, citing R. Hurd, Union Free Bargaining Strategies and 
First Contract Failures, in Proceedings of the 48th Meeting of the 
Industrial Relations Research Ass'n 145 (P. Voos ed. IRRA 1996), and G. 
Pavy, Winning NLRB Elections and Establishing Collective Bargaining 
Relationships, in Restoring the Promise of American Labor Law 110 
(Sheldon Friedman et al. eds. ILR Press 1994); Bronfenbrenner, Employer 
Behavior, at 84 (citing probability of winning first contract declining 
by 10 to 30 percent in bargaining units in which the employer utilizes 
a labor relations consultant). See 76 FR 36189. See also note 17 and 
text accompanying (describing the strategies used by a noted former 
consultant). Knowing that the employer has engaged the persuader 
services of a consultant will help employees assess the employer's 
position on unresolved issues and its characterization of the union's 
negotiating stance.
---------------------------------------------------------------------------

    \19\ First-contracts are crucial to newly certified unions. 
Under section 9(c)(3) of the NLRA, no elections may be held within 
one year of the election of an incumbent employee representative. 29 
U.S.C. 159(c)(3). Employers understand that unions that do not show 
results in bargaining during that first year are more vulnerable to 
challenges, including decertification petitions. As a result, 
employers may adopt strategies, with the assistance of consultants, 
to stall bargaining and prevent the adoption of a first contract. 
One year after an election in which employees voted in favor of 
union representation, only 48% of bargaining units with certified 
representatives have executed an initial collective bargaining 
agreement. Bronfenbrenner, No Holds Barred, at 22. The Department 
notes that the observed effects may not be entirely attributable to 
the use of a consultant, as some employers may be less supportive of 
unionization and may choose certain tactics and strategies 
independent of the use of a consultant.
---------------------------------------------------------------------------

    Concern about the impact of consultant activity on labor-management 
relations emanated from the Executive Branch as well. In March 1993, 
the Secretaries of Labor and Commerce announced the establishment of 
the U.S. Commission on the Future of Worker-Management Relations 
(Commission), which was charged with investigating and making 
recommendations regarding enhancement of workplace productivity and 
labor-management cooperation, among other areas. The Commission, also 
called the Dunlop Commission after its chairman, former Labor Secretary 
and Professor John T. Dunlop of Harvard University, held public 
hearings and took testimony on the state of labor relations in the 
early 1990s. The Commission issued a fact-finding report in June 1994 
and a final report in December of the same year, and the reports 
provide further support for the need for the revision of the 
interpretations involving consultant reporting.
    In assessing economic costs that labor and management face in the 
competition surrounding representation elections, the Commission found 
that ``[f]irms spend considerable internal resources and often hire 
management consulting firms to defeat unions in organizing campaigns at 
sizable cost.'' Commission on the Future of Worker-Management 
Relations, Fact-Finding Report, at 74 (May 1994). Indeed, the 
Commission concluded, the ``NLRA process of representation elections is 
often highly confrontational with conflictual activity for workers, 
unions, and firms that thereby colors labor-management relations.'' Id. 
at 75.
    The Department concludes that, as was true in the 1950s, the 
undisclosed use of labor relations consultants by employers--even where 
their activities are undertaken in strict accordance with the law--
impedes employees' exercise of their protected rights to organize and 
bargain collectively and disrupts labor-management relations.

C. History of the Department's Interpretation of Section 203(c)

    The ``advice'' exemption of LMRDA section 203(c) is reflected in 
the Department's implementing regulations, but, historically, the 
regulations simply tracked the language of the statute and did not set 
forth the Department's interpretation of the exemption. 29 CFR 
405.6(b), 406.5(b). Before this rule, the Department's interpretation 
of the advice exemption had been communicated primarily in documents 
intended to guide Department staff in administering the statute. See 76 
FR 36179-82.
    In 1960, one year after the passage of the Act, the Department 
issued its initial interpretation (sometimes referred to herein as the 
``original interpretation''), which was reflected in a 1960 technical 
assistance publication to guide employers. In this interpretation, the 
Department took the position that employers were required to report any 
``arrangement with a `labor relations consultant' or other third party 
to draft speeches or written material to be delivered or disseminated 
to employees for the purpose of persuading such employees as to their 
right to organize and bargain collectively.'' Department of Labor, 
Bureau of Labor-Management Reports,\20\ Technical Assistance Aid No. 4: 
Guide for Employer Reporting, at 18 (1960). The Department also took 
the position that a lawyer or consultant's revision of a document 
prepared by an employer was reportable activity. See Benjamin Naumoff, 
Reporting Requirements under the Labor-Management Reporting and 
Disclosure Act, in Fourteenth Annual Proceedings of the New York 
University Conference on Labor, at 129, 140-141 (1961).
---------------------------------------------------------------------------

    \20\ The Bureau of Labor-Management Reports is a predecessor 
agency to OLMS.
---------------------------------------------------------------------------

    In 1962, the Department changed its view of what must be reported. 
It limited reporting by construing the advice exemption more broadly, 
excluding from reporting the provision of materials to the employer 
that the employer could then ``accept or reject.'' This interpretation 
appeared as guidance in section 265.005 (Scope of the ``Advice'' 
Exemption) (1962) of the LMRDA Interpretative Manual (IM or Manual). 
The Manual reflects the Department's official interpretations of the 
LMRDA. The IM was prepared by OLMS predecessor agencies for use by 
staff in administering the LMRDA. OLMS maintains the IM and makes it 
available to the public upon request. Section 265.005 of the Manual 
stated:

    The question of application of the ``advice'' exemption requires 
an examination of the intrinsic nature and purpose of the 
arrangement to ascertain whether it essentially calls exclusively 
for advice or other services in whole or in part. Such a test cannot 
be mechanically or perfunctorily applied. It involves a careful 
scrutiny of the basic fundamental characteristics of any arrangement 
to determine whether giving advice or furnishing some other services 
is the real underlying motivation for it.

[[Page 15936]]

    [I]t is plain that the preparation of written material by a 
lawyer, consultant, or other independent contractor which he 
directly delivers or disseminates to employees for the purpose of 
persuading them with respect to their organizational or bargaining 
rights is reportable. . . .
    However, it is equally plain that where an employer drafts a 
speech, letter or document which he intends to deliver or 
disseminate to his employees for the purpose of persuading them in 
the exercise of their rights, and asks a lawyer or other person for 
advice concerning its legality, the giving of such advice, whether 
in written or oral form, is not in itself sufficient to require a 
report. Furthermore, we are now of the opinion that the revision of 
the material by the lawyer or other person is a form of written 
advice given the employer which would not necessitate a report.
    A more difficult problem is presented where the lawyer or 
middleman prepares an entire speech or document for the employer. We 
have concluded that such an activity can reasonably be regarded as a 
form of written advice where it is carried out as part of a bona 
fide undertaking which contemplates the furnishing of advice to an 
employer. Consequently, such activity in itself will not ordinarily 
require reporting unless there is some indication that the 
underlying motive is not to advise the employer. In a situation 
where the employer is free to accept or reject the written material 
prepared for him and there is no indication that the middleman is 
operating under a deceptive arrangement with the employer, the fact 
that the middleman drafts the material in its entirety will not in 
itself generally be sufficient to require a report.

(Italics added). In later years, the Department reiterated the 1962 
position (also referred to herein as the ``accept or reject'' test, or 
in distinction from the position taken in this rule, the ``prior'' 
interpretation), sometimes expressing doubts about its soundness. See 
Subcommittee on Labor-Management Relations, H. Comm. on Education and 
Labor, The Forgotten Law: Disclosure of Consultant and Employer 
Activity Under the L.M.R.D.A. (Comm. Print 1984) (statement of Richard 
Hunsucker, Director, Office of Labor-Management Standards Enforcement, 
Labor-Management Standards Administration, U.S. Department of Labor); 
Subcommittee on Labor-Management Relations, H. Comm. on Education and 
Labor, Pressures in Today's Workplace, at 4, 5 (Comm. Print 1980) 
(statement of William Hobgood, Assistant Secretary of Labor for Labor-
Management Relations). (The current interpretation ``when stretched to 
its extreme, . . . permits a consultant to prepare and orchestrate the 
dissemination of an entire package of persuader material while 
sidestepping the reporting requirement merely by using the employer's 
name and letterhead or avoiding direct contact with employees''). More 
recently, in 1989 the Department revisited the issue, stating in an 
internal memorandum:


    [T]here is no purely mechanical test for determining whether an 
employer-consultant agreement is exempt from reporting under the 
section 203(c) advice exemption. However, a usual indication that an 
employer-consultant agreement is exempt is the fact that the 
consultant has no direct contact with employees and limits his 
activity to providing to the employer or his supervisors advice or 
materials for use in persuading employees which the employer has the 
right to accept or reject.

March 24, 1989 memorandum from then Acting Deputy Assistant Secretary 
for Labor-Management Standards Mario A. Lauro, Jr. As a result of the 
Lauro memorandum, the approach that limited reporting to ``direct 
contact'' situations, while not strictly required by the 1962 
interpretation, became part of the Department's view of the advice 
exemption and has been generally followed since 1989 (with the 
exception of a brief period in early 2001).\21\
---------------------------------------------------------------------------

    \21\ The Department is aware of two instances where it took the 
position that indirect persuader activities triggered reporting. In 
1975, the Department filed suit against a consultant who directed 
and coordinated supervisors in a system of gathering information on 
union sympathies without direct contact. The case was settled after 
the consultants agreed to file the reports. See Statement of Richard 
G. Hunsucker on Labor Department Enforcement of Consultant Reporting 
Provisions of Landrum-Griffin Act, DLR No. 27, G-2 (Feb. 9, 1984) 
(BNA). In 1981, the Department brought suit arguing that the 
consultant engaged in indirect persuader activity. In this case, the 
employer consented to the entry of a court order requiring it to 
file reports. Id. Additionally, the Department may have taken that 
position in Martin v. Power, Inc., Civ. A. No. 92-385J (W.D. Pa.), 
1992 WL 252264. Although the opinion on a request to stay the 
Secretary's enforcement action is not entirely clear on this point, 
the Secretary may have argued that indirect contact by the 
consultant, as distinct from direct contact also involved in that 
case, had to be reported pursuant to section 203. Notwithstanding 
these actions, the Department's stance since has been that a 
consultant incurs a reporting obligation only when it directly 
communicates with employees with an object to persuade them. See 
International Union, United Auto., Aerospace, and Agricultural 
Implement Workers of America, UAW v. Donovan, 577 F. Supp. 398 
(D.D.C. 1983), aff'd in part, remanded in part by International 
Union, United Auto., Aerospace & Agr. Implement Workers of America 
v. Dole, 783 F.2d 237 (D.C. Cir. 1986); on remand, International 
Union v. Secretary of Labor, 678 F.Supp. 4 (D.D.C. 1988), rev'd, 
International Union, United Auto., Aerospace & Agr. Implement 
Workers of America v. Dole, 869 F.2d 616 (D.C. Cir. 1989). In these 
cases, the UAW challenged the Department's interpretation that a 
consultant-attorney's drafting of personnel policies to discourage 
unionization--an indirect persuader activity--did not trigger a 
reporting obligation. See International Union, United Auto., 
Aerospace & Agr. Implement Workers of America v. Dole, 869 F.2d at 
619. These cases are discussed in later sections of the preamble. 
See Sections V.B.1, .2.a.
---------------------------------------------------------------------------

    In 2001, the Department, without seeking public comment, published 
a revised interpretation, which expanded the scope of reportable 
activities, by focusing on whether an activity constitutes ``direct or 
indirect'' persuasion of employees, rather than categorically exempting 
activities in which a consultant had no direct contact with employees. 
See Interpretation of the ``Advice'' Exemption in Section 203(c) of the 
Labor-Management Reporting and Disclosure Act, 66 FR 2782 (Jan. 11, 
2001). However, later in 2001 this interpretation was rescinded, and 
the Department returned to its prior view. See Interpretation of the 
``Advice'' Exemption in Section 203(c) of the Labor-Management 
Reporting and Disclosure Act, 66 FR 18864 (Apr. 11, 2001).
    In its Fall 2009 Regulatory Agenda, the Department stated that it 
would revisit the interpretation to ensure that agreements involving 
persuader activities were not improperly excluded from reporting. On 
May 24, 2010, a public meeting was held on this issue. See 75 FR 27366. 
On June 21, 2011, the Department published the notice of proposed 
rulemaking (NPRM) on this issue. The comment period on the proposed 
rule closed on September 21, 2011.

IV. Revised ``Advice'' Exemption Interpretation

A. Summary of the Revised Interpretation

    This final rule adopts with some modifications the interpretation 
of the ``advice'' exemption outlined in the NPRM. The revised 
interpretation gives full effect to the statutory language, which 
requires disclosure of consultant activities that are intended 
``directly or indirectly'' to persuade employees concerning their 
organizing or collective bargaining rights. See 29 U.S.C. 433(a)(3) and 
(b) (emphasis added). Section 203 of the LMRDA is designed, in 
principal part, to shed light on the hidden activities of persuaders. 
Activities performed directly by consultants--such as delivering a 
speech to employees about why they should ``vote no'' in a union 
election, meeting with employees to dissuade them from joining the 
union, or sending a letter to employees, under his or her own 
signature, for the same purpose, have always triggered reporting, even 
under the Department's prior interpretation of the advice exemption, 
but that interpretation was so broad that it enabled consultants who 
undertook indirect persuader activities (such as writing a speech to be 
delivered by the employer or drafting a letter to employees for the 
employer's signature)

[[Page 15937]]

to skirt reporting, a result that contravenes the text and purpose of 
the LMRDA. The revised interpretation now brings to light those 
indirect persuader activities that have been hidden from public view. 
This rule adjusts how the Department construes the term ``advice,'' an 
interpretation that furthers the LMRDA's goals of transparency and 
labor-management stability. It is also consistent with the Department's 
initial, 1960 interpretation of the ``advice'' exemption.
    Under the revised interpretation, like the prior interpretation, 
activities that are clearly advice do not trigger reporting. Thus, ``an 
oral or written recommendation regarding a decision or course of 
conduct''--what traditionally has been viewed as the role of a 
consultant or attorney in counseling a client--does not trigger 
reporting.\22\ Agreements under which a consultant exclusively provides 
legal services or representation in court or in collective bargaining 
negotiations are not to be reported. ``Advice'' does not include 
persuader activities, i.e., actions, conduct, or communications by a 
consultant on behalf of an employer that are undertaken with an object, 
directly or indirectly, to persuade employees concerning their rights 
to organize or bargain collectively. If the consultant engages in both 
advice and persuader activities, however, the entire agreement or 
arrangement must be reported.
---------------------------------------------------------------------------

    \22\ As noted, both ``agreements'' and ``arrangements'' whereby 
the consultant undertakes activities with an object to persuade must 
be reported. For simplicity, this preamble often refers only to 
agreements. However, the same obligations attach to arrangements to 
persuade. Additionally, every ``person'' who, pursuant to an 
agreement with an employer, undertakes persuader activities is 
required to report pursuant to section 203(b). For simplicity, this 
preamble often refers only to ``consultants'' and their obligations 
to report persuader agreements pursuant to the section, but the same 
obligations attaches to all persons who enter into such agreements.
---------------------------------------------------------------------------

    No longer exempt from reporting are those agreements or 
arrangements in which the consultant engages in the indirect persuasion 
of employees. Such indirect persuader activities are no longer 
considered to be ``advice'' under LMRDA section 203(c), and, if 
undertaken, they now trigger reporting under sections 203(a) and (b). 
With this rule, the Department effectively reverses its prior 
interpretation of the advice exemption and will, accordingly, no longer 
utilize the ``accept or reject'' test. See Section III.C.
    The revised instructions to the Form LM-10 Employer Report and the 
Form LM-20 Agreement and Activities Report provide examples of 
reportable and non-reportable agreements or arrangements. See Section 
IV.E and Appendices. The revised instructions largely implement those 
proposed by the Department in the NPRM, but in response to comments 
received there are six changes: (1) Modifications to the text and 
layout of the instructions to ensure clarity, such as the inclusion of 
examples of indirect persuader activities that are now grouped into 
four categories (directing and coordinating supervisors' activities; 
providing persuasive materials; conducting union avoidance seminars for 
supervisors or other employer representatives; and developing and 
implementing personnel policies or actions); (2) restriction of the 
term ``object to persuade employees'' to only organizing and collective 
bargaining rights, and not the larger category of ``protected concerted 
activity''; (3) clarification regarding the reportability of union 
avoidance seminars and the elimination of duplicative reporting by 
employer-attendees; \23\ (4) distinguishing between trade associations 
and other labor relations consultants for some reporting purposes, 
including the elimination of reporting by trade associations where they 
merely sponsor union avoidance seminars or select ``off-the-shelf'' 
persuader materials for member-employers; \24\ (5) elimination of 
reporting for employee attitude surveys and related vulnerability 
assessments; and (6) clarification that reporting is not triggered by 
the employer's mere purchase or other acquisition of ``off-the-shelf'' 
persuader materials from a consultant without any input by the 
consultant concerning the selection or dissemination of the materials.
---------------------------------------------------------------------------

    \23\ Section 406.2 of the Department's regulations, 29 CFR 
406.2, has been revised, consistent with the instructions, to 
accommodate the adjusted filing date for reports concerning union 
avoidance seminars.
    \24\ ``Off-the-shelf'' materials refer to pre-existing material 
not created for the particular employer who is party to the 
agreement.
---------------------------------------------------------------------------

    This rule also implements changes to the employer and consultant 
reporting standards on the Forms LM-10 and LM-20 by expanding the 
reporting detail concerning reportable agreements and arrangements. The 
Department also modifies the layout of the LM-10 and LM-20 forms and 
instructions to better set forth the reporting requirements and improve 
the readability of the information. Finally, this rule requires that 
Form LM-10 and Form LM-20 reports be submitted to the Department 
electronically and provides a process to apply for an electronic filing 
exemption on the basis of specified criteria. These changes to the 
forms are discussed in more detail in Section IV.D.
    This rule supersedes any inconsistent interpretation or other 
guidance issued by the Department concerning the persuader reporting 
requirements of the Act insofar as Forms LM-10 and LM-20 are 
concerned.\25\
---------------------------------------------------------------------------

    \25\ Section 265.005 of the IM contains the Department's prior 
interpretation of the advice exemption, and it therefore is 
superseded in its entirety. Section 255.600 is inconsistent with the 
final rule to the extent the former provides in its third example 
that an indirect persuader activity is non-reportable as ``advice.'' 
Sections 257.100, 258.005, 260.500, 260.600 of the IM will need to 
be read in conjunction with the final rule insofar as reporting by a 
trade association is concerned. Similarly, section 262.005 will need 
to be read in conjunction with the final rule in addressing the 
timeliness of reports triggered by presenting a union avoidance 
seminar. OLMS intends to update these and other sections of the IM 
to reflect the most current reporting requirements.
---------------------------------------------------------------------------

    The comments submitted on the proposed rule reflected strongly 
divergent views as to how the reporting requirements of section 203 
should be applied, how section 203 and the proposed interpretation 
squares with the NLRA, whether the proposed interpretation 
unconstitutionally impedes the First Amendment rights of employers, and 
whether it is inconsistent with the principles protecting the attorney-
client relationship. The Department has carefully considered the 
comments, which have been helpful in informing the Department's 
judgment. For the reasons stated in this preamble, however, the 
Department has concluded that the proposed and final rules correctly 
effectuate the purposes of section 203 and faithfully adhere to 
national labor policy, as articulated in the NLRA and the LMRDA, 
without impeding any constitutional rights of employers or interfering 
with the attorney-client relationship as properly understood in the 
context of sections 203 and 204 of the LMRDA.

B. Revised Advice Exemption Overview

    This rule restores the focus of section 203 persuader reporting to 
whether a consultant's activities, undertaken pursuant to an agreement 
or arrangement with the employer, have an object to persuade employees 
about their union representation and collective bargaining rights. This 
focus forecloses an interpretation that allowed non-reporting of most 
activities simply by avoiding direct contact with employees. The 
revised instructions, consistent with the language and purpose of 
sections 203 and 204 of the LMRDA, provide that an agreement or 
arrangement is reportable if the consultant undertakes activities with 
an object to persuade employees, for example, by managing a union

[[Page 15938]]

avoidance or counter-organizing campaign. In practical terms, employers 
and consultants must report all direct and indirect activities 
undertaken by the consultant with an object to persuade employees, 
exempting only activities that come within the plain meaning of 
``advice'' to the employer, as well as the employer representation 
services enumerated in section 203(c), other legal services for the 
employer, and other consultant activities that, similarly, do not have 
an object to persuade employees.
    There are five general scenarios in which the underlying test for 
persuasion is to be applied, one in which the consultant engages in 
direct contact with employees and four in which the consultant does not 
engage in direct contact:
    Reporting of an agreement or arrangement is triggered when:
    (1) A consultant engages in direct contact or communication with 
any employee, with an object to persuade such employee; or
    (2) A consultant who has no direct contact with employees 
undertakes the following activities with an object to persuade 
employees:
    (a) Plans, directs, or coordinates activities undertaken by 
supervisors or other employer representatives, including meetings and 
interactions with employees;
    (b) provides material or communications to the employer, in oral, 
written, or electronic form, for dissemination or distribution to 
employees;
    (c) conducts a seminar for supervisors or other employer 
representatives; or
    (d) develops or implements personnel policies, practices, or 
actions for the employer.\26\
---------------------------------------------------------------------------

    \26\ In this connection, the instructions to the forms, which 
include these scenarios, also provide:
    The consultant's development or implementation of personnel 
policies or actions that improve employee pay, benefits, or working 
conditions do not trigger reporting merely because the policies or 
actions could subtly affect or influence the attitudes or views of 
the employees; rather, to be reportable, the consultant must 
undertake such activities with an object to persuade employees, as 
evidenced by the agreement, any accompanying communications, the 
timing, or other circumstances relevant to the undertaking.
---------------------------------------------------------------------------

    The activity that triggers the consultant's requirement to file the 
Form LM-20 also triggers the employer's obligation to report the 
agreement on the Form LM-10, with the exception of union avoidance 
seminars, as explained below.
1. Categories of Persuasion
    Direct Persuasion. Consultants must report if they engage in any 
conversation or other direct communication with any employee where the 
consultant has an object to persuade. For example, reporting would be 
required if the consultant speaks directly with employees (in person or 
by telephone or other medium) or disseminates materials directly (such 
as emailing or mailing) with an intent to persuade.
    Indirect Persuasion: Planning, Directing, or Coordinating 
Supervisors or Managers. Reporting is required if the consultant, with 
an object to persuade, plans, directs, or coordinates activities 
undertaken by supervisors or other employer representatives. This 
includes both meetings and other less structured interactions with 
employees. The following nonexclusive factors are indicia of a 
consultant using supervisors to engage in indirect persuasion: The 
consultant plans, directs or coordinates which employees they meet; 
where they meet them; when they meet; for how long they meet; the 
topics discussed and the manner in which they are presented; the 
information gathered from the employees and how they should gather it; 
debriefing with the supervisor to orchestrate the next steps in the 
campaign; and identifying materials to disseminate to employees.
    Indirect Persuasion: The Provision of Persuader Materials. 
Reporting is required if the consultant provides, with an object to 
persuade, material or communications to the employer, in oral, 
electronic (including, e.g., email, Internet, or video documents or 
images), or written form, for dissemination or distribution to 
employees. While a lawyer who exclusively counsels an employer-client 
may provide examples or descriptions of statements found by the 
National Labor Relations Board (NLRB) to be lawful, this differs from 
the attorney or other consultant affirmatively drafting or otherwise 
providing to the employer a communication tailored to the employer's 
employees and intended for distribution to them. The latter is 
reportable; the former is not.
    As to a consultant's revision of employer-created materials, 
including edits, additions, and translations, if an ``object'' of the 
revisions is to ensure legality as opposed to persuasion, then they do 
not trigger reporting. An object to persuade is also not present if the 
consultant merely corrects typographical or grammatical errors or 
translates the document. In contrast, if such revisions are intended to 
increase the persuasiveness of the material, then they trigger 
reporting. The principle here is that the revision of materials is no 
different than the initial creation of the materials: The consultant 
still plays a role in completing them. The only issue is whether there 
is an object to persuade.
    As for the provision of ``off-the-shelf'' materials, as explained 
below, the Department has revised the application of the advice 
exemption in these situations. As noted, ``off-the-shelf'' materials 
refer to pre-existing material not created for the particular employer 
who is party to the agreement. Where a consultant merely provides an 
employer with such material selected by the employer from a library or 
other collection of pre-existing materials prepared by the consultant 
for all employer clients, then no reporting is required. The consultant 
may provide information concerning the materials, such as explaining 
their content and origin, but such guidance does not trigger reporting. 
As mentioned above, the provision of off-the-shelf materials, without 
more, is not reportable. In contrast, if the consultant plays an active 
role in selecting the materials for its client's employees from among 
pre-existing materials based on the specific circumstances faced by the 
employer-client, then this activity would trigger reporting, because it 
demonstrates the consultant's intent to influence the decisions of 
those employees. However, where a trade association selects off-the-
shelf materials for its members, no reporting is required. See Section 
V.E.3, discussing trade associations.
    Indirect Persuasion: Conducting a Seminar for Supervisors or Other 
Employer Representatives. Some labor relations consultants and 
attorneys hold seminars on a range of labor-management relations 
matters, including how to persuade employees concerning their 
organizing and bargaining rights. The types of services offered by the 
consultants to the employer representatives vary with each seminar, but 
often include presentations, activities, and the distribution of 
materials on how to contest or avoid unionization.
    Seminar agreements must be reported when the consultant develops or 
assists the attending employers in developing anti-union tactics and 
strategies for use by the employers' supervisors or other 
representatives. In those cases, the consultant is not advising an 
employer as the term ``advise'' is traditionally defined and understood 
(i.e., recommending a decision or course of action), but instead is 
undertaking activities that have as their object influencing that 
employers' employees in their representation and collective bargaining 
rights. In contrast, a consultant who, for example, merely

[[Page 15939]]

solicits business by recommending that the employer hire the contractor 
to engage in persuasive activities does not trigger reporting.
    In no case, however, is the employer required to file a Form LM-10 
for attendance at a multiple-employer union avoidance seminar. 
Additionally, see below, under ``Exempt Agreements or Arrangements,'' 
for specific application to trade associations.
    Indirect Persuasion: Developing or Implementing Personnel Policies 
or Actions. Reporting is required only if the consultant develops or 
implements personnel policies or actions for the employer that have as 
an object to, directly or indirectly, persuade employees (e.g., the 
identification of specific employees for disciplinary action, or 
reward, or other targeting, based on their involvement with a union 
representation campaign or perceived support for the union, or 
implementation of personnel policies or practices during a union 
organizing campaign). This encompasses two types of activities: (a) 
Creating persuasive personnel policies; and (b) identifying particular 
employees (or groups of employees) for personnel action, with an object 
to persuade employees about how they should exercise their rights to 
support (or not) union representation or a union's collective 
bargaining proposal.
    As an example, if the consultant, in response to employee 
statements about the need for a union to protect against firings, 
develops a policy under which employees may arbitrate grievances, 
reporting would be required. On the other hand, if the grievance 
process was set up in response to a request by employees--without any 
history of a desire by them for union representation--or as a policy 
developed as part of a company's startup of operations, without any 
indication in the agreement or accompanying communications that the 
policy was established to avoid union representation of the employer's 
workforce, no reporting would be required. The key questions to ask in 
this situation are: Did the consultant develop the policy? If so, did 
the consultant develop the policy with an object to persuade employees? 
To reiterate, one must look at the object of the consultant, as 
evidenced in the agreement or arrangement, any communication 
accompanying the policy or action, the timing (including any labor 
dispute involving the employer), or other circumstances relevant to the 
undertaking.
    For personnel actions, this rule requires reporting if the 
consultant identifies or assists in identifying specific employees for 
reward or discipline, or other targeted persuasion, because of the 
employees' exercise or potential exercise of organizing and collective 
bargaining rights or the employees' views concerning such rights. Even 
if another motive for a personnel action is shown, as long as an object 
is to persuade, then reporting is triggered. In contrast, if a lawyer 
merely reviews proposed employee actions presented by the employer, 
drafts notices, and settles any litigation, the lawyer has not 
triggered reporting.
    As a result, the Department clarifies in this rule that the 
consultant's development of personnel policies and actions is not 
reportable merely because the consultant develops policies or 
implements actions that improve the pay, benefits, or working 
conditions of employees, even where they could subtly affect or 
influence the attitudes or views of the employees. To be reportable, as 
with the other categories of persuasion, the consultant must undertake 
the activities with an object to persuade employees, as evidenced by 
the agreement, any accompanying communication, the timing, or other 
circumstances relevant to the undertaking.
2. Exempt Agreements or Arrangements
    Agreements or arrangements in which the consultant does not 
undertake activities with an object to persuade employees are not 
reportable. A lawyer or other consultant who exclusively counsels 
employer representatives on what they may lawfully say to employees, 
ensures a client's compliance with the law, offers guidance on employer 
personnel policies and best practices, or provides guidance on NLRB or 
National Mediation Board (NMB) practice or precedent is providing 
``advice.'' ``Advice'' means an oral or written recommendation 
regarding a decision or a course of conduct.
    The revised instructions also clarify that a lawyer's review of 
documents, as a general rule, does not trigger the reporting 
requirements. For example, the revision of an employer-created 
persuasive document to ensure its legality does not trigger reporting. 
Further, a consultant explaining to the employer NLRB decisions 
concerning lawful and unlawful conduct would not trigger reporting. 
Correcting spelling or grammar mistakes in the document will also not 
trigger reporting. However, the creation of a speech or flyer by the 
consultant or revising an employer created document to further dissuade 
employees from supporting the union, will trigger reporting. Similarly, 
other services outlined in section 203(c), concerning representation of 
the employer before a court or similar tribunal or during collective 
bargaining negotiations, do not trigger reporting, as they also do not 
evidence an object to persuade employees. Instead, these services 
involve the representation of employers.
    Additionally, as stated, this rule clarifies the reporting of 
seminars. (Seminars that are reportable are explained above and in this 
section; differences with the NPRM are explained in ``Changes from the 
NPRM,'' below, and Part V.E.1 (Seminars).) No consultant report is 
required for an agreement or arrangement to offer a seminar in which 
the consultant does not develop or assist the attending employers in 
developing anti-union tactics or strategies for use by the employers' 
supervisors or other representatives. Such seminars consist of only 
guidance to the employers in attendance, and therefore do not 
demonstrate that the consultant has an object to persuade employees. 
Moreover, as explained in the next section of the rule focusing on the 
remainder of the revised instructions, employers will not be required 
to file reports concerning their attendance at union avoidance 
seminars.
    The Department has also revisited the reportability of employee 
attitude surveys and, in the larger context, union ``vulnerability 
assessments,'' in which a consultant evaluates an employer's proneness 
to union-related activity and offers possible courses of action. The 
Department concludes that agreements or arrangements for consultants to 
conduct these types of surveys and assessments are generally not 
reportable. The use of employee attitude surveys do not ordinarily 
evince an object to persuade employees, although they may do so in rare 
circumstances, such as with ``push surveys,'' which seek to persuade 
employees rather than gather insight into their views. Certain employee 
attitude surveys could nonetheless trigger reporting as an information-
supplying activity, if the feedback more specifically concerns employee 
activities during a labor dispute. However, generally speaking, such 
employee attitude surveys are not reportable, as they consist of 
general guidance and recommendations to the employer.
    Also, no reporting is required for an agreement or arrangement that 
exclusively includes an employer's purchase or acquisition of pre-
existing or off-the-shelf persuasive materials, without coordination by 
the consultant concerning the selection, tailoring, or

[[Page 15940]]

dissemination of the materials. (However, the Department notes that 
this general policy on pre-existing materials applies only to 
persuasive communications, not information-supplying concerning the 
employees or union involved in a labor dispute. For example, pursuant 
to longstanding Departmental policy, if the employer and consultant 
have an agreement whereby the consultant agrees to provide information 
on the bargaining practices of a union in connection with a labor 
dispute involving the employer, the agreement must be reported unless 
the information is derived solely from public sources). See Employer 
and Consultant Reporting, Technical Assistance Aid No. 6, U.S. 
Department of Labor, Labor-Management Services Administration (1964), 
at 12.
    Where, however, a consultant drafts for an employer, in whole or 
part, a persuasive speech or creates a persuasive video or any other 
communication intended to be disseminated to particular employees, such 
activity triggers reporting because the activity has an object to 
persuade. Similarly, if an employer contacts a consultant to coordinate 
the selection and purchase of pre-existing persuasive materials, or to 
direct or coordinate the use of the materials by the employer, then 
this would be evidence of an object to persuade by the consultant, and 
such an activity would trigger reporting of the underlying agreement or 
arrangement.
    Finally, trade associations are not required to file a report, 
where by reason of their membership agreements, the associations select 
off-the-shelf persuader materials for their member-employers, or 
distribute newsletters addressed to their member-employers.\27\ As 
explained in more depth below in Section V.E.3, there are significant 
practical difficulties associated with requiring trade associations to 
report such activities and such reporting would impose substantial 
burden on such associations without corresponding disclosure benefits 
to employees and the public. Accordingly, under the final rule trade 
associations as a general rule will only be required to report in two 
situations--where the trade association's employees serve as presenters 
in union avoidance seminars or where they undertake persuader 
activities for a particular employer or employers (other than by 
providing off-the shelf materials to employer-members). See Section 
V.E.3.
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    \27\ Where an association publishes a newsletter for employees 
of their member-employers, the inclusion of any material with an 
object to persuade would trigger reporting as has always been the 
case under the Department's regulations. See Master Printers of 
America v. Donovan, 751 F.2d 700 (4th Cir. 1984) (discussed further 
in Sections V.E.3. G.1).
---------------------------------------------------------------------------

3. Changes From the NPRM
    As explained in more detail in Part V of this rule, the Department 
has made several changes to the revised advice exemption instructions, 
in response to comments received.
    First, the Department has made significant changes to the text and 
format of the instructions in order to ensure clarity. These changes 
include the categorizing of indirect persuasion; the determination to 
not infer an ``object to persuade'' from a consultant's development or 
implementation of personnel policies that merely improve pay, benefits, 
or working conditions; and other rewording and reorganization, 
including additional material on information-supplying and further 
examples in the exempt agreements or arrangements section.
    Second, the Department clarifies that consultant-led seminars are 
reportable if the consultant develops or assists the employers in 
developing anti-union tactics and strategies to be utilized by their 
supervisors and other representatives. In this regard, the Department 
has also limited the reporting of union avoidance seminars sponsored by 
trade associations and eliminates the obligation for employers to 
report their attendance. Where reporting is triggered by presenting a 
union avoidance seminar, a report is not due until 30 days after the 
date of the seminar. Section 406.2(a) has been revised to reflect this 
change from the general rule that a report is due within 30 days after 
a persuader agreement is reached, rather than the date on which the 
activity undertaken by the agreement occurs.
    Third, the Department exempts from reporting agreements or 
arrangements exclusively involving vulnerability assessments, including 
employee surveys other than the ``push'' variety. Generally these 
assessments are not reportable as they provide guidance on an 
employer's proneness to union-related activity by its employees. 
Surveys would only trigger reporting if they are persuasive, such as 
push surveys, or if they are information-supplying activities in the 
context of a labor dispute, such as information gained through the 
consultant's use of surveillance technology. See Section V.E.1 
(Employee Attitude Surveys/Employer Vulnerability Assessments).
    Fourth, the Department has exempted agreements exclusively 
consisting of providing pre-existing or off-the-shelf materials, unless 
the materials were selected by the consultant. (As noted above, a trade 
association is not required to file a report if it selects such 
materials for its member-employers.)
    Fifth, the Department in this rule distinguishes between trade 
associations and other labor relations consultants for some reporting 
purposes, including the elimination of reporting by trade associations 
where they merely sponsor union avoidance seminars or select off-the-
shelf persuader materials for member-employers.
    Finally, the Department has dropped the term ``protected concerted 
activities'' from the definition of ``object to persuade employees.'' 
Instead, reporting is required only for agreements in which the 
consultant engages in activities with an object to persuade employees 
concerning representational and collective bargaining activities, but 
not ``other protected concerted activities.'' This better comports with 
the language of section 203, which, in contrast to the NLRA, does not 
expressly refer to ``concerted activities.''
4. Reportable Information-Supplying Agreements
    The final rule does not make any changes to reporting requirements 
for information-supplying activities, including the information-
supplying checklist on Form LM-10 and LM-20. In the revised advice 
exemption section of the Form LM-10 and LM-20 instructions, however, 
the Department has added language that explains reporting in such 
situations, and has included a description of the term ``labor 
dispute'' from section 3(g) of the statute.
    The amended Form LM-10 and LM-20 instructions appear in full in the 
appendices to this rule.

C. The Statutory Basis for the Revised Interpretation \28\
---------------------------------------------------------------------------

    \28\ This topic is discussed at greater length in Section V.B of 
the preamble.
---------------------------------------------------------------------------

    This rule reflects the language and purpose of sections 203 and 204 
of the LMRDA, effectuating the intent of Congress and resolving any 
tension or ambiguity in those sections, consistent with the authority 
and discretion embodied in the statute.\29\ Section 203(a) requires 
employers to report to

[[Page 15941]]

the Department of Labor ``any agreement or arrangement with a labor 
relations consultant . . . pursuant to which such person undertakes 
activities where an object thereof, directly or indirectly, is to 
persuade employees . . .'' with respect to their organizing and 
collective bargaining rights. 29 U.S.C. 433(a)(4). Section 203(b) 
imposes a similar reporting requirement on labor relations consultants 
and other persons who undertake such persuader activities on behalf of 
an employer. 29 U.S.C. 433(b).
---------------------------------------------------------------------------

    \29\ That the ``advice'' exemption of LMRDA section 203(c) might 
pose interpretive challenges was quickly clear to at least some 
observers. See, e.g., Bureau of National Affairs, The Labor Reform 
Law 36 (1959) (``The exemption applicable to consultants who merely 
give advice is susceptible of several different interpretations . . 
. It is questionable whether the exemption would also cover payments 
to a consultant who drafted anti-union letters and otherwise mapped 
out a campaign to combat union organizing'').
---------------------------------------------------------------------------

    Section 203(c) exempts any employer, labor relations consultant, or 
other person from filing a report under section 203(a) or (b) 
``covering the services of such person by reason of his giving or 
agreeing to give advice to such employer.'' 29 U.S.C. 433(c). Section 
203(c) makes explicit what is left implicit in section 203(a) and (b): 
The statute exempts an employer or its labor relations consultant from 
having to file the Form LM-10 or LM-20, respectively, if the activities 
undertaken by the consultant on behalf of the employer merely 
constitute ``advice.''
    The Department recognizes, however, as it has in the past, that the 
LMRDA is ambiguous as to whether the coverage provisions in sections 
203(a) and (b) or the advice exemption in section 203(c) control in 
situations where the consultant undertakes indirect activities to 
persuade employees. See International Union v. Secretary of Labor, 678 
F. Supp. 4, 6 (D.D.C. 1988) (``The Secretary argues that the 
juxtaposition of the two provisions creates an ambiguity which he is 
entitled to resolve and the resolution of which the courts must 
respect''). This ambiguity arises, in part, because of the statute's 
silence with respect to the definitions of ``advice'' and ``persuade,'' 
creating confusion as to what indirect consultant activities can or 
should be categorized as nonreportable advice or reportable persuasion. 
A review of the legislative history confirms that Congress did not 
speak directly, through the statutory text or otherwise, to the 
application of the reporting requirements in situations involving the 
indirect persuasion of employees. While Congress intended a ``broad'' 
exemption for activities constituting the giving of advice, the 
legislative history confirms that Congress also did not wish to do so 
at the expense of reporting persuader activities. It did not, by way of 
example, limit reporting to just situations that constituted unfair 
labor practices, but, rather, required reporting for the broader 
category of persuader activity. See discussion herein at Section III.B.
    As discussed in the NPRM, the Department originally interpreted 
section 203 to require reporting of all persuader activities, but it 
changed that interpretation in 1962 by establishing the ``accept or 
reject'' test, which over time essentially limited reporting to 
activities involving direct communication between consultants and 
employees. 76 FR 36180. In this rule, we have identified both direct 
and indirect persuader activities and distinguished these from 
activities that constitute non-reportable ``advice.'' ``Advice'' 
ordinarily is understood to mean a recommendation regarding a decision 
or a course of conduct. See, e.g., Merriam-Webster's Collegiate 
Dictionary (10th ed. 2002) (defining ``advice'' as ``recommendation 
regarding a decision or course of conduct: counsel''); Black's Law 
Dictionary (online) (8th ed. 2004) (defining ``advice'' as ``guidance 
offered by one person, esp. a lawyer, to another''); The Oxford English 
Dictionary (2d ed. 1989) (defining ``advice'' as ``opinion given or 
offered as to action; counsel. spec. medical or legal counsel''). This 
common construction of ``advice'' does not rely on the employer's 
ability to accept or reject materials obtained from the consultant, an 
element viewed as significant under the prior interpretation. As noted 
in the NPRM, a consultant's preparation and supply of persuader 
materials to an employer goes beyond offering a recommendation or 
counsel about an issue to the employer; instead its services provide 
the means by which the employer communicates its views to employees in 
order to persuade them how to exercise their choice on matters 
affecting representation and collective bargaining rights. See 76 FR 
36183.
    The prior ``advice'' standard in section 265.005 of the IM treats 
as advice not only the situation in which a lawyer consultant reviews 
drafts of persuasive material for compliance with the NLRA--actions 
which under this rule continue to not trigger reporting--but also 
covers the preparation of persuasive material to be disseminated or 
distributed to employees--actions which under this rule do trigger 
reporting. As discussed in the NPRM, the Department views preparation 
of material designed to persuade employees as ``quintessential 
persuader activity.'' See 76 FR 36183.
    Under this rule, reporting is required when, pursuant to an 
arrangement or agreement, the consultant does not limit its activities 
to advising the employer, but engages in activities, either directly or 
indirectly, aimed at persuading or influencing, or attempting to 
persuade or influence, employees as to how to exercise their union 
representation and collective bargaining rights. See discussion in 
Section V.B.
    The Department notes that section 203(c) exempts from the reporting 
requirement a consultant's services ``by reason of his giving or 
agreeing to give advice'' (emphasis added), indicating that reporting 
would be required by reason of other consultant activities that do have 
an object to persuade. Further, sections 203(a) and (b) specifically 
require reporting when a consultant undertakes activities with an 
object to ``directly or indirectly'' persuade employees, indicating 
that indirect methods of consultant persuasion also trigger reporting. 
The statute also specifies that an object of the consultant's activity 
must be to persuade, not the object, thus further supporting the view 
that the coverage provision applies in the case of indirect activities.
    The Department has carefully considered the comments that discussed 
the interpretative questions presented in this rulemaking, and we 
conclude that the prior interpretation of the advice exemption, while 
permissible, was not the best interpretation. The Department remains of 
the view that its revised approach is faithful to the language and 
purpose of the LMRDA. This approach restores a more appropriate balance 
between reportable persuader activities and those that are properly 
characterized as ``advice'' than achieved under the Department's prior 
interpretation. The prior interpretation largely exempted from 
reporting persuader agreements that exclusively involved indirect 
persuasion. As a consequence, despite the widespread growth of the 
labor relations consultant industry--and its extensive involvement in 
all but a small and shrinking number of campaigns to persuade employees 
to reject union representation--very few reports are being filed by 
consultants or employers. Further, the literature discussed in this 
preamble and the NPRM and the experiences related by many commenters 
indicate that this practical impact is quite large because most 
employers hire consultants to manage anti-union campaigns or programs, 
with most of these consultants using exclusively indirect persuasion. 
This information illustrates why the prior interpretation did not 
implement the full persuader-reporting regime envisioned by Congress. 
The prior interpretation therefore resulted in underreporting of 
persuader agreements, to the detriment of an informed workforce, 
collective bargaining rights, and stable labor relations.

[[Page 15942]]

D. Revised Form LM-20, LM-10, and Instructions

    The Department has not revised the Form LM-20 and Form LM-10 since 
the republication of the forms in 1963. See 28 FR 14381. With these 
changes to the interpretation of the advice exemption of section 
203(c), the Department revises Form LM-20 and Form LM-10 and their 
instructions. The Department is also revising Sec. Sec.  405.5 and 
405.7 of title 29 of the Code of Federal Regulations to update cross-
references in those sections to the instructions.
    While some of the revisions are minor stylistic and layout 
modifications there are four significant changes: (1) The revised 
interpretation of the advice exemption, including examples of 
activities that will trigger reporting and those that do not; (2) the 
mandating of electronic filing for each form, with language in each set 
of instructions depicting such process and guidance concerning the 
application for a hardship exemption from such electronic filing; (3) 
the addition of a detailed checklist that Form LM-20 and Form LM-10 
filers must complete to disclose the scope of activities that 
consultants have engaged, or intend to engage, in under a reportable 
agreement or arrangement; (3) the changes to the Forms LM-20 and LM-10 
and their instructions, including the requirement for filers to report 
their Employee Identification Number, as applicable, and explanations 
for terms ``agreement or arrangement'' and ``employer''; and (4) a 
revamped layout for the Form LM-10, which divides the report into four 
parts, each presenting aspects of the reportable transactions, 
agreements, and arrangements required by sections 203(a)(1)-(5) of the 
LMRDA, in a more user-friendly manner.
    Unless otherwise noted in this preamble, each of these changes is 
identical to what the Department proposed in the NPRM.\30\ See 76 FR 
36193-96. In addition to the changes to the ``advice'' interpretation 
instructions, the other significant area of substantive change concerns 
consultants' reporting of seminars on the Form LM-20. (Note: employers 
are not required to report attendance at union avoidance seminars on 
the Form LM-10.) The Department's response to comments is discussed 
below, in Section V, and the complete, revised Forms LM-20 and LM-10, 
including instructions, are contained in the appendices to this rule.
---------------------------------------------------------------------------

    \30\ The Department has also made minor, non-substantive changes 
throughout the revised Form LM-20 and Form LM-10 instructions, as 
compared with the proposed instructions.
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1. Mandatory Electronic Filing for Form LM-20 and Form LM-10 Filers
    This rule requires that employers and consultants file Form LM-20 
and Form LM-10 reports electronically. An electronic filing option is 
planned for all LMRDA reports as part of an information technology 
enhancement. Electronic reporting contains error-checking and trapping 
functionality, as well as online, context-sensitive help, which 
improves the completeness of the reporting. Electronic filing is more 
efficient for reporting entities, results in more immediate 
availability of the reports on the agency's public disclosure Web site, 
and improves the efficiency of OLMS in processing the reports and in 
reviewing them for reporting compliance. In contrast, paper reports 
must be scanned and processed for data entry before they can be posted 
online for disclosure, which delays their availability for public 
review.
    Currently, labor organizations that file the Form LM-2 Labor 
Organization Annual Report are required by regulation to file 
electronically, and there has been good compliance with this 
requirement. Like labor unions, employers and consultants have the 
information technology resources and capacity to file electronically. 
Further, OLMS has improved the technology utilized in its electronic 
filing process and eliminated the expenses formerly associated with 
such filing.
    The revised forms will be completed online, signed electronically, 
and submitted with any required attachments to the Department using the 
OLMS Electronic Forms System (EFS). The electronic forms can be 
downloaded from the OLMS Web site at www.olms.dol.gov.
    The revised Form LM-20 and Form LM-10 instructions outline a 
process for seeking an exemption from the electronic filing requirement 
that is identical to the Form LM-2 process. See Form LM-2 Instructions, 
Part IV: How to File, located at: www.dol.gov/olms/regs/compliance/EFS/LM-2_InstructionsEFS.pdf. A filer will be able to file a report in 
paper format only if the filer asserts a temporary hardship exemption 
or applies for and is granted a continuing hardship exemption. The 
temporary hardship exemption process, which is currently in place for 
Form LM-2 filing,\31\ will be applied to mandatory electronic filing of 
the Forms LM-20 and LM-10. The process is set out in full in the 
instructions. See Appendices.
---------------------------------------------------------------------------

    \31\ See https://www.dol.gov/olms/regs/compliance/GPEA_Forms/LM-2_Instructions4-2015_techrev.pdf, at 2.
---------------------------------------------------------------------------

2. Detailing the Activities Undertaken Pursuant to a Reportable 
Agreement or Arrangement
    The prior instructions to the Form LM-20 and Form LM-10 did not 
provide detailed guidance to the filer concerning how to report the 
nature of the activities undertaken by a consultant pursuant to an 
agreement or arrangement to persuade. For example, the prior Form LM-20 
instructions\32\ for Item 11, Description of Activities, stated:
---------------------------------------------------------------------------

    \32\ The prior Form LM-20 form and instructions are available on 
the OLMS Web site at: https://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-20p.pdf and https://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-20_Instructions_3_2015.pdf.
---------------------------------------------------------------------------

    For each activity to be performed, give a detailed explanation of 
the following:

    11a. Nature of Activity. Describe the nature of the activity to 
be performed. For example, if the object of the activity is to 
persuade the employees of Employer X to vote ``no'' on a 
representation election, so state.

    Similarly, the prior Form LM-10 instructions\33\ in Item 12, 
Circumstances of all Payments, states:
---------------------------------------------------------------------------

    \33\ The prior Form LM-10 form and instructions are available on 
the OLMS Web site at: https://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-10p.pdf and https://www.dol.gov/olms/regs/compliance/GPEA_Forms/lm-10_instructions_3_2015.pdf.

    [You] must provide a full explanation identifying the purpose 
and circumstances of the payments, promises, agreements, or 
arrangements included in the report. Your explanation must contain a 
detailed account of services rendered or promised in exchange for 
promises or payments you have already made or agreed to make. Your 
explanation must fully outline the conditions and terms of all 
---------------------------------------------------------------------------
listed agreements.

    In practice, the Department received only vague descriptions of 
persuader or information-supplying activity, such as ``employed to give 
speeches to employees regarding their rights to organize and bargain 
collectively'' and ``presented informational meetings to company 
employees relative to the process of unionization, the role of the 
NLRB, and collective bargaining.''
    As the review of the literature above has demonstrated, a wide 
range of activities and tactics have been utilized by employers, and 
employees and the public have a need to know in detail the types of 
activities in which consultants engage.\34\ Vague and brief narrative

[[Page 15943]]

descriptions and characterizations that have been permitted on the 
prior Form LM-20 serve little utility, and a checklist of activities is 
the best way to ensure more complete reporting of such persuader 
activities. Additionally, filers are provided an ``Other'' box on the 
checklist, and will be required to check this box and separately 
identify any other persuader or information-supplying activities that 
are not listed in the checklist. In the Department's view, the use of 
the checkboxes and the revised instructions for completing the form 
will make it easier for filers to comply with their reporting 
obligation.
---------------------------------------------------------------------------

    \34\ Various studies reflect the types of activities typically 
used by employers (as noted above, usually working with consultants) 
in response to union organizing campaigns: Between 82% and 93% of 
employers held ``captive audience'' meetings; between 70% and 75% of 
employers distribute leaflets in the workplace; between 76% and 98% 
of employers utilize supervisor one-on-one sessions; between 48% and 
59% of employers promised improvements; and between 20% and 30% of 
employers granted unscheduled raises. See Logan, U.S. Anti-Union 
Consultants, at 5, Table 1, compiling and citing results from 
Bronfenbrenner, Employer Behavior, at 75-89; Kate Bronfenbrenner, 
U.S. Trade Deficit Review Commission, Uneasy Terrain (2000); Rundle, 
Winning Hearts and Minds, at 213-231; and Mehta and Theodore, 
Undermining the Right to Organize.
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3. Revised Form LM-20 and Instructions
    The revised Form LM-20 and instructions (see Appendix A) largely 
follow the layout of the prior form and instructions, although the 
style has been altered. The revised form is two pages in length and 
contains 14 items. The first page includes the first five items, which 
detail contact and identifying information for the consultant: The file 
number (Item 1.a.) and contact information for the consultant (Item 2), 
including information detailing alternative locations for records (Item 
3), the date the consultant's fiscal year ends (Item 4), and the type 
of filer (Item 5), i.e., an individual, partnership, or corporation. 
The revised new Item 2 requires the consultant to provide, if 
applicable, its Employer Identification Number (EIN), which assists the 
Department and the public in identifying and analyzing other filings by 
the consultant and any individuals and entities reported on the form. 
The new Items 1.b. and 1.c. are for the filer to indicate if the report 
is filed pursuant to a hardship exemption from the electronic filing 
requirement or is amended, respectively. These items were not in the 
previous form.
    Additionally, the first page includes three items describing the 
employer agreement: The employer's contact information, which adds the 
requirement to report the employer's EIN (Item 6), the date the 
agreement was entered into (Item 7), and the person(s) through whom the 
agreement was made (Item 8). Item 8 has been amended to distinguish 
between the employer representative through whom the reported agreement 
or arrangement has been made and a prime consultant through whom an 
indirect party entered the agreement or arrangement. As revised, an 
indirect party to an employer-consultant agreement or arrangement must 
identify in a new Item 8.b the consultant with whom he or she entered 
into the reportable agreement or arrangement. This specificity is added 
to clarify the reporting that continues to be required on the Form LM-
20 when such indirect parties, or ``sub-consultants,'' are engaged by a 
primary consultant to assist in implementing a reportable agreement or 
arrangement. The primary consultant would report the employer 
representative in a new Item 8.a. This requirement has been included in 
the Form LM-20 Instructions in Part II, Who Must File, but its addition 
on the form itself will enable the Department, employees, and the 
public to more easily understand the nature of the activities conducted 
pursuant to the agreement or arrangement and determine if additional 
reports are owed.
    In response to comments received on the NPRM, the revised Form LM-
20 instructions also clarify, in Items 6-8, the manner in which the 
consultant reports agreements or arrangements concerning reportable 
union avoidance seminars, webinars, and conferences. The consultant is 
not required to file separate Form LM-20 reports for each employer 
attendee to a seminar. Rather, the consultant will identify each 
employer attendee in Item 6 by checking the box indicating that the 
report covers a reportable union avoidance seminar. The consultant will 
be able to either enter the necessary information manually, or it can 
import the data through a CSV file. For seminar reporting, the 
consultant is not required to provide the EIN for each attending 
employer, because there is no corresponding Form LM-10 reporting for 
the employers. While more employers may register for a seminar than 
actually attend, the consultant must identify each attendee to the 
seminar, through whatever tracking system it uses for such purposes. 
Further, the instructions clarify that only the seminar presenter needs 
to file the Form LM-20 report, not the organizer. If the presenter is a 
trade association, then it is not required to complete Item 8.
    As proposed, the front page also includes the signature blocks for 
the president (Item 13) and the treasurer (Item 14), including the date 
signed and telephone number.
    The second page provides more detail concerning the agreement. 
Items 9 and 10 are unchanged. Item 9 requires the filer to indicate if 
the agreement called for activities concerning persuading employees, 
supplying the employer with information concerning employees or a labor 
organization during a labor dispute, or both. Item 10 asks for the 
terms and conditions of the agreement, and requires written agreements 
to be attached. In response to comments received on the NPRM, 
information has been added to the instructions for Item 10 concerning 
the reporting of persuader seminars, webinars, or conferences, as well 
as clarification on the scope of the ``detailed explanation'' required 
in this item. For example, the instructions now state that filers must 
explain whether the consultant was hired to manage a union-avoidance 
campaign, to provide assistance to an employer in such a campaign 
through the persuader activities identified in Item 11, or conduct a 
union avoidance seminar. An attorney who provides legal advice and 
representation, in addition to persuader services, is only required to 
describe such portion of the agreement as the provision of ``legal 
services,'' without any further description.
    Item 11 calls for the provision of certain details concerning any 
covered agreement or arrangement, and a new Item 11.a, as described 
above in Section IV.B, requires filers to check boxes indicating 
specific activities undertaken as part of the agreement or arrangement. 
There is also an ``Other'' box, which requires the filer to provide a 
narrative explanation of any other reportable activities planned or 
undertaken that are not specifically contained on the list.
    Additionally, Items 11.b, 11.c, and 11.d, respectively, require the 
consultant, as before the proposed revisions, to indicate the period 
during which activity was performed, the extent of performance, and the 
name and address of the person(s) through whom the activity was 
performed. Item 11.d. has been revised to ask filers to specify if the 
person or persons performing the activities is employed by the 
consultant or serves as an independent contractor. In the latter 
scenario, the person or persons performing the activities is an 
indirect party to an employer-consultant agreement or arrangement, who 
would owe a separate Form LM-20 report. This requirement is not new, 
and it has been incorporated in the Form LM-20 instructions in Part II, 
Who Must File, but this addition on the form itself will enable the 
Department, employees, and

[[Page 15944]]

the public to more easily understand the nature of the activities 
conducted pursuant to the agreement or arrangement and determine if 
additional reports are owed. Finally, Items 12.a and 12.b require the 
consultant to identify the employees that are targets of the persuader 
activity and the labor organizations that represent or are seeking to 
represent them, respectively. To achieve more specificity, Item 12.a as 
proposed would include a description of the department, job 
classification(s), work location, and/or shift(s) of the employees 
targeted. In response to comments received on the NPRM, information has 
been added to the instructions for item 12 concerning the reporting of 
persuader seminars, webinars, or conferences.
    The revised Form LM-20 instructions are similar to the previous 
version, and they follow the layout of the revised form. There are five 
significant modifications. First, a clarification of the term 
``agreement or arrangement'' has been added to Part II, Who Must File. 
As there stated: ``The term `agreement or arrangement' should be 
construed broadly and does not need to be in writing.'' Second, as 
discussed above, the revised form would be submitted electronically, 
and the Department has made changes to the instructions describing the 
signature and submission process, as well as a procedure for filers to 
apply for an exemption from the electronic filing requirement. This 
procedure is modeled on the procedure for filers of the Form LM-2, 
Labor Organization Annual Report. Third, the revised instructions 
include guidance on the application of the ``advice'' exemption, in the 
general guidance on reporting agreements, arrangements, and activities 
section. The revised instructions provide examples, beyond those 
contained in the proposed rule, of activities that would trigger 
reporting requirements and those that will not. Fourth, as discussed, 
the revised instructions refer to the new checklist of activities 
undertaken pursuant to the reportable agreement or arrangement (see 
Item 11.a). Fifth, the instructions address new exceptions from certain 
reporting requirements applicable to trade associations, franchisors 
and franchisees, and special reporting procedures for union avoidance 
seminars.
    Additionally, the Department has clarified in Part V (When to File) 
that, for reporting of union avoidance seminars, reporting is not 
required until 30 days after the conclusion of the seminar. Section 
406.2(a) of the Department's regulations, 29 CFR 406.2(a), has been 
revised to reflect this change from the general rule that a report is 
due within 30 days after a persuader agreement is reached, rather than 
the date on which the activity undertaken by the agreement occurs.\35\ 
Similarly, as explained in Section V.E.3 concerning trade association 
reporting, the association and its member-employers are not required to 
report simply by reason of the membership agreement with member-
employers, but only if they engage in the limited activities that will 
trigger reporting by them (which must be reported within 30 days of 
entering into agreements to engage in the reportable persuader 
activities). The Department has also made other, non-substantive 
changes throughout the instructions to ensure clarity or consistency 
with the OLMS electronic reporting system.
---------------------------------------------------------------------------

    \35\ In the NPRM, the Department had proposed to update and 
revise the authority citations to section 406.2. Since the NPRM was 
published, however, the Department has updated various authority 
citations in numerous regulations administered by the Department, 
including those pertaining to LMRDA reports, thereby obviating any 
need to revise this part of section 406.2. See Final Rule, Technical 
Amendments Relating to Reorganization and Delegation of Authority, 
78 FR 8022, February 5, 2013.
---------------------------------------------------------------------------

4. Revised Form LM-10 and Instructions
    The revised Form LM-10 and Instructions (see Appendix B) are 
significantly different in layout and style from the previous form and 
instructions, although the reporting requirements have been altered 
only in two respects: The interpretation of the ``advice'' exemption is 
now included, and the form now requires detailed information regarding 
specific activities undertaken pursuant to the agreement or 
arrangement.
    The revised form is four pages in length and contains 19 items. It 
is to be filed electronically. The first page includes the first seven 
items (and the signature block), which provide the contact information 
for the employer. This information includes the file number (Item 
1.a.), fiscal year covered (Item 2), contact information for the 
employer (Item 3), employer's president or corresponding principal 
officer (Item 4), any other address where records necessary to verify 
the report will be available for examination (Item 5), at which of the 
listed addresses records are kept (Item 6), and type of organization 
that the employer is, such as an individual, partnership, or 
corporation (Item 7). Item 3 is revised to require the employer to 
provide its EIN, which will assist the Department and public in 
identifying the employer and analyzing the employer's filings. Item 
1.b. is for the filer to indicate if the report is filed pursuant to a 
hardship exemption from the proposed electronic filing requirement and 
Item 1.c. is for the filer to indicate whether the filing is an amended 
report. These items were not on the previous form. The front page also 
includes the signature blocks, for the president (Item 18) and the 
treasurer (Item 19), including the date signed and telephone number.
    The remainder of the revised form is divided into four parts: Parts 
A, B, C, and D. This layout is designed to clarify Item 8, which had 
required the filer to check those box(es) (Items 8.a-8.f) that depicted 
the reportable transaction, arrangement, or agreement, and required in 
a Part B to detail the transaction, arrangement, or agreement. The 
Department views the steps required by Item 8 in the prior form as 
unnecessary and confusing. Part B in that form added to the confusion, 
because it applied a ``one size fits all'' approach to reporting the 
diverse information required by section 203(a). To remove this 
confusion, the Department has adopted a more convenient four-part 
structure to capture the required information.
    Revised Part A requires employers to report payments to unions and 
union officials. The employer must report on the form the contact 
information of the recipient in Item 8. In Item 9, the employer must 
report detailed information concerning the payment(s), including: The 
date of the payment (Item 9.a), the amount of each payment (Item 9.b), 
the kind of payment (Item 9.c), and a full explanation for the 
circumstances of the payment (Item 9.d). There are no changes to the 
substantive reporting requirements for payments in Part A, which are 
required pursuant to LMRDA section 203(a)(1).
    Revised Part B requires employers to report certain payments to any 
of their employees, or any group or committee of such employees, to 
cause them to persuade other employees to exercise or not to exercise, 
or as to the manner of exercising, the right to organize and bargain 
collectively through representatives of their own choosing. The 
employer must report the contact information of the recipient of the 
payment in Item 10. In Item 11, the employer must report detailed 
information concerning the payment(s): The date of the payment (Item 
11.a), the amount of each payment (Item 11.b), the kind of payment 
(Item 11.c), and a full explanation for the circumstances of the 
payment (Item 11.d). There are no changes to the substantive reporting 
requirements in Part B, which are required by LMRDA section 203(a)(2).

[[Page 15945]]

    Revised Part C requires employers to detail any agreement or 
arrangement with a labor relations consultant or other independent 
contractor or organization in which the consultant, contractor, or 
organization undertakes activities with the object to persuade 
employees or supply information regarding employees and a labor 
organization involved in a labor dispute. The employer must indicate 
whether the agreement or arrangement involves one or both of the above 
purposes by checking the appropriate box in Part C. Next, the employer 
must provide contact information for the consultant in Item 12. A 
revision to Item 12 requires the employer to provide the consultant's 
EIN, if applicable. In response to comments received, the revised 
instructions exempt employers from filing Form LM-10 reports for 
attendance at multiple-employer persuader seminars, webinars, or 
conferences. The date of the agreement or arrangement and a full 
explanation of its terms and conditions would be reported in Items 13.a 
and 13.b, respectively. In response to comments received on the NPRM, 
the instructions for Item 13.b concerning the scope of reporting 
required in this item have been clarified. The instructions now state 
that filers must explain whether the consultant was hired to manage a 
union-avoidance campaign or to provide assistance to an employer in 
such a campaign through the persuader activities identified in Item 14. 
An attorney who provides legal advice and representation, in addition 
to persuader services, is only required to describe such portion of the 
agreement as the provision of ``legal services,'' without any further 
description.
    Item 14 calls for detail concerning the agreements undertaken. Item 
14.a, as described above in Item 11.a. for the revised Form LM-20, 
requires filers to check boxes indicating specific activities 
undertaken or to be undertaken. There is also an ``Other'' box, which 
requires the filer to provide a narrative explanation for any 
activities not specified on the list provided on the form. Items 14.b, 
14.c, and 14.d, respectively, require, as before, the employer to 
indicate the period during which the activity was performed, the extent 
of performance, and the name and address of persons through whom the 
activity was performed. As with Item 11.d of the revised Form LM-20, 
Item 14.d requires filers to specify whether the person performing the 
activity is employed by the consultant or works as an independent 
contractor. Items 14.e and 14.f require the consultant to identify the 
employees and any labor organization that are targets of the persuader 
activity. Item 14.e requires a description of the department, job 
classification(s), work location, and/or shift of the employees 
targeted. Finally, the employer must provide detailed information 
concerning any payment(s) made pursuant to the agreement or 
arrangement: The date of each payment (Item 15.a), the amount of each 
payment (Item 15.b), the kind of payment (Item 15.c), and a full 
explanation for the circumstances of the payment(s) (Item 15.d). 
Information reported in Part C is required by LMRDA sections 203(a)(4) 
and (5).
    Revised Part D requires employers to report certain expenditures 
designed to ``interfere with, restrain, or coerce'' employees regarding 
their rights to organize or bargain collectively, as well as 
expenditures to obtain information concerning the activities of 
employees or a labor organization in connection with a labor dispute 
involving such an employer. The employer must indicate the object of 
the expenditure by checking a box. The employer must report the contact 
information of the recipient of the expenditure in Item 16. In Item 17, 
the employer must report detailed information concerning the 
expenditure(s): The date of each expenditure (Item 17.a), the amount of 
each expenditure (Item 17.b), the kind of expenditure (Item 17.c), and 
a full explanation for the circumstances of the expenditure (Item 
17.d). There are no changes to the substantive reporting requirements 
in Part D, which are required by LMRDA section 203(a)(3).
    The revised Form LM-10 instructions follow the layout of the 
revised form. Insofar as the reporting of persuader activities is 
concerned, the revised instructions correspond with the changes 
discussed above in connection with the Form LM-20.

V. Review of Comments Received

A. General Comments

    The Department received approximately 9,000 comments on the 
proposed rule. The vast majority focused on general observations. The 
supportive comments came largely from labor unions, union officials, 
and law firms, as well as public policy organizations and Members of 
Congress. Commenters opposing the rule included business associations, 
public policy organizations, law firms and labor relations consultants, 
as well as numerous businesses, and a senator and congressman. General 
comments are discussed immediately below.
    Most of the comments submitted by labor organizations, law firms 
representing unions, public policy organizations, and private citizens 
expressed general support for the proposed rule and the increased 
disclosure it would provide. Some of these commenters stated that the 
proposed changes will finally give employees the information that 
Congress intended. Others described the Department's proposal as a 
``common-sense interpretation'' that would close the ``advice 
loophole'' that has led to circumvention of employer-consulting 
reporting requirements. One commenter stated that the rule would 
restore a balance to election campaigns where, in its view, companies 
have long held an unfair advantage. This commenter stated that 
employees have a right to organize unions, and that they should be 
given more information that would aid them in their organizing efforts. 
Another commenter voiced support of the proposed interpretation, which, 
in its view, would increase transparency in a way that would be 
beneficial to employees, unions, and employers. Some private citizens 
submitted brief statements in support of the proposal. Other commenters 
submitted examples of consultant-prepared materials that have been used 
by employers in campaigns against unions.
    Many employer and trade associations, law firms representing 
employers, labor relations consultants, and public policy groups 
provided substantive comments, almost all uniformly calling for the 
proposed rule to be withdrawn or at least substantially modified to 
reduce the proposed scope of the reporting requirement and what they 
viewed as an undue burden. Some law firms and local and national bar 
associations focused their comments on what they viewed as an improper 
intrusion on attorney-client relationships and potential concerns that 
the proposed rule, if adopted, would impede employers in exercising 
their free speech rights under the NLRA and pose substantial First 
Amendment and other constitutional issues. Many commenters stated that 
the proposed changes would hamper job creation and result in job 
losses. Other commenters expressed the view that the proposed rule was 
too vague. The vast majority of the comments received in response to 
the proposed rule, however, were either templates (e.g., sets composed 
of hundreds of identical, or nearly identical, comments from private 
citizens opposing the rule) or brief, individual statements expressing 
general opposition.

[[Page 15946]]

    Several commenters framed their opposition in terms of their own 
experience with union organizing campaigns at their companies. One such 
commenter stated that the proposed rule tilts in favor of unions, 
stating that employers need a fair opportunity to educate their 
employees about unionization and dispel any false information 
disseminated by the union organizers. In this commenter's view, the 
proposed rule impeded this opportunity. Many other commenters opposed 
to the proposed rule simply expressed general anti-union and anti-
regulation sentiments, others voiced general criticism of the current 
administration, claiming that the rule is a ``political payback'' to 
unions. Further, some commenters voiced concern about publicly 
disclosing companies' financial information. Other commenters urged 
that the LMRDA be abolished. Some commenters apparently confused the 
proposed rule with other rules proposed by NLRB or proposed or 
contemplated legislation, and others submitted comments consisting of 
general statements that were not germane to any aspect of the proposed 
rule.
    The Department disagrees with the general points made by those 
opposing the proposed rule. Simply put, the commenters offered no 
persuasive argument that the Department's revised reporting 
requirements for persuader activities will hamper job growth or reduce 
jobs. As explained in Section VI, there is minimal burden on individual 
filers and the economy as a whole. Further, several commenters that 
supported the Department's proposal referenced the large amount of 
money that employers spend on consultants, which greatly exceeds the 
cost for employers and consultants to publicly disclose their 
agreements.
    The Department also disagrees with the suggestion made by some 
commenters that the revised interpretation is motivated to advance 
efforts by unions to organize employees or to somehow impede the 
ability of employers to advance any lawful arguments designed to 
persuade employees in the exercise of their union representation and 
collective bargaining rights. Rather, this rule is an effort by the 
Department to fairly and effectively administer the LMRDA, a statute 
passed with bipartisan support in 1959, which requires reporting of 
both sides in labor-management relations. This rule will improve 
disclosure from employers and consultants. The Department plainly 
understands the right of employers to express, in robust fashion, their 
views on the advantages and disadvantages of union representation or 
collective bargaining issues, and to hire consultants to implement that 
goal. This rule does not encourage or discourage employer speech or 
involvement in organizing campaigns and representation elections. Apart 
from requiring reporting in prescribed situations, it regulates no 
speech or conduct.
    The Department is also well aware of the primacy of the NLRB in 
resolving representation issues and investigating and resolving charges 
of unfair labor practices. This rule is in no way at odds with the 
statutory scheme administered by the NLRB, nor does it concern any 
proposed legislation. Instead, the rule effectuates the Department's 
limited, complementary role assigned to it by Congress in the LMRDA to 
provide workers with information that is helpful to them in assessing 
communications from their employers, provide the public information 
about the administration of these statutes, and provide the Government 
with information that will better enable it to secure compliance with 
these statutes. As noted in Sections I.A., III.B, and V.C of the 
preamble, it is critically important that workers, as recognized by 
Congress in crafting section 203, are provided this information.
    This rule and its interpretation of section 203 advance these 
purposes. The Department's prior interpretation of this section 
effectively denied employees, as well as the public and the Government, 
most of the information about labor relations consultants that Congress 
wanted to be publicly disclosed. This rule, consistent with the intent 
of Congress, will make known to employees information that will allow 
them to more thoughtfully and effectively exercise their right to 
support or refrain from supporting a union as their collective 
bargaining representative. Under the rule, employees will learn, many 
for the first time, that their employer has hired a labor relations 
consultant to help it to persuade them how to exercise their individual 
and collective rights to union representation and collective 
bargaining. With this information, employees will be better able to 
assess the extent to which their employer's spokesperson is conveying 
the employer's own take on union representation and its ideas about 
what is truly best for the company and its employees, or instead making 
arguments that other employers have successfully used to defeat union 
representation; the extent to which the employee's supervisors are 
conveying their full and honest opinions about union representation 
(such as whether there is a need for an ``outsider'' to look out for 
employee interests) or merely following the direction of the company's 
own behind the scenes ``outsider.'' It will be up to each individual 
employee to make his or her own choice about the merit of the claims 
articulated by the employer (just as each must make a similar 
assessment about the union's claims). This rule does not restrict the 
claims that may be made, their timing, or the person or means by which 
they are made. Instead, the rule only requires employers that engage 
labor relations consultants in order to persuade employees about how 
they should exercise their workplace rights and the consultants that 
engage in these activities to disclose to employees, the public, and 
the Government the terms of their agreements. Such disclosure is 
required under the LMRDA and necessary to actualize the rights accorded 
employees under the LMRDA and the NLRA--a requirement ill served by the 
Department's prior interpretation of section 203.
    In the sections that follow the Department summarizes and addresses 
comments on particular aspects of the rule: Textual analysis of the 
statutory language; the Department's policy justification for revised 
interpretation; the clarity of revised interpretation; activities that 
trigger persuader reporting; the asserted bias in favor of unions; 
particular aspects of the revised forms and instructions; asserted 
constitutional and statutory infirmities with the revised 
interpretation; and the asserted conflict between the revised 
interpretation and the attorney-client privilege and an attorney's duty 
to protect confidential information.

B. Comments on the Statutory Analysis of LMRDA Justifying the Revised 
``Advice'' Exemption Interpretation

    The NPRM proposed additions to the Form LM-20 and LM-10 and 
corresponding instructions that would implement the revised 
interpretation of the ``advice'' exemption. The revised interpretation 
focused on the plain meaning of the term ``advice'' in the statute's 
text, and contrasted that plain meaning with those activities 
undertaken by consultants that have an object, directly or indirectly, 
to persuade employees with respect to their statutory rights. The 
revised interpretation defined reportable ``persuader activities'' as 
all actions, conduct, or communications that have an object, directly 
or indirectly, to persuade employees. The Department proposed this 
interpretation to replace the prior interpretation. The prior 
interpretation distinguished between

[[Page 15947]]

direct and indirect contact by consultants, exempting indirect contact 
by consultants from triggering the reporting requirements. See 76 FR 
36190-93.
1. Comments That the Revised Interpretation Is Contrary to Statute
    Several commenters provided their views on whether the proposed 
reporting requirements were consistent with the statutory provisions. 
Only a relatively small number, however, addressed the interpretative 
issues in detail, most simply stating that the proposed interpretation 
properly applied the provisions or that the prior interpretation 
reflected the sole reasonable construction of the provisions.
    The following key aspects of the Department's proposed 
interpretation provide context for the comments and discussion below:
     ``Advice'' means an oral or written recommendation 
regarding a decision or a course of conduct.
     ``Persuader activity,'' in contrast, refers to a 
consultant's providing material or communications to, or engaging in 
other actions, conduct, or communications on behalf of an employer 
that, in whole or in part, have the object directly or indirectly to 
persuade employees concerning their rights to organize or bargain 
collectively.
     Reporting is required whenever the agreement or 
arrangement, in whole or part, calls for the consultant to engage in 
persuader activities, regardless of whether or not advice is also 
given.
    See the Department's NPRM (76 FR 36192).
    These aspects of the proposal have been revised in the final LM-10 
and LM-20 instructions to read as follows:

    An agreement or arrangement is reportable if a consultant 
undertakes activities with an object, directly or indirectly, to 
persuade employees to exercise or not to exercise, or to persuade 
employees as to the manner of exercising, the right to organize and 
bargain collectively through representatives of their own choosing 
(hereinafter ``persuade employees''). Such ``persuader activities'' 
are any actions, conduct, or communications with employees that are 
undertaken with an object, explicitly or implicitly, directly or 
indirectly, to affect an employee's decisions regarding his or her 
representation or collective bargaining rights. Under a typical 
reportable agreement or arrangement, a consultant manages a campaign 
or program to avoid or counter a union organizing or collective 
bargaining effort, either jointly with the employer or separately, 
or conducts a union avoidance seminar.
* * * * *
    No report is required covering the services of a labor relations 
consultant by reason of the consultant's giving or agreeing to give 
advice to an employer. ``Advice'' means an oral or written 
recommendation regarding a decision or a course of conduct. For 
example, a consultant who, exclusively, counsels employer 
representatives on what they may lawfully say to employees, ensures 
a client's compliance with the law, offers guidance on employer 
personnel policies and best practices, or provides guidance on 
National Labor Relations Board (NLRB) or National Mediation Board 
(NMB) practice or precedent is providing ``advice.''
* * * * *
    Note: If any reportable activities are undertaken, or agreed to 
be undertaken, pursuant to the agreement or arrangement, the 
exemptions do not apply and information must be reported for the 
entire agreement or arrangement.\36\
---------------------------------------------------------------------------

    \36\ The instructions have been modified to identify and discuss 
the reportability of several activities often undertaken by 
consultants under an agreement with an employer. The modifications 
address the concerns of some commenters that the instructions would 
benefit from greater clarity.

    Commenters in favor of the revised interpretation, principally 
unions, endorsed the proposed rule's focus on the object of the 
activities performed under an agreement between a consultant and an 
employer. They generally viewed this approach as natural and best 
suited to meeting the intent of Congress. In their view, this approach 
is consistent with the Department's original (until 1962) and its 
proposed 2001 interpretations of the reporting requirements. These 
commenters strongly objected to the view that required persuader 
reporting only when a consultant directly persuaded employees on how to 
exercise their protected rights. Commenters supporting the rule argued 
that the UAW decision does not prevent the Department from revising its 
interpretation. In their view, the interplay between reportable 
persuader activities and exempt advice is ambiguous, and the 
Department's revised interpretation is a permissible and better 
interpretation of the reporting provisions.
    Opponents of the proposed rule embraced the prior interpretation. 
According to them, the prior interpretation better comports with the 
statutory language and provides a more practical approach because it 
sets forth a ``bright-line'' standard for consultants and employers to 
understand and apply. The proposed rule, in their view, was ambiguous. 
Some commenters read UAW v. Dole, 869 F.2d 616 (D.C. Cir. 1989), to 
preclude the Department from revising its prior interpretation that 
only direct persuader activities are reportable under section 203.\37\ 
Most, however, recognized that the decision did not foreclose the 
Department from taking a different approach so long as it is 
reasonable. In their view, however, the Department's proposal was 
unreasonable.\38\ Similarly, some commenters stated that the proposal 
essentially ignores section 203(c) because the interpretation requires 
reporting where activities, properly characterized as ``advice,'' are 
intertwined with persuader activities. Other commenters opposed to the 
rule focused exclusively on the term ``advice''--some objecting to the

[[Page 15948]]

Department's interpretation and others embracing the definition but not 
its application. In their view, if an employer uses the consultant-
provided ``advice'' in its effort to persuade employees, then such 
``advice'' would be characterized as ``persuader activity'' by the 
proposed rule. Thus, according to the commenters, the proposed rule 
eliminates the exemption. Others took the position that the 
Department's proposed interpretation ignores that the term ``advice'' 
is broader than the term ``legal advice,'' an impermissibly narrow view 
of ``advice'' and contrary to the language of section 203(c).
---------------------------------------------------------------------------

    \37\ International Union, United Automobile, Aerospace & 
Agricultural Implement Workers of America v. Dole, 869 F.2d 616 
(D.C. Cir. 1989) is one of four related opinions (the others include 
International Union v. Secretary of Labor, 678 F. Supp. 4 (D.D.C. 
1988); International Union, United Automobile, Aerospace & 
Agricultural Implement Workers of America v. Brock, 783 F.2d 237 
(1986); and International Union v. Donovan, 577 F. Supp. 398 (D.D.C. 
1983)) in a suit brought by UAW to challenge two aspects of the 
Department's prior interpretation of section 203: (1) That a law 
firm and the employer that it had hired as a consultant were not 
required to report certain persuader activities because they 
involved supervisors (not direct persuasion of employees) and (2) 
that the employer was not required to report extra compensation it 
had provided supervisors for advocating the employer's position 
against union representation. See 678 F. Supp. 4, 7-8. The second 
issue is not germane to this rulemaking. On the first issue, the 
appeals court held only that the Department's interpretation of the 
advice exemption was permissible, limiting its ruling to the 
particular facts and the Department's ``right to shape [its] 
enforcement policy to the realities of limited resources and 
competing priorities.'' 869 F.2d at 620. Further, on the first 
appeal in the case, the D.C. Circuit expressly recognized that the 
``Department may, of course, reverse its interpretation at some 
future date.'' 783. F.2d 237. The commenters failed to note that the 
appeals court left undisturbed the district court's conclusion that 
section 203 was better read to require reporting the activities at 
issue in that case, wherein the district court noted ``that Congress 
was concerned with behind-the-scenes manipulations of employees by 
consultants.'' In any event, these decisions do not constrain the 
Department from revising its interpretation. See, e.g., Home Care 
Association of America v. Weil, 799 F.3d 1084, 1094-1095 (D.C. Cir. 
2015), petition for cert. docketed, ** U.S.L.W. *** (U.S. Nov. 24, 
2015) (No. 15-683).
    \38\ Some commenters also argued that the Department's proposal 
is inconsistent with the court's observation in UAW v. Dole about 
section 203(e) (concerning the absence of reporting by an employer's 
own staff), i.e., that ``the LMRDA's domain is persuader activities. 
No exemption is needed for activities that fall outside the Act's 
domain.'' 869 F.2d at 618. By analogy, the commenters argued that 
the ``advice'' exemption of section 203(c) must also exempt from 
reporting ``persuasive'' activities, and thus cannot be limited to 
legal advice and representation. The commenters ignore that the 
court there was only addressing the reportability of persuader 
activity engaged in by supervisors, not consultants. Id. at 620. 
Section 203(e), unlike section 203(c), operates to exclude a whole 
category of individuals from reporting (individuals employed by the 
employer engaged in persuader activities). In contrast, section 
203(c), by exempting ``advice,'' does not eliminate the need to 
distinguish between ``advice'' and persuader activities, an 
irrelevant consideration under section 203(e).
---------------------------------------------------------------------------

    However, several commenters expressed their view that the LMRDA 
covers ``direct and indirect'' persuasion. They argued that the 
Department's prior interpretation, by limiting reporting to activities 
involving only ``direct contact'' with employees, is ``illogical'' 
because it ignores the statute's direction that ``indirect'' activities 
must be reported and leaves unreported activities specifically intended 
to persuade employees.
    One international union declared that the statute, properly 
construed, requires that any ``affirmative act'' with an object to 
persuade be reported. That union stated that the common and ordinary 
understanding of ``advice'' provides a ``principled distinction'' 
between exempt advice and reportable persuasion. The union stated the 
proper inquiry focuses on the ``nature and object'' of the consultant's 
activities, not whether the employer accepts or rejects the 
consultant's ``work product.'' In this regard, according to the 
commenter, a ``recommendation regarding a decision or course of 
conduct'' does not have an object to persuade employees. Any 
``affirmative act,'' in the commenter's view, with an object to 
persuade should trigger reporting. This commenter also emphasized its 
support for the Department's original 1960 interpretation. In its view, 
the Department's original interpretation, unlike the interpretation 
adopted in 1962, did not restrict the scope of persuader activities to 
narrow, direct contact situations. Rather, the original interpretation 
required reporting of a consultant's preparation of persuader materials 
as well as any other circumstance in which ``the consultant's activity 
went beyond the mere providing of such advice or where it was 
impossible to separate advice from persuader activity.''
    An international union asserted that the prior interpretation 
allowed consultants to avoid reporting by hiding activities under the 
``guise'' of ``advice.'' This union contended that activities such as 
creating videos, Web site content, or fully-scripted presentation 
materials, and planning or conducting meetings with supervisors and 
managers are not normally considered to be advice. Instead, it asserted 
that these activities are nothing less than ``pre-packaged, full-
service anti-union campaigns'' designed to defeat employee efforts to 
organize and bargain collectively and, as such, are reportable under a 
correct reading of the statute. In its view, the fact that these 
activities may be carried out without any direct contact with employees 
makes them no less activities with an object to persuade; thus, these 
activities should trigger reporting. A federation of unions similarly 
contended that a consultant directing an employer's supervisor to 
distribute persuasive material to employees does not transform the 
materials or their content into advice for the employer, particularly 
when the underlying motive is clearly not to advise the employer but to 
persuade employees.
    Another international union endorsed the revised interpretation 
because it ensured that the advice exemption did not ``swallow the rule 
requiring disclosure of direct and indirect persuader activity.'' 
Instead, in the union's view, the Department properly construed section 
203(c) in a manner that effectuates the purposes of the statute. It 
emphasized that reporting is triggered where ``an'' object of the 
consultant's activities is to persuade employees, not ``the'' object or 
even a primary object of the activities. Otherwise, indirect persuader 
activities would go unreported. To further support coverage in such 
situations, the commenter stated that the language ``by reason of'' in 
section 203(c) indicates that reporting is required if a consultant 
engages in an activity with an object to persuade, even if the activity 
also relates to, or is intermingled with, an element of advice, or the 
agreement calls for both types of activities. As a result, according to 
the commenter, coverage in indirect contact situations better meets the 
statutory language, than enlarging the advice exemption to include 
``all activity that may occur in the context of giving advice.''
    In contrast to these views, multiple commenters opposed the 
Department's revised interpretation. Although most commenters were 
untroubled by the definition of ``advice,'' they were concerned that 
the Department's proposed rule would deny the term its broad intended 
reach.
    Several commenters described the Department's revised 
interpretation as a ``catch-all,'' sweeping in all activities that are 
``related'' to persuasion, including advice, thus conflating ``advice'' 
and ``persuasion.'' Several relied on their reading of the legislative 
history, as reported in judicial decisions, to support their position. 
In challenging the Department's analysis, some commenters argued that 
the Department's proposed interpretation was the opposite of the 
approach required by the statute. As stated by one law firm, the 
reporting requirements in sections 203(a) and (b) cannot be reasonably 
interpreted without giving full play to the broad exemption established 
by section 203(c). Thus, as it reads the statute, any and all advice, 
even advice combined with persuader activity, is within the exemption. 
Another law firm commented that the Department's proposed 
interpretation was improper because the exemption would no longer have 
a ``broad scope,'' as intended by Congress. Instead, in its view, the 
proposed interpretation was ``probably the narrowest possible 
exemption'' from reporting, rendering the exemption a ``nullity'' 
(italics included in comment). Another commenter explained that the 
Department confused (perhaps deliberately so) the term ``advice'' 
(recommendations) with ``conduct'' (supply of materials that can be 
rejected).
    Several commenters stressed that a ``recommendation'' implies the 
ability of the employer to ``accept or reject'' the recommendations or 
suggestions offered (i.e., no ``advice'' without a ``recommendation,'' 
and no ``recommendation'' without the ability of the recipient to 
``accept or reject''). One commenter emphasized that ``strategy'' is 
included within the definition of ``advice,'' noting that lawyers 
strategize routinely.
    Another commenter asserted that the Department was mistaken in 
thinking that ``advice'' could be limited to just ``yes or no,'' 
without also including the preparation of materials. In its view, labor 
law is a complicated area and that the only ``practical'' way of 
advising the employer is to draft materials for the employer's use. In 
any event, the commenter argued, the materials simply constitute 
``recommendations'' for the employer to accept or reject; the material 
is still advice if the employer, and not the consultant, does the 
persuasion.
    An employer association stated that ``advice'' is provided by 
consultants, including attorneys, trade associations, and other third 
parties, in a variety of forms, such as seminars, ``fully drafted 
documents,'' ``tactics and communications tools'' to be used in

[[Page 15949]]

persuading employees, and other employment-related documents. It is 
therefore proper to treat such activities as advice.
    Some commenters suggested that the interpretation as applied would 
be too narrow, limiting the advice exemption to just ``legal advice.'' 
These comments cited the three examples provided in the first paragraph 
of the proposed instructions under ``Exempt Agreements''--``exclusively 
counsels employer representatives on what they may lawfully say to 
employees, ensures a client's compliance with the law or provides 
guidance on NLRB practice or precedent.'' 76 FR 36191. In their view, 
these examples demonstrate that the Department is misreading the 
intended reach of ``advice,'' which they believed extends well beyond 
the bounds suggested by the examples. One commenter claimed that the 
Department ``craftily avoids'' making explicit its position that the 
``proposed rule limits advice to `legal advice,' '' while at the same 
time narrowly defining and taking a ``jaundiced view'' of what may 
constitute such advice. In its view, the Department seeks to narrow the 
advice exemption to legal advice in its purest and most technical form.
    Another commenter suggested that the Department's revised 
interpretation renders section 203(c) superfluous, because section 204 
would encompass the same activities. Some commenters viewed ``legal 
advice'' by a consultant as not having an object to persuade, 
regardless of the circumstances, even if the advice was used by the 
employer in its persuasion of employees. As a result, ``advice'' must 
mean more than ``legal advice,'' the commenters assumed, or otherwise 
section 203(c) would be rendered meaningless. A national bar 
association contended that section 203(c) clearly contemplates that at 
least some of the advice that a lawyer provides to the employer client 
will be designed to help the employer to persuade employees on 
unionization issues. This is self-evident, in the association's view, 
because if all of the lawyer's advice to the employer-client was 
unrelated to persuader activities, it would not be covered by the 
statute at all, with or without an advice exemption, and no exemption 
would be needed.
    Several commenters stated that the requirement to report in 
situations in which ``legal advice'' is ``intertwined'' with persuader 
activity misapplies the concept of attorney-client privilege under 
which legal advice intertwined with non-legal advice (including 
``specific tactics'' and ``alternative strategies'') is privileged. In 
the opinion of one commenter, the Department's revised interpretation 
renders the exemption ``meaningless'': ``Legal advice is never given in 
a vacuum, but is always provided to support a client's desired goals. 
For example, an attorney who reviews an employer's speech to employees 
regarding a union organizational drive, but only comments on the 
legality or illegality of its content (rather than suggesting lawful 
means to enhance its persuasive content) may violate his/her ethical 
responsibilities.''
    Other commenters challenged the Department's statement in the NPRM 
that the employer is a ``conduit for persuasive communication.'' See 76 
FR 36183. In their view, it is the employer that chooses to accept, 
reject, or modify the advice and materials provided by the consultant. 
As one commenter put it, to suggest that a consultant who provides such 
advice and materials without any personal interaction with employees is 
engaged in persuader activities ``is preposterous.'' A law firm made a 
similar point, albeit less emphatically: ``[T]he persuasive message 
given by the employer is the employer's message, not the consultant's 
sent through a conduit or middleman. The giving of the message is the 
employer's `decision or course of action' based on the `recommendation' 
of the consultant--a recommendation that is plainly `advice' within the 
[accepted] definitions [of the term].'' \39\
---------------------------------------------------------------------------

    \39\ This law firm stated summarily that the Department had 
misconstrued the term ``indirect.'' In its view, the language is 
intended to cover only those situations in which a ``prime'' 
consultant uses a third party, not affiliated with the employer, to 
directly persuade employees. The Department finds no merit to this 
contention. The pertinent language in section 203 is ``every person 
who . . . undertakes activities where an object thereof is, directly 
or indirectly, to persuade employees.'' The words ``directly or 
indirectly'' neither narrow nor enlarge the persons who are 
potentially subject to reporting. Thus, regardless of the ``directly 
or indirectly'' language, a third party acting pursuant to a 
persuader agreement, i.e., ``any person,'' as well as the consultant 
and employer, is required to file a report if he or she undertakes 
an activity with an object to persuade. Therefore, ``directly or 
indirectly'' must have been used to describe the activities 
undertaken, and intended, similar to other provisions in the 
statute, to make plain that reporting cannot be avoided by artifice, 
device, or indirection. See sections 202(a)(1), (3), (4), and (6). 
This view of the statute better harmonizes section 203's provisions 
than the commenter's reading of the section, which would largely 
deny any effective meaning to ``indirectly persuade employees.'' 
Additionally, the Department notes that its view regarding the 
application of ``indirectly'' to the full scope of actions by 
consultants (not restricted to the prime consultant's use of third 
parties) was not questioned by any other commenters.
---------------------------------------------------------------------------

2. Department's Response to Comments on the Textual Analysis
a. General Response
    In response to these comments, the Department first notes the 
``undisputed'' requirements prescribed by sections 203 and 204 of the 
LMRDA:
     A report shall be filed by a labor relations consultant 
who has agreed with an employer that the consultant will undertake 
activities that have an object, directly or indirectly, to persuade 
employees in the exercise of their union representation or collective 
bargaining rights. This report must contain a statement of the terms 
and conditions of the agreement or arrangement and must be filed within 
30 days after entering into such agreement or arrangement.
     Both the consultant and the employer shall each file, 
later, an annual report showing payments made and received under the 
agreement or arrangement (Form LM-10 by an employer; Form LM-21 by a 
consultant).
     Nothing in section 203 shall be construed to require a 
report by reason of a consultant's giving or agreeing to give advice to 
the employer or representing or agreeing to represent the employer in a 
court, administrative, or arbitration proceeding or engaging in or 
agreeing to engage in collective bargaining on behalf of the employer.
     Nothing in the LMRDA shall be construed to require an 
attorney to include in a report any information lawfully communicated 
to him by his clients in the course of an attorney-client relationship.
    Neither the language of the statute nor the legislative history 
provides clear direction about where Congress intended the line to be 
drawn between reportable persuader activities and nonreportable 
advice.\40\ The ambiguity

[[Page 15950]]

within section 203 has been evident since the earliest appellate 
decisions construing this section. See Wirtz v. Fowler, 372 F.2d 315, 
330-332 (5th Cir. 1966), rev'd in part on other grounds, 412 F.2d 647 
(1969); Douglas v. Wirtz, 353 F.2d 30, 32 (4th Cir. 1966). As stated in 
Wirtz v. Fowler:
---------------------------------------------------------------------------

    \40\ The varying interpretations by the Department over the 
years to delineate between what is reportable and what is not 
underscore the statute's ambiguity. The commenters are incorrect in 
stating, without qualification, that the ``direct contact'' test has 
been around for 50 years. Although it derives from the 1962 IM 
interpretation, the strict formulation of the ``direct contact'' 
aspect of the prior interpretation stems from a statement of reasons 
the Department submitted in UAW v Dole, which the Department 
established as policy in 1989. Further, as a federation of unions 
observed, IM section 265.005 could be read to require ``indirect 
contact'' reporting, in certain circumstances. Indeed, the 1962 test 
states that, ``the question of application of the `advice' exemption 
requires an examination of the intrinsic nature and purpose of the 
arrangement to ascertain whether it essentially calls exclusively 
for advice or other services in whole or in part. Such a test cannot 
be mechanically or perfunctorily applied. It involves a careful 
scrutiny of the basic fundamental characteristics of any arrangement 
to determine whether giving advice or furnishing some other services 
is the real underlying motivation for it.'' Although not the best 
formulation of the statute, the flexibility of the prior rule 
demonstrates the breadth of permissible constructions.

    The exemption is not, as [the attorney-consultant] contends ``as 
broad as the reporting requirement itself.'' Almost consistently, 
the purpose of Sec.  203(c) was explained [in the legislative 
history] not to carve out a broad exemption of activities which 
would otherwise be covered by Sec.  203(b), but to make explicit 
what was already implicit in Sec.  203(b), to guard against 
misconstruction of Sec.  203(b). Generally, it was felt that the 
giving of legal advice was something inherently different from the 
exertion of persuasion on employees, and section 203(c) was inserted 
only to remove from the coverage of Sec.  203(b) those grey areas 
where the giving of advice and participation on legal proceedings 
and collective bargaining could possibly be characterized as 
exerting indirect persuasion on employees, . . . not to remove 
activities which are directly persuasive, but indirectly connected 
to the giving of advice and representation.
    For the purposes of this case, it is unnecessary for us to 
ascertain the precise location of the line between reportable 
persuader activity and nonreportable advice. . . . We conclude only 
that not everything which a lawyer may properly, or should, do in 
connection with representing his client and not every activity 
within the scope of the legitimate practice of labor law is on the 
nonreportable side of the line. At least some of the [consultant-
attorney's] activities . . . no matter how traditional, ethical, or 
commendable--were those of a persuader.

372 F.2d at 330-31 (footnotes omitted). More recently in UAW v. Dole, 
the court described the statute as ``silent or ambiguous,'' noting the 
evident tension between the Act's ``coverage provisions'' and the 
``exemption for advice.'' 869 F.2d at 617-18.\41\
---------------------------------------------------------------------------

    \41\ Several law review articles have addressed the tension 
between the obligation to report persuader activities and the 
exemption for advice, and the scope of a consultant's obligation to 
report other activities once it has engaged in persuader activities. 
See, e.g., Terry A. Bethel, Profiting From Unfair Labor Practices: A 
Proposal to Regulate Management Representatives, 79 NW. U. L. Rev. 
506 (1984); Jules Bernstein, Union-Busting: From Benign Neglect to 
Malignant Growth, 14 U.C. Davis L. Rev. 1 (1980); Jonathan G. 
Axelrod, Common Obstacles to Organizing under the NLRA: Combatting 
the Southern Strategy, 59 N.C.L. Rev. 147 (1980); James Farmer, 
Keynote Address: Union Busting, 1 Gonz. L. Rev. 3 (1980); James R. 
Beaird, Some Aspects of the LMRDA Reporting Requirements, 4 Ga. L. 
Rev. 696 (1970); James R. Beaird, Reporting Requirements for 
Employers and Labor Relations Consultants in the Labor Management 
Reporting and Disclosure Act of 1959, 53 Geo. L. J. 267 (1965). For 
the first impressions of the reporting obligation and the 
interpretative questions presented, compare the articles by two 
prominent commenters on labor relations matters, Russell Smith, 
Labor Management Reporting and Disclosure Act, 46 Va. L. Rev. 195 
(1961)); Benjamin Aaron, Labor Management Reporting and Disclosure 
Act of 1959, 73 Harv. L. Rev. 85 (1960).
---------------------------------------------------------------------------

    In proposing a revised interpretation that returns to the 
Department's original view about where the line separating reportable 
persuader activities and exempt advice is properly drawn, the 
Department rejects the position under the prior interpretation that a 
consultant's activities would be reportable only if they involved face-
to-face, or other direct, contact with employees. There is nothing in 
the statutory language that compels this reading. While the legislative 
history specifically enumerates some of the types of improper actions 
which might be avoided if employers were required to report their 
persuader agreements with consultants, such as coercion, bribery, 
surveillance of employees, and unfair labor practices undermining 
employee rights, it sheds little light on what specific activities by a 
consultant should trigger reporting under the LMRDA. At the same time, 
however, the legislative history is clear that reporting was not to be 
limited to the disclosure of unlawful practices by consultants. See 
Section III.B.1 of the preamble to this rule.
    The prior interpretation did not represent the best reading of the 
statute, as it left unreportable indirect persuader activities, with 
the attendant loss of transparency intended by Congress. Commenters 
supporting the prior interpretation have shed no new light on the 
interpretative challenges posed by the statutory language. In 
particular, they have failed to explain how the prior interpretation 
better satisfied the requirement that both indirect and direct 
persuader activity must be reported. Their arguments are based on 
threads taken from reported opinions in the case law, which have 
underscored the tension between reportable activities and advice. For 
example, while in UAW the court upheld the Department's prior 
interpretation as reasonable, it did not hold that this interpretation 
was compelled by the statute and did not construe the statute in a way 
that would caution the Department against its present view about how 
best to effectuate the purpose of disclosing persuader activities. Some 
commenters relied on observations in the UAW opinion (``[T]he term 
`advice,' in lawyers' parlance, may encompass, e.g., the preparation of 
a client's answers to interrogatories [or] . . ., the scripting of a 
closing or an annual meeting.'' 869 F.2d at 619 n. 4,). While such 
activities ``may encompass'' advice, as viewed under the prior 
interpretation, the court did not view this as the only permissible 
construction.
    The Department disagrees with the suggestion by some commenters, 
relying by analogy on language in UAW, 869 F.2d at 618, that section 
203(c) must also exempt from reporting ``persuasive'' activities. The 
commenters ignore that the court in UAW was only addressing the 
reportability of persuader activity engaged in by supervisors, not 
outside consultants. Id. at 620. Section 203(e), unlike section 203(c), 
operates to exclude a whole category of individuals from reporting 
(individuals regularly employed by the employer, even if engaged in 
persuader activities). In contrast, section 203(c), by exempting 
``advice,'' does not exempt any person from reporting agreements with 
employers, but, rather, clarifies the need to distinguish between the 
outside consultant's provision of ``advice'' to the employer from their 
undertaking of ``persuader activities,'' an irrelevant consideration 
under section 203(e).
    Further, as stated, agreements to exclusively provide advice do not 
trigger reporting. Thus, even where an employer, who has an agreement 
with a consultant for providing legal services, itself undertakes 
actions to persuade employees to vote against union representation, 
such as by delivering a speech the employer has prepared to employees, 
no reporting is required where the consultant has only reviewed the 
speech for legality and has refrained from preparing materials, 
scripting supervisor interaction with employees, or otherwise 
undertaking activities with an object to persuade.
b. How to Read Section 203(c)
    Section 203(c) provides, in relevant part: ``Nothing in this 
section shall be construed to require any employer or other person 
[e.g., a consultant] to file a report covering the services of such 
person by reason of his giving or agreeing to give advice to such 
employer.'' This provision stands in juxtaposition to the requirement 
that employers and consultants must file reports, providing detailed 
information relating to activities and payments under any agreement or 
arrangement where an object thereof is, directly or indirectly: (1) To 
persuade employees to exercise or not to exercise, or how to exercise, 
their union representation and collective bargaining rights; or (2) to 
supply an employer with information

[[Page 15951]]

about ``the activities of employees or a labor organization in 
connection with a labor dispute involving such employer. . . .'' 
Section 203(b), 29 U.S.C. 433(b).\42\ This provision establishes the 
consultant's reporting obligation. The equivalent obligation of the 
employer, who has additional reporting obligations, independent of any 
agreements or arrangements with consultants, is prescribed by section 
203(a), 29 U.S.C. 433(a).
---------------------------------------------------------------------------

    \42\ Section 203(a) places ``is,'' differently, stating a report 
is required ``where an object thereof, directly or indirectly, is to 
persuade employees.'' No commenter mentioned this distinction in the 
statutory language and the Department attaches no significance to 
the varied phrasing of the declaration.
---------------------------------------------------------------------------

    Section 203(c), by providing a rule of construction, serves to 
clarify that sections 203(a) and (b) establish which types of employer-
consultant agreements are reportable and which are exempt. This 
language is similar to other sections of the LMRDA, which serve to make 
explicit what is already implicit. See section 202(c) (clarifying that 
union officials are not required to report unless they hold a 
reportable interest); 203(d) (accord for employers or ``other 
persons''). It also should be noted that each of these sections uses 
introductory language similar to that used in section 203(c) (``Nothing 
shall be construed to require''). However, unlike section 203(c), other 
LMRDA provisions use language that creates ``blanket'' exemptions from 
their reporting requirements for particular activities. Compare with 
section 202(b) (exempting from reporting by union officials their 
holdings in exchange-traded stock) and section 203(b) (requiring 
reporting of agreements in which consultants supply certain information 
to employers, ``except information for use solely in conjunction with 
an administrative or arbitral proceeding or a criminal or civil 
judicial proceeding''). See also sections 202(a)(5) (excepting from 
reporting by union officials payments received as a bona fide employee 
and purchases or sale of goods in the regular course of business); and 
section 203(a)(1) (excepting from employer reporting loans and other 
payments made by banks).
    Section 203(c) does not contain language creating a blanket 
exemption. Unlike the provisions just cited, section 203(c) contains 
language that limits the availability of the exemption to instances 
where a consultant acts ``by reason of his giving or agreeing to give 
advice.'' At a minimum, this language indicates that a person who gives 
advice is not exempt from filing a report on this basis alone; instead, 
by exclusively giving or agreeing to give advice, a consultant does not 
trigger a reporting obligation. If he or she undertakes other 
activities that do have an object to persuade, the exemption is 
unavailable.\43\ Further, the statute specifically requires reporting 
when a consultant undertakes activities with an object to ``directly or 
indirectly'' persuade employees, as noted by some commenters, 
indicating that indirect methods of consultant persuasion also triggers 
reporting. Moreover, the statute specifies that an object of the 
consultant's activity must be to persuade, not the object, thus 
supporting the coverage provision in the case of indirect persuasion. 
See sections 203(a) and (b).
---------------------------------------------------------------------------

    \43\ In this regard, the Department disagrees with the 
commenters who opposed reporting in situations in which an agreement 
or arrangement included among multiple activities only some that 
constitute persuader activities. As noted in the NPRM, 76 FR 36192, 
n. 16, this application of the statute stems from the initial Form 
LM-10 and LM-20 reports issued in 1962 and is not being altered by 
this rule. This view flows from the statutory language which states 
that reporting should not be required by reason of the giving of 
advice and engaging in the other enumerated activities. See section 
203(c). The Department continues this approach in this rule.
---------------------------------------------------------------------------

    Thus, section 203(c) is best understood as making explicit what 
sections 203(a) and (b) make implicit: That consultant activity 
undertaken without an object to persuade employees, such as advisory 
and representative services for the employer, do not trigger 
reporting.\44\ In the Department's view, this reading best harmonizes 
the tension between the ``coverage'' and ``exemption'' provisions. 
Moreover, this reading gives effect to the requirement that indirect 
persuader activities be reported, an element almost entirely missing 
from the prior interpretation.
---------------------------------------------------------------------------

    \44\ The legislative history of section 203 confirms this view: 
``Although this [that attorneys and other consultants that confined 
their activities exclusively to those described in Section 203(c) 
would not trigger reporting] would be the meaning of the language of 
Section 103(a) and (b) [what became LMRDA Section 203(a) and (b)] in 
any event, a proviso to Section 103(b) [what became Section 203(c)] 
guards against misconstruction.'' S. Rep. No. 85-1684, at 9. See 
also Humphreys, Hutcheson, and Moseley v. Donovan, 755 F.2d 1211 
(``[T]his court agrees with the majority of courts that find the 
purpose of section 203(c) is to clarify what is implicit in section 
203(b)--that attorneys engaged in the usual practice of labor law 
are not obligated to report under section 203(b)'').
---------------------------------------------------------------------------

    In contrast, the prior interpretation framed the reporting 
obligation to exclude indirect persuader activities from reporting by 
characterizing them as ``advice,'' even where the consultant engaged in 
an activity with an object to persuade employees, as long as the 
activity had any tenuous connection with advice. As noted approvingly 
in a form letter opposing the Department's proposed interpretation 
rule, under the prior rule ``[a]s long as my company was free to accept 
or reject anything prepared by the third party, it was considered 
advice, not persuasion'' (emphasis added). Even though, for example, 
the consultant drafted a captive audience speech that was delivered 
verbatim by the employer or implemented for the employer a system 
whereby supervisors delivered a scripted message to employees, such 
activities were excluded from reporting because the employer was free 
to decide whether to use the consultant's materials or its 
directions.\45\
---------------------------------------------------------------------------

    \45\ Some commenters asserted that ``advice'' may be defined to 
include a recipient's ability to ``accept or reject'' 
recommendations, suggestions, or opinions offered. Although the term 
may be used in this sense, the Department has concluded that the 
ability of the employer ``to accept or reject'' is not the relevant 
inquiry in establishing the scope of the advice exemption. In any 
event, even if ``advice'' is read to encompass ``an accept or 
reject'' element, here the issue is not whether the consultant is 
attempting to influence or advise the employer concerning the 
exercise of rights belonging to the employees, or the employer's own 
rights, but rather whether the consultant pursuant to its agreement 
with the employer is undertaking an activity with an object, 
directly or indirectly, to persuade employees.
---------------------------------------------------------------------------

    In contrast, as noted in both the NPRM and the final rule, the 
Department gives ``advice'' its ordinary meaning: ``an oral or written 
recommendation regarding a decision or course of conduct.'' The 
preparation of persuader materials is more than a recommendation to the 
employer that it should communicate its views to employees on matters 
affecting representation and their collective bargaining rights. See 76 
FR 36183. Although some commenters stated that they disagreed with the 
Department's interpretation of the term ``advice,'' it appears that 
their disagreement lies primarily or entirely with the Department's 
proposed application, which would expand the reporting obligation 
beyond the direct contact trigger under the prior interpretation and 
would include the preparation of persuader material.
    Some commenters have suggested that if an employer, not the 
consultant, is the ``final'' actor under the parties' agreement, the 
consultant has no reporting obligation. A consultant drafting persuader 
materials as part of an anti-union campaign for the employer is also 
likely providing advice to the employer (which by itself would not 
trigger reporting). However, by engaging in a persuader activity, the 
consultant has triggered a reporting

[[Page 15952]]

obligation even though the employer, as the ``final'' actor in this 
scenario, actually delivers the anti-union message.
    Some commenters took the view that the Department has misread 
section 203(c) because, in their view, it can be given effect only if 
persuader activities are exempted as advice. Otherwise, they assert, 
there would be no obligation to report and no need to provide an 
exemption. Thus, in their view, the prior interpretation of section 
203(c) recognized that Congress intended to ``carve out'' activities 
that would otherwise be reportable. For this reason, they contended 
that the proposed rule created a ``false dichotomy'' between advice to 
the employer and persuasion of employees. In the commenters' view, 
sections 203(a) and (b) require consultants to report upon all 
agreements, and the proposed interpretation treats section 203(c) as 
mere ``surplusage.''
    The Department disagrees. What the commenters overlook is that 
section 203(c) is still given effect as a rule of construction if it is 
read, as put forth in this rule, to underscore that advice qua advice 
(from a consultant to an employer) does not trigger a reporting 
obligation simply because it arguably concerns a potential employer 
action that has an object to persuade. Section 203(c) serves as a check 
on the outer bounds of consultant actions that are only tenuously 
connected to persuasion. It makes plain that a consultant has not 
undertaken a reportable activity by counseling an employer that a 
tactic is lawful under the NLRA; section 203(c) thus ensures reporting 
is not triggered by an activity simply because the employer's 
subsequent action may ultimately affect the employees' views on the 
need for a union. Similarly, the approach taken by the Department 
ensures that a consultant is not required to report an agreement to 
develop employer personnel policies or best practices without an object 
to persuade the employees. Section 203(c) continues to provide a broad 
exemption for numerous types of employer-consultant agreements, even 
those in which the employer, rather than the consultant, ultimately 
engages in the persuasion of its employees. See Section IV.B.2. The 
Department therefore disagrees that the revised rule establishes a 
``false dichotomy'' between ``advice'' and ``persuasion,'' and renders 
section 203(c) ``superfluous.''
    Section 202(c), which addresses financial reporting by union 
officials, serves a similar role under the statute, by emphasizing that 
a union official is not required to file an annual report unless he or 
she has engaged in a particular financial matter during the reporting 
period. Section 202(a) for union officials, like sections 203(a) and 
(b) for employers and consultants, prescribes that only particular 
financial payments are to be reported. Thus, section 202(c), like 
section 203(c), was not necessary to ``exempt'' officials from a 
reporting obligation. Nonetheless, its inclusion shows that the 
statute's drafters wanted to not only articulate reporting requirements 
but also to plainly demonstrate when reporting was not required.
    Many commenters criticized the Department for failing to give 
``advice'' the breadth that they believe the term demands. As noted, 
the Department does not interpret section 203(c) as a blanket exemption 
from reporting by a consultant. Instead, the Department reads this 
provision in conjunction with the general reporting requirement 
prescribed by sections 203(a) and (b)--to require the reporting by an 
employer and a consultant of any agreement or arrangement under which a 
consultant ``undertakes activities where an object thereof, directly or 
indirectly, is to persuade employees'' in their exercise of their 
representation and collective bargaining rights. Further, the 
Department only characterizes as ``advice'' those activities that meet 
the term's plain meaning. The Department's reading of section 203(c) 
gives effect to all the statute's provisions and is consistent with the 
common sense and interpretative canons that an exemption should not 
swallow the rule.
c. Legislative History
    A few commenters provided arguments that the Department's revised 
interpretation was inconsistent with the statute's legislative history, 
which they read to create a broad or sweeping exemption from reporting. 
In this regard, they advance two separate points: first, that Congress 
explicitly characterized the exemption as broad; and second, that the 
legislative history demonstrates Congress intended that reporting would 
be limited to activities of the notorious-type of middlemen identified 
by the McClellan Committee. We here address the first argument; the 
second is discussed later in Section V.C.1.d.
    Commenters drew on the legislative history, as discussed in a 
handful of cases in which persuader reporting has been an issue, 
including UAW, 869 F.2d 616; Humphreys, Hutcheson and Mosely v. 
Donovan, 755 F.2d 1211 (6th Cir. 1985); Wirtz v. Fowler, 372 F.2d 315 
(5th Cir. 1966), rev'd in part on other grounds, Price v. Wirtz, 412 
F.2d 647 (1969); Douglas v. Wirtz, 353 F.2d 30 (4th Cir. 1965). In 
addition, a few commenters quoted from the conference committee report 
on the LMRDA: ``Subsection (c) of the conference substitute grants a 
broad exception from the requirements of the section with respect to 
the giving of advice.'' H. R. Rep. No. 86-1147, at 33 (1959), reprinted 
in 1 Leg. History at 937. The Department agrees with this 
characterization, and notes that section 203(c) continues to operate as 
a broad exemption, leaving unreportable a wide range of agreements 
commonly entered into by employers and consultants. Indeed, this rule 
exempts from reporting agreements involving exclusively the following 
activities:
     Counseling on NLRB, NMB, or similar agency practices;
     legal services (as distinct from persuader activities 
undertaken by a lawyer);
     guidance on employer personnel policies and best 
practices, as well as the development of such policies and practices 
except where undertaken with an object to persuade (such as by 
introducing a particular benefit at issue in an organizing campaign or 
reassigning union supporters to jobs where they have less contact with 
co-workers);
     employee surveys (other than push surveys);
     vulnerability assessments;
     off-the-shelf material (where selected by a trade 
association for its member-employers or in other circumstances where 
selected by the employer without assistance by the consultant);
     trade association newsletters addressed to member-
employers; and
     conducting a seminar for employers in which the consultant 
does not develop or assist the attending employers in developing anti-
union tactics or strategies.
    The commenters additionally relied on the following passage from 
the legislative history, quoting Professor Archibald Cox's testimony on 
the proposed legislation:

    Payments for advice are proper. If the employer acts on the 
advice it may influence the employees. But when an employer hires an 
independent firm to exert the influence, the likelihood of coercion, 
bribery, espionage, and other forms of interference is so great that 
the furnishings of a factual report showing the character of the 
expenditure may be fairly required. . . . Since attorneys at law and 
other responsible labor-relations advisers do not themselves engage 
in influencing or affecting employees in the exercise of their 
rights under the [NLRA], an attorney or other consultant who 
confined himself to giving advice, taking part

[[Page 15953]]

in collectively bargaining and appearing in court and administrative 
proceedings nor [sic] would such a consultant be required to 
report.\46\
---------------------------------------------------------------------------

    \46\ Wirtz v. Fowler, 372 F.2d at 327, n. 25, quoting Testimony 
of Archibald Cox, Hearing on Labor-Management Legislation, Subcomm. 
on Labor and Public Welfare, 86th Cong., 1st Sess. 128 (1959). 
Commenters rely on two other statements in opinions discussing the 
legislative history--``Generally it was felt that the giving of 
legal advice to employers was something inherently different from 
the exertion of persuasion on employees . . .'' and ``Congress 
recognized that the ordinary practice of law does not encompass 
persuasive activities.'' (quoting Humphreys, 755 F.3d at 1216, n. 
9).

    In the Department's view, these statements and those referenced in 
note 46 merely reflect that attorneys and others providing advice would 
not be required to file reports. Indeed, under this rule no reporting 
is triggered by attorneys who exclusively engage in legal services, or 
by any consultants who merely provide recommendations or suggestions. 
The statements provide no support for the position that Congress 
intended that the particular activities, identified as reportable under 
this rulemaking, would be exempted from reporting as ``advice.'' The 
general statement that advice by ``responsible'' advisers would not be 
reportable is not a useful guide in distinguishing among particular 
activities undertaken by consultants, nor does it signal that exempt 
advice includes within it consultant activities that have an object to 
persuade. In any event, the rule recognizes that consultant activities 
that exclusively constitute the giving of advice do not trigger 
reporting.
d. ``Advice'' or ``Legal Advice''
    The commenters here advanced two arguments. First, they argued, in 
effect, that the Department misconstrues ``advice'' by limiting it to 
``legal advice,'' and, in the process, fails to properly consider 
section 204, which they view as providing protection for ``legal 
advice.'' Second, they argued that the Department arbitrarily defines 
``legal advice'' in a stilted fashion, effectively ignoring both the 
manner in which attorneys conduct their management law practices and 
how they must conduct their practices as a matter of ethics.
    The Department disagrees with the commenters who asserted that the 
revised interpretation limits the advice exemption to just legal 
advice. As stated, the Department defines ``advice'' by its plain 
meaning: ``an oral or written recommendation regarding a decision or 
course of conduct.'' Only those activities that fall outside that 
definition trigger reporting, such as those activities listed on pages 
3-4 of the instructions to Form LM-20 (see Appendix A) and on page 6 of 
the instructions to Form LM-10 (see Appendix B). For example, a 
consultant is not required to report his or her activities in 
recommending that the employer retain the consultant's services to 
develop a union avoidance program that would include the consultant's 
development of persuader materials and a system whereby supervisors 
undertake activities to detect employees' sympathies towards union 
representation and how to shape such views. Reporting is triggered only 
when the employer and the consultant agree that the consultant should 
undertake such activities. Moreover, as discussed above, counseling an 
employer regarding personnel policies and practices will not trigger 
reporting.
    Additionally, the commenters are also mistaken in their suggestion 
that the few examples they cited from the proposed instructions were 
intended by the Department to constitute the entire universe of 
activities that are within the scope of ``giving advice'' to an 
employer. Rather, they are merely examples illustrative of the term, 
and they are not meant to be exhaustive. For instance, if a consultant 
merely recommends that the employer conduct employee surveys or hold 
meetings, then no reporting is required because such recommendations 
are ``advice.'' On the other hand, if the consultant, after having 
recommended a meeting, then prepares the persuasive speeches and 
presentations for the employer to present at the meeting, or identifies 
which employees to meet with at a certain location and time (see 
factors in Section IV.B.1), then the consultant has gone beyond 
providing advice to the employer and has engaged in the indirect 
persuasion of employees. Reporting would then be required under this 
rule. In addition, certain consultant undertakings, such as conducting 
vulnerability assessments and revising materials for legality and 
grammar, are not considered persuader activities. See discussion above 
in Section IV.B.2. As we have explained, recommendations regarding best 
practices in matters of personnel management do not, by themselves, 
trigger reporting. Rather, the consultant must develop such best 
practices with an object to shape employees' views against union 
representation. A consultant advising businesses on personnel 
management practices, therefore, becomes subject to reporting only if 
developing such practices with that object present, hardly a likely 
occurrence unless the consultant has been hired to deter union 
representation, which is often a question of timing. Therefore, while 
legal advice and other services do not trigger the reporting 
requirements, the advice exemption is not limited to legal advice under 
the revised interpretation.
    Furthermore, several commenters stated that the requiring of 
reporting in situations in which legal advice is ``intertwined'' with 
persuader activity misapplies the common law definition of ``advice,'' 
which states that legal advice intertwined with non-legal advice 
(including concerning ``specific tactics'' and ``alternative 
strategies'') is privileged under the attorney-client privilege. The 
Department disagrees with these comments and reiterates that all 
consultant activity that meets the plain definition of advice does not 
trigger reporting, whether legal or non-legal. Further, the advice 
exemption of section 203(c) determines whether or not an agreement is 
reportable, while section 204 states that privileged information is not 
required to be reported. See Section V.H. In this regard, the 
Department notes that--consistent with the interpretation that section 
204 has received from the courts--it always has construed section 204 
as roughly equivalent to the limited attorney-client privilege under 
the common law. The Department has never embraced the view that section 
204 creates a broad, separate exemption for attorneys that supplants 
section 203(c). The Department proposed no change to this 
interpretation of section 204.
    Finally, commenters are mistaken that the Department's proposal 
would impede a consultant's ability to provide an employer with 
documents that not only comply with the law but also best convey the 
employer's position on union and collective bargaining related 
materials. In support of their position, they rely on case law defining 
``advice,'' or explaining an attorney's legal duties. As noted above, 
some also rely on UAW v. Dole, which, they asserted, is inconsistent 
with the Department's proposal. The Department's interpretation does 
not interfere in any way with an attorney-consultant's ability to 
provide employers with legal services that, presumably, the employers 
are owed by entering into their relationship with the attorney-
consultant. Nor does the interpretation impede an attorney's ability to 
prepare and revise ``legal documents,'' such as collective bargaining 
agreements, or documents prepared in connection with a grievance, 
administrative or judicial proceeding. Under the interpretation, 
however, reporting is triggered by a consultant's preparation of 
documents, such as scripting ``captive audience speeches'' or preparing 
anti-union flyers

[[Page 15954]]

for distribution to employees, or activities such as instructing 
supervisors and managers about how to detect their employees support 
for a union and steer them against the union, and so forth--documents 
and other activities, including the revision of documents (other than 
to ensure legality), that have as their purpose the persuasion of 
employees about how to exercise their rights to representation and 
collective bargaining.
    In contrast, agreements that have their sole purpose to provide 
guidance to an employer, as distinct from having a purpose to persuade 
employees, do not trigger reporting. No reporting is required where the 
consultant has reviewed for legality a speech prepared by the employer 
to dissuade employees from giving their support to the union. The 
typical situation in which a consultant must report its activities will 
be where the consultant has orchestrated the employer's union 
opposition campaign, prepared materials designed to persuade employees 
or enhanced their persuasive value, scripted supervisor interaction 
with employees, undertaken surveillance of employees engaged in union 
activities, or otherwise undertaken concrete actions with an object to 
persuade. Neither the proposed nor final rule prevents an employer from 
taking actions to persuade its employees to oppose union representation 
or to hire a consultant for this purpose. The content, timing, and mode 
of the message to employees remain entirely within the control of the 
employer and the labor relations consultant. The rule requires only 
that if the consultant engages in persuader activities the consultant 
and the employer must file Forms LM-10 and LM-20 to disclose such 
activities and the underlying agreement. See further discussion of this 
and related points in Section V.H.
    Indeed, although not limited to just legal advice and 
representation, the Department's interpretation preserves the exemption 
for activities traditionally performed by attorneys. As explained by 
the Fourth Circuit:

    Primarily, . . . the [disclosure] requirement is directed to 
labor consultants. Their work is not necessarily a lawyer's. Indeed, 
for a legal adviser, it would be extracurricular. True, a client may 
desire such extra-professional services, but, if so, the attorney 
must balance the benefits with the obligations incident to the 
undertaking.

    Douglas v. Wirtz, 353 F.2d at 33. That today, attorneys often fill 
the consulting role that was performed by a balanced mix of legal and 
non-legal professionals does not change the meaning of ``advice'' as 
used in section 203(c). That some lawyers now perform roles that were 
once outside the traditional ``legal advice'' field and therefore 
subject them to additional reporting responsibilities is an issue 
separate from the meaning to be given ``advice'' in section 203(c). See 
Price v. Wirtz, 412 F.2d at 650 (``Since a principal object of the 
LMRDA was neutralizing the evils of persuaders, it was quite legitimate 
and consistent with the Act's main sanction of goldfish bowl publicity 
to turn the spotlight on the lawyer who wanted not only to serve 
clients in labor relations matters within Sec.  203(c) but who wanted 
also to wander into the legislatively suspect field of a persuader''). 
The statute, not the business model followed by some law firms, 
determines whether certain activities are reportable.

C. Comments on Department's Policy Justification for Revised 
Interpretation

    In the NPRM, the Department outlined its justification for its 
revised interpretation for reporting consultant agreements that provide 
for direct and indirect persuader activities. The policy reasons for 
revising the interpretation are largely restated in the preamble to 
this rule. In discussing the comments received on the Department's 
policy reasons underlying the interpretation, we follow the order used 
in the NPRM: The needed disclosure of persuader agreements to enable 
employees to make informed decisions about their representation and 
collective bargaining rights; the significant underreporting under the 
prior interpretation where only agreements involving a consultant's 
direct contact with employees were reported; and the deterrent impact 
of transparency on practices harmful to peaceful and stable labor-
management relations.
1. Benefit to Workers
    In the NPRM, the Department explained that many employers engage 
consultants to manage ``union avoidance'' or ``counter-organizing'' 
efforts to prevent workers from successfully organizing and bargaining 
collectively. See 76 FR 36187. These efforts include the dissemination 
of persuader material to workers, whether conveyed verbally or in 
written or electronic formats, as well as the development and 
implementation of personnel policies and actions with an object to 
persuade workers. The Department also explained that its proposed 
interpretation would require that agreements involving indirect 
persuasion of employees be reported, not merely those involving direct 
contact between consultants and employees. Reporting both types of 
agreements better informs employees as they choose how to exercise 
their protected rights to organize and bargain collectively. Such 
disclosure informs workers about the underlying source of the 
information they are receiving, helps them in assessing its content, 
and assists them in making decisions about union representation and 
collective bargaining issues.
a. Comments in Support of NPRM
    Commenters that expressed support for the revised interpretation 
explained the need for workers to have more information concerning 
persuader agreements in deciding whether to support or oppose union 
representation. These commenters noted that workers are often unaware 
that employers are relying on the services of an outside consultant and 
that the disclosure of their involvement would allow workers to better 
assess the frequent position taken by employers to depict the union as 
an unwanted or unnecessary ``third party'' or ``outsider'' intruding 
between the employer and the workers.
    A national union provided an example of a counter-organizing 
campaign where the consultant produced the employer's anti-union 
campaign literature and speeches, coached management on conducting 
``captive audience meetings,'' and used materials and arguments that 
``repeatedly and consistently'' referred to the union as an 
``outsider.'' The national union supported the proposed rule, stating 
that requiring employers to disclose their relationships with 
consultants ``would allow employees to scrutinize the source of the 
bogus information they receive about the merits of collective 
bargaining and let them decide . . . which party in the organizing 
campaign is the true outsider: a democratic federation of their fellow 
workers or paid outside consultants and attorneys.'' To emphasize the 
importance of disclosure, the commenter quoted Justice Louis Brandeis, 
``Publicity is justly commended as a remedy for social and industrial 
diseases. Sunlight is said to be the best of disinfectants.'' See Louis 
Brandeis, What Can Publicity Do?, Harper's Weekly, Dec. 20, 1913.
    According to another international union, disclosure of information 
about consultants allows workers to know who is behind a campaign so 
they can ``cast an educated vote'' on union representation. Another 
international union noted that such disclosure provides workers with 
``the opportunity to determine who is running an employer's anti-union 
campaign and

[[Page 15955]]

which messages are heartfelt expressions versus paid propaganda.'' 
Similarly, a senator and congressman argued that workers, in voting for 
or against union representation, need to know the source of information 
in order to evaluate its credibility, analogizing to public elections 
where the identity of those who paid for political advertisements must 
be disclosed.
    Union commenters asserted that consultants routinely run anti-union 
campaigns for employers, through the employer's supervisors. They 
provided examples of some of these indirect persuader activities. A 
national union noted that supervisors are used as the conduit to convey 
the consultant's message. As a result, the commenter agreed with the 
Department's characterization of supervisors in the NPRM as ``the 
conduit for persuasive communications or material developed by an 
outside consultant or lawyer.'' See 76 FR 36183. Similarly, a senator 
and congressman stated that consultants frequently are a ``shadow 
management at a facility, making disciplinary decisions and drafting 
scripts for mid-level management to read.''
    A federation of unions stated that modern campaigns rely heavily on 
supervisors as ``the consultant's trusted intermediaries.'' It also 
cited an industrial relations study that states that ``consultants 
typically script supervisors' conversations, train them how to read 
employees' verbal and non-verbal reactions, and have them ask indirect 
questions without explicitly asking employees how they will vote.'' 
Lafer, Neither Free Nor Fair: The Subversion of Democracy Under 
National Labor Relations Board Elections, American Rights at Work 
Report, at 3 (July 2007). The commenter also quoted Martin Jay Levitt, 
a former persuader consultant, who asserted: ``The entire campaign . . 
. will be run through your foremen. I'll be their mentor, their coach. 
I'll teach them what to say and make sure they say it. But I'll stay in 
the background.'' Levitt, Confessions of a Union Buster, at 10. 
Similarly, a public policy organization presented two examples of such 
practice, a ``confidential memorandum'' from an employer instructing 
managers to attend a mandatory meeting involving a labor attorney who 
would address ``preventive labor relations''; and a manual produced by 
a law firm to be used by the employer to counter an organizing effort. 
As quoted by the commenter, the manual states: ``As a supervisor or 
manager, your role in an organizing attempt is a key one. You are in 
the best position to communicate the message to employees that 
unionization is not in the best interest of the individual employees, 
the organization, or the community.'' An international union stated 
that management attorneys often will attend ``captive audience'' 
meetings with the employer's representatives, avoiding direct contact 
with employees but prompting the employer's spokesperson as he or she 
addresses the employees. The union described persuader services 
advertised on law firm Web sites, where the firms portrayed themselves 
as experts in developing ``comprehensive and strategic union avoidance 
tactics,'' and boasted about their ``extensive union avoidance 
practice'' and the availability of their ``union avoidance attorneys'' 
to represent employers ``who wish to establish and/or maintain a union-
free workplace.'' The commenter noted that these law firms publicize 
services to provide ``supervisory union avoidance training,'' 
``develop[ing] strategies for election campaigns,'' and ``inform[ing] 
employees'' about the company's positions. Further, the law firm touted 
that it has ``a proven record of success in running campaigns and 
winning elections.''
    One commenter reported its experience that the written and video 
materials used in these campaigns employ anti-union rhetoric, warning 
employees not to sign union authorization cards, asserting the union is 
a ``third party,'' describing the union as a business (out to make a 
profit, not serve its members), and warning about strikes. The 
commenter stated that although the consultant was careful not to 
trigger a reporting requirement under the current interpretation of the 
advice exemption by meeting with employees face-to-face, employees see 
unidentified strangers meeting with management officials and first-line 
supervisors during anti-union campaigns. An international union argued 
that Congress intended for workers to know that the source of persuader 
messages is a ``paid agent'' hired to persuade them. In its view, 
Congress knew and wanted employees to know that these agents may coach 
employers on the ``spontaneous'' formation of employee committees and 
design tests to identify pro-union workers. Disclosure of these 
tactics, according to the commenter, provides workers with information 
``important to assessing the credibility and motivations behind what 
they are seeing and hearing and thereby facilitates informed decision 
making.''
    A national union presented examples of indirect persuasion by 
consultants during several recent union representation elections. The 
consultants created persuader handbills, posters, videos, and other 
materials. Literature was placed in ``strategic places'' such as 
employee changing rooms, the time clock area, and hallways that workers 
pass through when going to the polling area. Workers were often 
required to view videos portraying unions in a negative light and, like 
other messaging, encouraging employees, explicitly, to vote against the 
union. Another national union provided examples of indirect persuader 
activity from four separate campaigns. It explained that the 
consultants in those instances issued a manual for supervisors and 
trained them in conducting one-on-one and group meetings with employees 
designed to persuade them against supporting the union, and drafted 
emails, letters, and other literature for distribution by management.
    A law firm representing unions submitted documents used by 
consultants to influence employee choice. It included campaign 
literature, a document outlining campaign strategies to defeat union 
representation, ``captive audience'' and other speeches opposing union 
representation, and training materials for supervisors.
    A public policy organization provided several examples of 
consultant activities. It stated that a law firm had managers call 
workers at home and ``turned supposed training seminars into anti-union 
captive audience meetings.'' The commenter stated that another 
consultant developed anti-union literature that was circulated to 
employees, along with a calendar of anti-union events. The commenter 
described a law firm's extensive activities in directing and scheduling 
the employer's first four weeks of a campaign: sending nine letters to 
employees' homes; placing four notices on bulletin boards; passing out 
six leaflets to employees in the workplace; making three anti-union 
speeches in mandatory all staff meetings; holding one vote 
demonstration; and conducting five days of small group meetings where 
immediate supervisors tell employees that unions are bad. According to 
the commenter, another consultant encourages its clients to hold a `` 
`Vote No' saturation carnival,'' which involves all supervisors wearing 
``Vote No'' buttons, shirts, etc., and handing them out to employees. 
According to the commenter, these consultant-driven messages often use 
the following types of ``selling points'': ``Give the employer another 
chance; the union will take you out on strike; unions charge dues, 
fines, and assessments; unions cannot guarantee anything; the union is 
a third party that interferes in the employment

[[Page 15956]]

relationship; unions need your money to survive; and the employer will 
never agree to union demands.'' Quoting Mehta, Chirag & Theodore, Nik, 
Undermining the Right to Organize: Employer Behavior During Union 
Representation Campaigns, Washington, DC: American Rights at Work 
(2005).
    Local labor union officials also provided examples of ``formulaic'' 
campaigns managed by law firms. For example, a commenter discussed the 
mailing of 12 letters to employees that appealed to employees as a 
``family,'' while characterizing unions as ``third-parties'' or 
``outsiders.'' The letters also included a ``give us another chance'' 
theme, followed by letters ``explaining'' the law, and stating that 
unions operated on a ``blank slate'' and could promise nearly anything. 
The letters progressed to include a more negative anti-union tone, with 
direct references to ``union corruption'' and crime. The commenter 
noted that these would be followed by letters about the salaries of 
union officers, the amount of dues, and potential penalties against 
members for violating union bylaws. The final letter, the commenter 
described, would combine themes and ``invariably'' predict a strike.
    Multiple commenters suggested that workers would benefit from 
knowing how much money employers spent on third-party consultants. A 
public policy organization cited a study estimating that the union 
avoidance industry was a $1 billion industry, with employers hiring 
individuals at, for example, $500 per hour to run a counter-organizing 
campaign, with one employer taking out a $100,000 loan to fund the 
campaign.
    A senator and congressman stated that employees would be stunned at 
the amount of money employers pay anti-union consultants, especially 
when bombarded with anti-union rhetoric that a company lacks resources 
to offer raises, or that unionization may drive the company into 
bankruptcy. As an example, the commenters pointed to litigation 
documents revealing that a company paid a prominent law firm $2.7 
million in fees to prevent employees from unionizing. They explained 
that this kind of information is of particular interest to employees 
whose motivation to unionize is ``because they feel that management is 
denying them a fair share of the profits of their labor.'' Further, the 
commenters stated that workers would ``surely be interested'' in 
knowing that management is ``paying lavish fees for consultants to 
run'' a counter-organizing campaign. The commenters concluded that the 
revised interpretation will ``finally bring transparency to labor-
management relations and will help ensure that employees are fully 
informed when they make a decision to exercise or not to exercise their 
rights. Another commenter suggested that such disclosure might also 
affect decision making by employers when faced with union 
representation or collective bargaining issues. The commenter stated 
that employers would have the ability to compare the costs of offering 
benefits and/or raises to their workers against the high fees charged 
by law firms to defeat union representation. In its view, if provided 
with this information, some employers, particularly smaller employers, 
might decide to negotiate in good faith rather than to pay law firms 
that have a strong interest in opposing unions, suggesting that ``the 
harder law firms fight the union, the more they earn.''
b. Comments in Opposition to NPRM
    The comments opposing the proposed rule put forth several policy 
arguments against the disclosure of indirect persuader agreements. 
First, the commenters contended that the source of persuader activities 
was not relevant in indirect persuasion situations. Second, the 
commenters maintained that Congress intended for the disclosure of 
``middlemen,'' who, in the commenters' view, did not include indirect 
persuaders. Third, the commenters rejected the analogy between 
persuader disclosure and other public disclosure regimes. Finally, the 
commenters argued that the proposed reporting would not timely apprise 
employee voters about the source of the persuader materials. These 
comments are addressed in the following sections.
c. Comments on the Disclosure of the Source of Persuader Communications
    Despite disagreeing with the Department on the need for workers to 
have information concerning persuader agreements involving indirect 
persuasion by consultants, many commenters suggested or acknowledged 
that workers should have ``accurate'' and ``balanced'' information 
available to them when exercising their rights. For example, one 
commenter asserted its primary concern was to meet its ``employees' 
interest in and right to [receive] full and complete information from 
both the union and the employer, in order to have an opportunity to 
understand and make a meaningful choice about representation.''
    A congressman that opposed the Department's proposal stated that 
once employers disseminate a speech or deliver a speech, employees 
``know the employer stands by the material,'' and the source of the 
material is ``irrelevant.'' In one commenter's view, the success of the 
employer's ``campaign'' relies upon its ``reputation, demeanor, and 
actions.'' According to the commenter, employees would have no reason 
to ``care'' about any influence a consultant or other third party 
exerted on the message, as it will not affect the ``credibility'' 
assigned by the employees to the employer and its representatives 
delivering the message. In another commenter's view, the reporting of 
agreements involving exclusively indirect persuasion would ``mislead'' 
workers as to the employer's intentions.
    These commenters suggested that reporting should focus on the 
person who delivers the message, and not the person who drafts the 
remarks. A law firm and a trade association disagreed with the NPRM's 
purported assumption that positions expressed in the consultant-created 
persuader materials are not those of the employer. One trade 
association commenter disagreed with the notion that the consultant is 
a third party, since, in its view, the only ``parties'' to a collective 
bargaining agreement are the employer, the employees, and the union. 
Another trade association similarly rejected the Department's view.
    In responding to these comments, both those in support of the 
proposed rule and those opposed to its adoption, it is the Department's 
view that workers need to know the source of information that is 
conveyed to them either directly by consultants--such as in ``face-to-
face encounters,'' where the consultant openly acknowledges its role in 
opposing union representation--or indirectly, where the employer is 
delivering the message, without acknowledgment of the consultant's role 
in preparing the persuader materials.
    The Department disagrees with the commenters who contend that 
workers do not need to know the source of the persuader materials 
directed at them in indirect persuasion situations. Workers should be 
informed that the employer, who has stated its opposition to employees 
organizing or joining a union (often portrayed by the employer as an 
``outsider'' or ``third-party interloper)'' has itself hired a 
consultant to persuade them how to exercise their representation and 
collective bargaining rights. The employer's relationship with the 
consultant and the associated fee arrangement have bearing on the 
workers' analysis of both the content and merit of the message being 
delivered to them.
    Knowledge that the consultant may not be on the scene to help them 
understand their legal rights under the

[[Page 15957]]

NLRA, but has been hired by the employer to persuade employees against 
supporting the union, may also affect how employees assess the 
``credibility'' of the employer, or its ``reputation, demeanor, or 
actions,'' as workers may react differently if they know that the 
employer engaged in a campaign against the union, through a third 
party. Indeed, Congress observed that ``middlemen have acted in fact if 
not in law as agents of management,'' a situation whereby workers would 
naturally assume that their employer has adopted the views disseminated 
directly or indirectly by the consultant. S. Rep. No. 86-187, at 10, 1 
LMRDA Leg. Hist., at 406. Knowledge of the background of the third 
party allows employees to evaluate not just whether their interests 
vis-[agrave]-vis the union align with those of the employer, but also 
how, if at all, the self-interests of the consultant align with either 
those of the employer or employees.\47\ Such information is relevant to 
both direct and indirect persuader situations.
---------------------------------------------------------------------------

    \47\ In the situations discussed in the text at Sections III.B.1 
and Section V.C.1.c, employees would have been better able to 
exercise their protected rights if they had known of the 
consultant's role in crafting the employer's message to them. 
Although the commenters appear to criticize at least some of the 
activities as deceptive and/or improper, the Department has not made 
a judgment on the propriety of these actions. It is not the role of 
this Department to make such determination. It is also not the role 
of this Department to comment on the tactics of organizing and 
counter-organizing campaigns, their legality under the NLRA, or the 
content of the messages conveyed in those campaigns. This 
Department's interest is solely to implement the command of section 
203 to require appropriate disclosure where consultants undertake 
persuader activities, both direct and indirect.
---------------------------------------------------------------------------

    Indeed, at least one commenter who opposed the revised reporting 
requirements recognized that, like advertising, workers must similarly 
``consider the source'' when making a decision on exercising their 
rights. The commenter asserted that, in evaluating the source, workers 
can make an independent decision and assume that ``pro-union'' 
arguments are ``bias[ed]'' in favor of unionization and vice versa. The 
Department disagrees with this conclusion because it conflates 
perspective with actual knowledge of the source of the information. The 
issue is not whether workers will understand the perspective of the 
message, but whether they should know the source of the message, i.e., 
whether it is formulated by the employer's management officials or an 
outside source. For example, if an employer tells employees that they 
should oppose unionization because it will make the company less 
competitive, employees know that the employer opposes unionization 
regardless of whether they know that that message was scripted by a 
consultant. If employees know, however, that the message was scripted 
by a consultant, they may then question the employer's intent in making 
the statement--to convey a genuine concern about the consequences of 
unionization or to advance a strategy supplied by a consultant as the 
most expedient or effective argument against unionization, regardless 
of the employer's actual belief in the verity of the statement. This 
knowledge will assist workers in determining the extent to which the 
message directed at them reflects the genuine views of their employer, 
of the employees, or of the consultant.
    A law firm representing employers acknowledged that many employers 
who have ``consulted outside experts'' inform their employees about 
their use of consultants, and noted that unions will often publicize an 
employer's use of consultants to shape an employer's anti-union message 
so that workers can weigh that fact in considering the employer's 
message. This comment underscores the value of such information to all 
workers. Further, even if the employer discloses that it has retained 
an outside party, without knowing the identity of the outside party and 
the terms of its agreement with the employer, employees may be deceived 
into thinking that the consultant has been retained merely to advise 
the employer on its legal obligations--and not to persuade them against 
supporting the union. Some employers may be open about their use of 
consultants; employees or unions, on their own, may become aware (or at 
least suspect or assume) that the employer has sought the assistance of 
a consultant in waging its campaign against union representation. 
However, the suggestion that employees typically possess such knowledge 
is belied by the rulemaking record, which indicates that employees are 
unaware that:
     The employer had hired a labor relations consultant to 
manage its campaign against the union
     the consultant had scripted the speeches, letters, and 
leaflets used to deliver the employer's message during the campaign
     the consultant had instructed supervisors that they must 
address questions in a particular way without regard to whether that 
view reflected the supervisor's actual beliefs or the employer's 
independent views about particular questions that arise during 
representation or collective bargaining, and
     the employer used a formulaic message typical of that 
crafted by labor relations consultants, espousing a view antithetical 
to representation by a union, rather than one that appeared to have 
been drafted to respond to workplace-specific issues that had arisen 
during the campaign.
    Many of the commenters supporting the rule submitted comments 
making these and similar points. We have credited those comments in 
fashioning this rule. OLMS also relies on its experience in generally 
administering the LMRDA. Union officers and union members, who have 
interacted with OLMS investigators, have expressed an interest in 
learning about consultant activities and agreements. At compliance 
assistance sessions conducted by OLMS in which attendees receive 
training on how to access and use the OLMS online public disclosure 
room (where reports filed by unions, union officers, employers, and 
consultants are available for viewing), attendees often raise questions 
about ``missing reports,'' referring to the absence of reports filed by 
employers and consultants. According to the attendees, they are aware 
of situations in which known and unknown third parties are involved in 
the employers' counter-organizing efforts, but no reports have been 
filed. Explanations from OLMS investigators on the ``direct contact'' 
rule did not satisfy their curiosity. Nor did it reduce their interest 
in seeing reports about the use of third-party consultants by 
employers.
    Disclosure of indirect persuader agreements allows workers to know 
the actual source of the persuasive information provided to them by 
their supervisors, individuals that the workers may find more credible 
than higher-level management officials. As stated by some commenters, 
consultants utilize supervisors to disseminate the consultant-prepared 
persuader message. Thus disclosure will allow workers to better 
evaluate comments made by their supervisors (as the supervisor's own, 
or scripted, view about union representation) and other forms of 
communication.
    When a consultant is used to indirectly persuade employees and such 
use is not disclosed to employees, that, per se, deprives the employees 
of being fully informed about all the circumstances regarding their 
decision on representation. In making this assessment, the Department 
is not questioning employers' intentions or making a judgment about 
employers' use of consultants, nor does it take a position on 
employers' exercise of their rights under the NLRA. The Department

[[Page 15958]]

is simply stating its position that employers and consultants should 
publicly disclose their arrangement so workers can know the source of 
persuader materials in order to better evaluate them.
    Furthermore, the nature of the persuader arrangement is relevant. 
The persuader represents the employer, and never the employees whose 
decision to decide on union representation is the focus of the parties' 
concern. Where the consultant is involved in persuading employees about 
how they exercise this right, it has differentiated itself from the 
employer insofar as section 203 is concerned. By virtue of section 
203(e), no reporting is required if the employer itself undertakes 
persuader activities. In such situation, workers may assume, correctly, 
that its employer, through its representatives, drafted the material. 
Workers are thus able to evaluate the employer's message on its face. 
In the absence of persuader reporting, workers have no independent 
means of determining whether the message truly derives from the 
employer or from a third-party source, and any assumptions they make 
about the source and its credibility may be incorrect.
    In sum, as further discussed below, the issue is not just the 
activity itself (e.g., drafting a persuasive document), but the source 
of material and the agreement pursuant to which it was drafted: If the 
employer is the author, it is not generally reportable; if a third 
party drafts the material, it is reportable.
d. Comments on the Term ``Middlemen'' in the Legislative History
    Multiple commenters stated that the Department's focus should be on 
deceptive ``middlemen'' employed to spy on employees or otherwise 
``unlawfully and deceptively'' interfere with their rights and defeat 
their organizing efforts. They suggested that Congress did not intend 
that labor relations consultants, as a general matter, would have to 
report what to these commenters are routine activities--whether done 
openly or not--but only to require ``middlemen,'' as unique-outliers 
among consultants, to report agreements to engage in ``nefarious 
conduct.'' They rely on the LMRDA's legislative history to advance 
their contention that the proposed rule does not address what they see 
as the congressional intent for section 203 to apply only to these 
types of middlemen who interacted directly and deceptively with 
employees. Further, these comments imply that such middlemen are an 
historical anomaly and, accordingly, the proposed rule addresses a 
problem that no longer exists.
    Many of the commenters argued that the LMRDA's legislative history 
clearly evinces that reporting is only required in instances where a 
labor relations consultant is interacting directly with employees as a 
middleman for the employer. These commenters contended that it was the 
sole intent of Congress to curb abuses of unscrupulous middlemen, as 
opposed to the work of legitimate consultants and attorneys. One 
commenter noted that the evidence presented before the McClellan 
Committee was ``largely focused'' on the deceptive practices of Nathan 
W. Shefferman and his labor consulting firm. The commenter quoted the 
following excerpt from the Senate Report on the bill that became the 
LMRDA: ``These middlemen have been known to negotiate sweetheart 
contracts. They have been involved in bribery and corruption as well as 
unfair labor practices. The middlemen have acted, in fact if not in 
law, as agents of management.'' See S. Rep. No. 86-187, at 10, 1 LMRDA 
Leg. Hist., at 406. Another commenter noted that the practices targeted 
in the legislative history centered on the hiring of middlemen to spy 
on employee organizing activity, induce employees to join company 
unions, negotiate sweetheart contracts, and commit acts of bribery and 
corruption. The commenter claimed that the LMRDA has effectively 
eliminated these practices.
    Other commenters contended that section 203 was never intended to 
regulate situations involving the indirect persuasion of employees, 
such as where ``an employer accepts advice and materials prepared for 
them, applies that advice it received on its own behalf, adopts that 
advice and materials as its own, and itself delivers the message to its 
employees.'' Another commenter, a public interest organization, stated 
that the term ``middlemen'' means ``persons acting in the middle, i.e., 
between the employer and its employees, such as through faux employee 
committees.'' Therefore, the organization argued, attorneys who do not 
interface with employees cannot be considered middlemen.
    Likewise, a trade association commented that Congress sought to 
expose labor consultants acting as middlemen who engaged in the direct 
persuasion of employees without revealing their true connection to the 
employer, essentially acting as ``fronts for the employer's anti-union 
activity.'' The trade association stated that the Department, in the 
NPRM, had failed to identify any legislative history to show that 
Congress intended to target consultants who merely advised employers on 
ways in which the ``employers themselves'' could campaign against union 
organizing. Several of the commenters also recited the following 
testimony from Professor Archibald Cox before the Senate Subcommittee 
that discussed the bill prior to the LMRDA's passage:

    Payments for advice are proper. If the employer acts on the 
advice it may influence the employees. But when an employer hires an 
independent firm to exert the influence, the likelihood of coercion, 
bribery, espionage, and other forms of interference is so great that 
the furnishing of a factual report showing the character of the 
expenditure may fairly be required.

    See Hearings before the Subcommittee on Labor of the Senate 
Committee on Labor and Public Welfare on Labor-Management Legislation, 
86th Cong., 1st Sess., at 128 (1959). The commenters construed this 
testimony as an indication that reporting should be required only when 
an employer hires a consultant to directly ``exert the influence'' on 
employees. According to another commenter, the legislative history 
confirms that Congress wanted only for employees to know whether a 
middleman was acting on behalf of the employer, and not whether the 
employer had consulted with a labor relations consultant or lawyer.
    The Department accepts that some of the legislative history focuses 
on the deceptive and surreptitious activities of ``middlemen'' such as 
Shefferman. The Department disagrees, however, with the suggestion that 
Congress intended for the persuader reporting provisions of section 203 
to be limited to persuasion that amounted to unlawful conduct by 
middlemen. Instead, section 203 is worded broadly to require both 
employers and consultants to report consultant activities where an 
object thereof, directly or indirectly, is to persuade employees, as 
well as the attendant details regarding their agreements or 
arrangements. The activities of individuals like Shefferman and his ilk 
provided the most blatant examples of the conduct to be regulated 
through reporting and disclosure, but nowhere in the legislative 
history was it suggested that Congress intended to exempt or exclude 
from reporting those persuader activities that do not rise to the level 
engaged in by Shefferman and his consulting firm.\48\ Indeed, as

[[Page 15959]]

discussed earlier in the preamble, at Section III.B.1, Congress 
recognized that reporting of both direct and indirect persuader 
activity by consultants is necessary and desirable to promote 
transparency without regard to whether the persuader activity is 
illegal or not.
---------------------------------------------------------------------------

    \48\ See IM Section 263.005 (Purposes of Arrangement) (1960): 
``The purpose which would make an arrangement subject to the 
reporting requirements of section 203(a)(4) and 203(b)(1) need not 
be unfair labor practices or otherwise in violation of law. These 
suggestions speak of activities to ``persuade'' employees in the 
exercise of their collective bargaining rights, in significant 
contrast with section 203(a)(3) which requires reporting by 
employers of expenditures where the object is ``to interfere with, 
restrain, or coerce employees'' in the exercise of these rights. The 
legislative history supports this conclusion. The provision 
corresponding to section 203(a)(4) in the House Bill as reported 
(section 203(a)(4) of H.R. 8342) would have required reporting only 
in the case of an agreement to provide an employer with the services 
of a person or firm engaged in the business of ``interfering with, 
restraining, or coercing employees in the exercise of rights 
guaranteed'' by the Reporting Act, the National Labor Relations Act, 
or the Railway Labor Act. This provision was replaced by the present 
section 203(a)(4) with its test of persuasion.''
---------------------------------------------------------------------------

    As explained further in Section V.C.3, the LMRDA is designed, in 
large part, to rely on reporting and disclosure in order to promote 
lawful, constructive activities that bring stability and harmony to 
labor-management relations. Disclosure promotes the full exercise by 
individuals of their rights as employees and union members and 
discourages improper financial arrangements between unions, their 
officials, and employers (as provided by the NLRA and the various 
titles of the LMRDA). In its crafting of section 203, there is nothing 
to indicate that Congress sought to exclude from disclosure any 
agreements between an employer and a consultant under which a 
consultant agrees to undertake any activity, lawful or otherwise, with 
an object to persuade employees regarding their organizing and 
collective bargaining rights. Although many commenters opposed to the 
rule have argued that Congress only intended that reports be filed in 
situations with conduct that is patently corrupt, they have provided no 
evidence of such intent. Narrow language could have been easily drafted 
to accomplish this result if that was the intent of Congress, yet 
Congress instead chose the expansive language contained in section 203.
    In Humphreys, Hutcheson and Moseley, 755 F.2d 1211, 1215 (6th Cir. 
1985), the Sixth Circuit explained that Congress ``did not distinguish 
between disclosed and undisclosed persuaders or between legitimate and 
illegitimate activities. Rather, Congress determined that persuader 
activities were impeding the exercise of employee rights and that 
disclosure and reporting might be sufficient to redress this problem. 
In that case, the law firm whose activities were at issue argued that 
section 203(b) was inapplicable to the firm because it did not engage 
in ``covert'' activities. The firm essentially made the same argument 
raised by many commenters in response to the NPRM; as stated by the 
appeals court: ``[The firm] contends that the LMRDA is aimed at covert 
management middlemen who engage in activities such as spying, bribery 
and influence peddling rather than at persuaders who openly engage in 
`legitimate' persuasive activities such as the speeches given by the 
partners of the firm who were disclosed persuaders.'' Id. The court 
disagreed with this argument, finding instead that ``the fact that the 
attorneys identified themselves to the . . . employees did not remove 
them from the ambit of LMRDA section 203(b).'' Id.
    The Department disagrees with the contention that Congress intended 
for section 203 to apply only to middlemen who directly persuade 
employees. The Department agrees with the assertion by a trade 
association opposing the proposed rule that there is no data showing 
that employers who hire consultants to engage in direct persuasion (and 
file LM reports under the prior rule) are more or less likely to 
interfere with employee rights than employers who hire consultants to 
engage in indirect activities. As explained in this section of the 
preamble, Congress focused on ``surreptitious'' activities designed to 
influence employees, thus requiring reporting and disclosure to workers 
of the source of persuasive communications or policies. Concerning 
direct persuasion, as one commenter stated, the source of the material 
in such situations is often ``patently obvious,'' in contrast to where 
the consultant's actions are indirect and thus hidden behind the 
employer's role as ``spokesperson.'' Without required disclosure, 
employees may assume that the employer, not a consultant whose profit 
depends on persuading employees against the union, is voicing its own, 
unscripted position on union representation.
    An employer association contended that the Department's conclusion 
that the reporting of both direct and indirect persuasion will further 
employees' ability to make informed choices concerning their bargaining 
rights is a policy judgment to be made by Congress, not the Department. 
Further, the commenter argued that such reporting provides no benefit 
to workers and interferes with employer rights. A law firm similarly 
asserted that ``true persuaders'' are currently required to report, and 
the NLRB's rules adequately protect employee rights in organizing 
campaigns.
    The Department rejects these assertions. As discussed above, the 
legislative history and the wording of section 203 support the 
Department's interpretation that both lawful unlawful persuader 
activities are reportable and that such reporting is beneficial to 
employees. This rule furthers Congress's intent that section 203 
supplement the NLRA in protecting the representation and collective 
bargaining rights of employees. See Humphreys, 755 F.2d at 1222 
(disclosure of third-party persuader agreements ``enable[s] employees 
in the labor relations setting, like voters in the political arena, to 
understand the source of the information they are given during the 
course of a labor election campaign.''); see also testimony of an 
attorney for the NLRB before the McClellan Committee (``[The NLRA] is 
not adequate to deal with such activities.'' S. Rep. 86-187, at 10, 1 
LMRDA Leg. Hist., at 406.
    Furthermore, nothing in the legislative history supports the 
commenters' view that section 203 was enacted to apply only to 
middlemen interacting directly with employees. As stated above, the 
broad language of section 203 suggests otherwise. Moreover, regardless 
of the broad or narrow scope of the term ``middlemen,'' the Department 
notes that the term ``middlemen'' is not mentioned in the text of the 
LMRDA and that no specific persuader activities are identified in the 
text. Section 203(a)(4) uses the phrase ``labor relations consultant or 
other independent contractor or organization,'' a phrase more inclusive 
than ``middlemen.'' Section 203(b), rather than identifying particular 
reportable activities, simply states that ``[e]very person'' who 
engages in persuader activities through an agreement or arrangement 
with an employer must report. 29 U.S.C. 433. Further, many of the 
activities cited in the legislative history are not strictly examples 
of ``direct'' persuasion, such as efforts to induce employees to form 
or join company unions through such devices as ``spontaneous'' employee 
committees, essentially fronts for the employer's anti-union activity. 
S. Rep No. 85-1417, at 255-300 (1958). The ``middlemen'' also engaged 
in other activities discussed in the legislative history, involving 
direct or indirect contact with employees, including organizing ``vote 
no'' committees during union campaigns and designing psychometric 
employee tests designed to weed out pro-union workers. Id.; see also S. 
Rep. No. 86-1139, at 871 (1960). Indeed, the legislative history 
discusses

[[Page 15960]]

none of the activities typically viewed as reportable under the prior 
interpretation, such as a consultant delivering a persuasive speech to 
employees or disseminating a persuasive letter to employees on the 
consultant's own letterhead. The Department also notes that it has 
historically viewed consultants, whether acting directly or indirectly, 
as ``middlemen.'' \49\
---------------------------------------------------------------------------

    \49\ See IM section 265.005, which states in relevant part: ``A 
more difficult problem is presented where the lawyer or middleman 
prepares an entire speech or document for the employer. We have 
concluded that such an activity can reasonably be regarded as a form 
of written advice where it is carried out as part of a bona fide 
undertaking which contemplates the furnishing of advice to an 
employer. Consequently, such activity in itself will not ordinarily 
require reporting unless there is some indication that the 
underlying motive is not to advise the employer. In a situation 
where the employer is free to accept or reject the written material 
prepared for him and there is no indication that the middleman is 
operating under a deceptive arrangement with the employer, the fact 
that the middleman drafts the material in its entirety will not in 
itself generally be sufficient to require a report.'' (Emphasis 
added.)
---------------------------------------------------------------------------

e. Comments on Comparisons of Persuader Disclosure to Other Disclosure 
Regimes
    Drawing upon the disclosure requirements applicable to unions under 
the LMRDA and various individuals and entities in other settings, 
several commenters objected to the need to identify the consultant as 
the source of persuader materials, arguing that such disclosure 
provides little or no benefit to workers. First, as a general matter, 
commenters argued that disclosure should focus on the person who 
delivers the message, and not the person who drafts the remarks. 
Referring to presidential speeches and regulatory documents as 
examples, one commenter asserted that it is the ``oratory or 
signatory'' who ``owns'' the words delivered, even if others assist in 
drafting or reviewing. This commenter argued that if an employer 
delivers remarks prepared by a consultant, the employer has adopted the 
remarks as his own and that the drafter thus, in effect, serves only an 
inconsequential role insofar as employees are concerned.
    Other commenters disagreed that employer-consultant reporting is 
similar to union reporting, stating that union reporting was required 
to show how a union maintained their finances, a rationale unrelated to 
the reasoning underlying the Department's proposed rule. Another 
commenter suggested that the rule is not necessary to ``even the 
playing field'' between labor and management, as unions have won the 
majority of elections in recent years. An employer association 
suggested that the Department sought, without authority, to ``redress 
the balance of `contemporary labor relations.' ''
    A trade association, citing Buckley v. Valeo, 424 U.S. 1 (1976), 
criticized the Department's comparison of employer-consultant reporting 
to reporting under Federal election campaign law. The commenter 
acknowledged that an analogy is appropriate between campaign disclosure 
laws and reporting of direct persuasion, as reporting will provide 
employees with knowledge of ``whose behalf the middleman is acting and 
the true source of the message being relayed.'' In contrast, the 
commenter contended, this risk is not present where the employer 
delivers the message, as ``there is no danger that the employees are 
being deceived with regard to the interests of the messenger or the 
risk that the messenger is somehow beholden to an undisclosed 
interest.''
    The Department disagrees with these commenters. Initially, we 
disagree with the idea that whether an employer or its spokesperson 
delivers a persuader message prepared by a consultant--thereby, in the 
commenter's view, ``owning'' its content--is material to the question 
whether the consultant's involvement must be reported. By creating the 
message to be given by the employer, the consultant has engaged in 
indirect persuasion, which, as the statute requires, must be reported. 
Putting aside this statutory requirement, it remains our view, as 
expressed throughout the preamble, that workers benefit by knowing that 
a message is being scripted by a third party. For example, when the 
issue in a union election context is whether the workers want a 
representative, often portrayed as an unwanted ``outsider'' by the 
employer, then it is relevant that the employer's message opposing the 
union is crafted by an outsider. When, unknown to employees, a 
supervisor's day-to-day interactions and comments with the employees he 
or she supervises are scripted to defeat union representation, 
employees may view the message differently. If employees are unaware 
that a labor relations consultant has been hired to persuade them to 
oppose unionization, they may never learn that their supervisors may 
not be sharing their own, usually trusted, views about matters in the 
workplace. Thus, without disclosure, there is an unacceptable risk that 
employees may alter their decision concerning the exercise of their 
rights based upon the scripted message of ``trusted'' supervisors or 
those managers with whom the employees regularly interact--one part of 
a professional persuader's campaign strategy. See Part III.B.3 and 
V.C.1.c of the preamble.
    With regard to the suggestion that the Department's proposed 
persuader rules have no analog in the Act's provisions relating to 
union reporting, the Department notes that the general disclosure 
principles are roughly analogous for section 201 and section 203 
reporting, even if not all of the specific reporting goals or 
requirements are identical. Indeed, the Senate Committee that drafted 
what became section 203 indicated its belief that ``if unions are 
required to report all their expenditures, including expenses in 
organizing campaigns, reports should be required from employers who 
carry on, or engage such persons to carry on, various types of 
activity, often surreptitious.'' S. Rep. 187 at 39-40, 1 LMRDA Leg. 
Hist., at 435-436. Thus, the Department's goal in this rule is not to 
take sides in labor-management disputes, or promote ``parity,'' but, 
rather, to advance the interests of Congress in labor-management 
disclosure that benefits workers choosing to exercise their protected 
rights. As such, union success rates are not relevant. Further, the 
fact that the primary rationale for union disclosure does not apply 
strictly to employer and consultant disclosure has no bearing on the 
underlying merits of such disclosure. Disclosing this information, as 
stated, provides beneficial information to workers.
    With regard to the comments that there are important differences 
between the disclosure proposed by the Department and the disclosure 
rules applicable to public elections, the Department recognizes such 
distinctions. However, the Department disagrees with these commenters 
to the extent they suggest there is no analogy between the benefit 
derived by voters under campaign disclosure laws and the benefits 
derived by workers from the disclosure provided by this rule. See 
Humphreys, 755 F.2d at 1222 (disclosure of third-party persuader 
agreements ``enable[s] employees in the labor relations setting, like 
voters in the political arena, to understand the source of the 
information they are given during the course of a labor election 
campaign.'')
    To illustrate, while voters are selecting among various candidates 
for office in the larger, political context, workers are choosing 
whether to be represented by a union, or they are choosing from among 
rival unions seeking their support. Although the dynamics differ, in 
each situation, outside parties use persuasive

[[Page 15961]]

communications in an attempt to influence the process in support of a 
particular candidate or choice. Knowledge about those outside parties 
helps individuals assess the merits of the arguments and make effective 
decisions. While employers are not strictly candidates in 
representation elections, they have a stake in election outcomes, and 
they have a right under the NLRA to put forth their views. Indeed, many 
of the opposing comments emphasize the fundamental role that management 
should play in the representation election process, with one law firm 
stating that ``the NLRB election process is an example of workplace 
democracy and, as a microcosm of our democracy, it is sometimes 
messy.''
    Thus, in the Department's view, analogizing between the source of 
an employer's position and the sources that fund candidates' campaigns, 
and their related political action committees, is justified. Just as 
knowledge of special interests and campaign donors helps voters 
formulate opinions on candidates' positions, knowledge of employer 
reliance on outside parties can assist workers in evaluating the merit 
of employer positions. The benefit of knowing the source of persuader 
materials and other activities is apparent for either direct or 
indirect persuasion. Under the other reporting regimes, the 
contribution of money from an individual or entity may influence the 
candidate's position on an issue--and thereby affect a citizen's 
evaluation of the candidate--thus animating the need for disclosure. 
This contrasts with the situation that arises under the LMRDA; here, it 
is the contractual arrangement between the employer and the consultant 
to undertake persuader activities--without any apparent divergence of 
views between the consultant as agent and the employer, as principal--
that would be significant to an employee. In the political sphere, a 
candidate's position on an important issue may be ``bought'' by a 
donation. In the union election context, an employer's general views 
about the union may be shaped and made coherent by a professional 
consultant. In each instance, however, the purpose served by disclosure 
is to provide information that allows the public (under the campaign 
analog) and the employees (under the LMRDA's) to exercise important 
governance duties (exercising their franchise and related ``oversight'' 
duties). In each situation, it is the risk that actions by third 
parties may impede voting rights if they are not disclosed that makes 
disclosure important. Although the political spheres and the nature of 
the relationship between donors and candidates, on the one hand, and 
consultants and employers, on the other, are different, Congress 
decided that disclosure is necessary to ensure that individuals can 
fully exercise their rights in an informed manner.
    Finally, one law firm also objected to the Department's reference 
in the NPRM to ``laboratory conditions'' that the NRLB promotes in its 
representation elections, a test which ensures that employees have full 
and accurate information during campaigns. See General Shoe Corp., 77 
NLRB 124 (1948); 76 FR 36189. The commenter asserted that the proposed 
rule incorrectly stated that the NLRB seeks to ``police the truth or 
falsity of campaign communications'' by parties involved in 
representation elections. The commenter also asserted that workers know 
that their interests and employers diverge at times, and that they are 
capable of assessing information and evaluating the merits before 
making decisions. The Department disagrees with the comments. This rule 
is not concerned with monitoring the ``accuracy'' of communications, 
which is left to the parties. Further, the Department also acknowledges 
the ability of workers to make decisions and evaluations, but in doing 
so they need to know the source of the information designed to persuade 
them about how they should exercise their protected rights.
f. Comments on the Timeliness of Disclosure
    Several commenters suggested that workers could not benefit from 
this increased disclosure, because the statutory deadlines for 
reporting are later than the 38-day median timeframe between the filing 
of an NLRB petition and the ensuing election (additionally noting that 
90% of the elections are held within 56 days). Further, much of the 
information from submitted reports would be available only 90 days 
after the conclusion of the filer's fiscal year. Additionally, some 
commenters stated that if the NLRB expedites representation elections, 
it will be even less likely that workers will actually benefit from the 
Department's proposed changes.
    The Department rejects these contentions. The Department recognizes 
that the NLRB in December 2014 issued a final rule amending its 
representation case procedures. See 79 FR 74307. Critics of that rule 
argue that the time between the filing of a certification petition and 
the holding of the representation election will be significantly 
reduced. In the Department's view if this result is achieved, the rule 
will remain highly beneficial to employees and the public; it in fact 
makes the need for transparency even more compelling. Initially, the 
Department notes that section 203(b) requires consultants to file Form 
LM-20 reports within 30 days of entering into the persuader agreement 
or arrangement, not 30 days from the union's filing the petition. Thus, 
since the rulemaking record suggests that employers engage consultants 
at the first signs of union organizing, i.e., before a petition is 
filed, the commenters' concerns about the timing of disclosure are 
unwarranted. Moreover, even apart from when the information is actually 
received by employees, workers and the public will have the additional 
benefit of information about a particular consultant from its past Form 
LM-20 reports, which would complement the information available to them 
in the Form LM-20 for the present employer.\50\
---------------------------------------------------------------------------

    \50\ See Humphreys, 755 F.2d at 1222 (``Requiring disclosure, 
even after the fact, will inhibit and expose illegal and unethical 
actions by persuaders that hamper employees in the exercise of their 
rights guaranteed by the NLRA. . . . Past reports that disclose the 
interests of persuaders serve as a valuable source of information in 
current elections'').
---------------------------------------------------------------------------

2. Underreporting of Persuader Agreements and Research Studies
    As stated in the NPRM, while most employers utilize consultants to 
conduct counter-organizing campaigns, most persuader agreements are 
unreported because most consultants engage only in indirect--not 
direct--persuasion. This lack of reporting has persisted, despite the 
growth of the persuader industry and its widespread use by employers 
since the enactment of the LMRDA. See 76 FR 36185-87. As stated in the 
NPRM, the Department estimated that 75% of employers utilize labor 
relations consultants to manage union avoidance campaigns. 76 FR 36186. 
The widespread use of consultants to indirectly persuade employees has 
been documented in congressional hearings, executive branch commission 
reports, and industrial and labor-management relations research. Id. 
The NPRM also cited these sources to illustrate the practical effect of 
the prior interpretation and to demonstrate that it did not lead to the 
full reporting necessary for workers to effectively exercise their 
representation and collective bargaining rights as intended by 
Congress. 76 FR 36190.

[[Page 15962]]

a. Review of Comments Received
    Many commenters opposed to the revised interpretation criticized 
the Department's use of industrial relations research to support its 
position that the prior interpretation failed to provide the reporting 
intended by Congress. In response, the Department emphasizes that the 
proposed interpretation, embodied in this rule, is rooted in the 
statutory language and congressional intent. To reiterate points 
earlier made in this preamble, the text of section 203 is better read 
to require reporting of employer agreements with consultants who engage 
in both direct and indirect persuasion of employees. This view of the 
statutory language better promotes the public interest than the prior 
interpretation, by achieving greater transparency of such agreements 
and activities, thereby allowing workers to make better informed 
decisions about their union representation and collective bargaining 
rights. This, in turn, promotes public confidence that election 
outcomes reflect the informed choice of the workers. The Department's 
use of independent studies illustrates the practical benefits that 
would be served by increased transparency. More specifically, the 
research studies describe employers routinely engaging in anti-union 
campaigns through their mid-level managers and supervisors, supported 
at large costs by outside consultants without the knowledge of the 
employees, while employers simultaneously argue that the union is an 
unwanted ``third party.''
    Notwithstanding their criticism of the research cited in the NPRM, 
these commenters did not controvert the fundamental propositions 
concerning indirect consultant activity made in the NPRM. The 
commenters did not contest the Department's basic description of how 
employers routinely rely upon labor relations consultants, including 
lawyers, who work behind the scenes (engaging in legal and non-legal 
services) with supervisors and other employer representatives, who then 
directly persuaded employees. The commenters did not contradict the 
contention that workers are generally unaware of the extent to which 
consultants are involved in the ``indirect activities'' designed to 
affect how they make their choices about matters involving union 
representation and collective bargaining. Moreover, many of the 
commenters who supported the proposed rule concurred with the 
researchers' observations and the Department's determinations regarding 
the growth of the consultant industry and employers' routine reliance 
on consultants in persuading employees about how they should exercise 
their representation and collective bargaining rights. And, none 
contested that indirect persuader activities have gone unreported.
b. Comments on Research Studies
    Several commenters voiced support of the research studies cited in 
the NPRM. Many more commenters (all opposed to the proposed rule) took 
issue with the studies cited, variously criticizing the research as 
outdated, unreliable, lacking credible analysis, flawed, and arbitrary. 
Other commenters criticized the research as having a pro-union bias and 
lacking objectivity. One commenter argued that the cited research does 
not address the problems identified by Congress in the enactment of the 
LMRDA. Another commenter called the studies cited in the NPRM 
``discredited,'' and stated that they have been refuted by counter-
studies (citing U.S. Chamber of Commerce, Responding to Union Rhetoric: 
The Reality of the American Workplace--Union Studies on Employer 
Coercion Lack Credibility and Integrity (U.S. Chamber of Commerce White 
Paper 2009).
    Multiple commenters specifically criticized Bronfenbrenner's No 
Holds Barred study, arguing that it was flawed because it was based on 
interviews and surveys of union organizers and lacked objectivity. 
Another commenter criticized Bronfenbrenner's failure to obtain data 
from employees or employers, even anonymously. Further, a trade 
association commenter stated that the study is based on allegations of 
unfair labor practices by union organizers, a far less meaningful data 
source than one involving actual findings that the allegations had 
merit.
    Other commenters criticized the studies by John Logan, stating that 
they are based on qualitative analyses and interviews with union 
officials and union avoidance consultants, and that they lack 
credibility because Logan did not distinguish between legal and illegal 
campaign tactics when describing employers' consultant use. Another 
commenter took issue with Logan's The Union Avoidance Industry in the 
USA and criticized the study as ``one-sided.'' The same commenter 
countered Logan's assertions about consultants' ``extreme language'' 
with examples of union rhetoric, suggesting that both consultants and 
unions employ rhetoric to suit their respective purposes.
    A law firm criticized Bronfenbrenner and Logan for not fairly 
portraying changes in union strategies for conducting representation 
campaigns. An employer association stated that labor unions and certain 
academic professionals believe that employers should refrain from 
playing any role in response to union organizing efforts, or at least 
that any employer actions should be subject to stringent regulation.
    Further, a law firm stated that the Department should have provided 
its own evidence in support of its policy justification for the 
proposed rule, or, at a minimum, verified the authenticity or 
reliability of the data from the research cited in the NPRM. Another 
commenter urged the Department to conduct its own research and hold 
hearings to obtain stakeholder input and assess the need to change the 
current interpretation. The commenter argued that a ``thorough, non-
partisan review of the labor relations climate will demonstrate that 
labor relations consultants are in most, if not all, cases assisting 
employers in a lawful manner to respond to potentially devastating 
economic attacks by unions.''
    In addressing these comments, the Department first wants to make 
clear that the foundation for this rule is the statutory language 
chosen by Congress to require the disclosure and reporting of 
agreements between employers and labor relations consultant to persuade 
employees about the exercise of their union representation and 
collective bargaining rights. Thus, we are not relying on research 
findings to establish whether it is appropriate to require reporting--
Congress has answered the question in the affirmative. The chief value 
in the research findings, as discussed in the preambles to the NPRM and 
this final rule, is to show that the conduct that Congress intended to 
address by requiring disclosure and reporting persists.
    In response to those commenters that stated the Department should 
have conducted its own research, the Department, as discussed below, 
had no basis to question the soundness of the research cited. While 
some may argue about some of the specific findings and recommendations 
in the studies cited, the studies firmly establish that labor relations 
consultants are heavily relied upon by employers in contesting union 
representation efforts, that consultants are heavily involved in 
persuader activities, and that many of these activities have had a 
negative impact on labor-management relations. Further, with regard to 
the criticism that the Department should have relied on its own data, 
its review of Form LM-10 and Form LM-20 reports would have revealed no 
useful information about the extent of indirect persuader activities 
because, under the prior

[[Page 15963]]

interpretation, only direct persuader activities triggered the filing 
of information about persuader agreements. Review of the reports would 
not yield information that would allow useful inferences about the 
extent of indirect persuader activities, which is the area this rule 
principally addresses.
    Despite these criticisms, no commenter introduced a single academic 
study that offered any reliable evidence that meaningfully controverted 
the Department-cited studies' conclusions regarding the labor relations 
consultant industry. While the commenters rely on a review of the 
literature prepared by an employer association that challenges some of 
the studies cited by the Department, this review presented no new data 
or peer-reviewed studies to refute those cited by the Department in the 
NPRM. Nor did the comments cite data more contemporaneous than the 
post-2001 studies in the NPRM.\51\ Furthermore, the criticism that the 
research cited in the NPRM is not objective, reflects a pro-union bias, 
and is funded by unions does not withstand scrutiny, because the cited 
research is peer reviewed and often published in respected academic 
journals.
---------------------------------------------------------------------------

    \51\ John Logan, The Union Avoidance Industry in the U.S.A., 44 
British Journal of Industrial Relations 651 (2006); Kate 
Bronfenbrenner, Economic Policy Institute, No Holds Barred: The 
Intensification of Employer Opposition to Organizing (2009); Chirag 
Mehta and Nik Theodore, American Rights at Work, Undermining the 
Right to Organize: Employer Behavior during Union Representation 
Campaigns (2005); John Logan, Consultants, Lawyers, and the `Union 
Free' Movement, 33 Industrial Relations Journal 197 (2002); John 
Logan, `Lifting the Veil' on Anti-Union Campaigns: Employer and 
Consultant Reporting under the LMRDA, 1959-2001, 15 Advances in 
Industrial and Labor Relations (2007).
---------------------------------------------------------------------------

    Regarding the assertion that the NPRM failed to take into account 
the tactics of unions, the Department disagrees with this contention, 
as this rule concerns reporting for persuader agreements between 
employers and their consultants pursuant to section 203. Reporting and 
disclosure requirements for labor unions and their officials are 
covered by sections 201 and 202, and provide for much more 
comprehensive and detailed reporting. The Department also considers the 
reaction of employers and consultants to union tactics to be irrelevant 
to section 203 reporting, as the focus of this rule is on the 
agreements and activities that trigger employer-consultant reporting, 
and the purposes served by such disclosure.
    In response to the commenters who criticized Bronfenbrenner's No 
Holds Barred study and took issue with her presentation of evidence 
obtained from surveys of union organizers, the Department notes 
Bronfenbrenner also relied on extensive NLRB case documentation. With 
respect to the comments on the research of John Logan, the Department 
notes that Logan's articles include a review of the available academic 
literature and cited works by other well-regarded industrial relations 
scholars. See Section III.B.2. The Department also conducted a thorough 
search of relevant literature before proposing the revised 
interpretation and remains of the view that the cited studies best 
reflect the existing research. Furthermore, in proposing the revised 
interpretation, the Department additionally relied on two House 
Subcommittee Reports (1980 and 1984), and the published work of the 
joint labor-management U.S. Commission on the Future of Worker-
Management Relations chaired by Harvard Professor (and former Labor 
Secretary) John Dunlop, along with union, management, government 
representatives, and several industrial relations scholars.
    Commenters criticized John Logan's research on the grounds that it 
failed to distinguish between legal and illegal conduct. Logan's 
listing of both lawful and unlawful tactics, however, fails to 
undermine the soundness of his reasoning in the article, the clear 
purpose of which, as stated by the author, is ``to provide[] a 
qualitative analysis of the services that the consultants have offered 
employers and an account of the campaign tactics of several superstars 
of the union free movement.'' See John Logan, Consultants, Lawyers, and 
the ``Union Free'' Movement, 33 Industrial Relations Journal, at 198 
(2002). Moreover, as stated, Congress intended for persuader reporting 
regardless of whether the consultant's activity constituted unlawful 
conduct. Even conceding for purposes of argument that the commenters' 
criticism is valid, it remains incontrovertible that labor relations 
consultants continue to be engaged by employers to conduct campaigns to 
oppose union representation, largely behind the scenes and without 
public disclosure, as had been the case, on a smaller scale, when the 
LMRDA became law. There is nothing in the rulemaking record to suggest 
that the use of consultants is an isolated activity or a historical 
phenomenon that is absent from contemporary labor-management relations 
and thus undeserving of regulation.\52\
---------------------------------------------------------------------------

    \52\ A trade association questioned the NPRM's reference of two 
memoirs written by former labor relations consultants (Nathan W. 
Shefferman, The Man in the Middle (New York: Doubleday 1961) and 
Levitt, Confessions of a Union Buster), and argued that these two 
consultants ``do not represent the majority of law abiding lawyers 
and consultants.'' See 76 FR 36184, 36187. The Department did not 
claim, nor intend to suggest, that these books provide an accurate 
portrayal of a typical labor relations consultant. The books, 
however, do identify some indirect activities that are typically 
undertaken by consultants during a campaign to contest a union's 
efforts to represent a company's employees. It is for that limited 
purpose that we cited to the books in the NPRM and in the preamble 
to this rule.
---------------------------------------------------------------------------

    In response to commenters arguing that the Department has not 
independently verified the authenticity or reliability of data and 
methodology used in the studies cited in the NPRM, the Department again 
notes it has now, and had then, no reason to question the soundness of 
the data and methodologies used by the academic researchers. In fact, 
additional studies referenced by commenters in opposition to the rule 
utilized the very methodologies that the commenters had previously 
criticized. Several commenters referenced the Chamber of Commerce's 
white paper that leveled criticism at Bronfenbrenner and Logan's 
respective bodies of research. Yet, the Chamber of Commerce did not 
conduct its own research, publish its article in an academic journal, 
or produce any alternate research data that meaningfully contradicted 
that of Bronfenbrenner and Logan. In attempting to refute 
Bronfenbrenner's and Logan's research, it used many of the same 
methodologies as those researchers. Moreover, the document was not 
published in an academic journal, which further diminishes its 
analytical strength. Commenters' critique of a lack of data in fact 
only makes a stronger case for the need for the rule; because the 
advice exemption has in effect swallowed the reporting requirements, a 
neutral government source of information that all parties might access 
is entirely lacking. The studies that exist are the only possible 
source of information--the opposite of what the statute intended.
c. Comments on the Underreporting of Persuader Agreements
    Multiple commenters agreed with the Department's determination that 
persuader activities were relatively underreported despite a 
substantial growth in the labor relations consultant industry. These 
comments were from local and international unions, a law firm 
representing unions, Congressional leaders, and a public policy 
organization.
    A law firm representing unions stated that the majority of 
organizing efforts

[[Page 15964]]

involve indirect persuader activities. This commenter stated that the 
number of Form LM-20 reports filed each year is disproportionately 
small compared to the number of representation matters in which 
consultants are involved. Further, the commenter pointed out that, 
since many union organizing efforts are stopped after consultants' 
initial involvement, no NLRB or NMB election petitions would be filed, 
apparently suggesting that underreporting may be even greater than 
estimated in the NPRM.
    Two international unions concurred with the Department's assessment 
that underreporting is a significant problem. The unions stated that, 
by limiting reporting to direct persuader activities, the prior 
interpretation has led to the increased retention of attorneys and 
other consultants to provide union avoidance services. A public policy 
organization concurred with the Department's underreporting estimates 
in the NPRM, and also provided examples (from its own research) of 
indirect persuader activities that were not reported.
    Multiple commenters disagreed with the Department's claim that the 
underreporting of employer-consultant reports provides any 
justification for the proposed rule. A large employer association 
disagreed with the Department's claim of an underreporting problem, on 
the grounds that such claim is based on the views of pro-union 
academics who describe and criticize activities beyond the purview of 
the proposed rule.
    Similarly, a trade association argued that an underreporting 
problem cannot exist, since, if consultants' activities do not by law 
have to be reported, then they do not qualify as reportable activities. 
Other commenters echoed the theme that employer-consultant reports are 
not being underreported since reports, which are being submitted under 
the current (not proposed) ``advice'' interpretation, are being filed 
exactly as they should be. Another commenter refuted the NPRM's 
underreporting claim on the grounds that it is based on what the 
commenter calls a ``false connection'' between the number of 
consultants and the number of reports that they should be filing.
    Several commenters questioned the Department's determination that 
the prior interpretation has led to significant underreporting. A 
consulting firm argued that the Department has simply created the new 
category of ``indirect'' persuasion activity, which is considered 
``advice'' under the prior interpretation. Another commenter stated 
that, even if consultants are hired in a majority of union organizing 
campaigns, the consultants are not necessarily hired for the purpose of 
engaging in persuader activity at all. Instead, they may be engaged in 
activities that the Department would concede would be exempt as advice. 
A public policy organization stated that the Department failed to 
justify its claim that the number of reports filed is 7.4% of those 
expected, and indicated that it is just as likely that most consultants 
have complied with the law and only provided advice, which is exempt 
from reporting. The commenter characterized the Department's reporting 
expectations as ``grossly inflated.''
    Multiple commenters stated that the Department did not provide 
adequate evidence that persuader activity is underreported. One law 
firm commenter argued that the underreporting claims were based on 
anecdotal evidence from biased sources. A trade association commenter 
disagreed with the Department's analysis of NLRB/NMB representation 
cases and levels of LM-20 reporting (76 FR 36186), and stated that the 
NPRM's analysis failed to prove the existence of an underreporting 
problem.
    A law firm stated that the Department did not explain why it only 
looked at NMB and NLRB representation cases from 2005 through 2009, and 
questioned the Department's estimate of how many Form LM-20s should 
have been filed, based on that NMB and NLRB data. It asserted that 
there is no evidence that those consultants engaged in persuader 
activity, and also stated that there is no evidence that the 
Department's reporting expectations are reasonable and realistic.
    One commenter argued that the cited studies did not substantiate 
that the 75% figure is an accurate estimate for elections conducted by 
the NMB in the airline and railroad industries. The commenter states 
that airline and railroad industries already have high unionization 
rates, so labor relations consultants are not hired as often, and 
employers in these industries respond differently to organizing 
campaigns.
    In the Department's view, as reflected in the NPRM and reiterated 
here, the LMRDA, properly interpreted, requires the reporting of 
consultants' direct and indirect persuasion of employees. Both the data 
used and the cited research illustrate the extent to which indirect 
persuasion, several decades after the enactment of section 203, 
continues to be relied upon by consultants to influence employees about 
how they should exercise their union representation and collective 
bargaining rights. The Department has separately demonstrated, as a 
matter of textual analysis, congressional intent, and public policy, 
that indirect persuasion should be reported to the same extent as 
direct persuasion. As such, the vast scope of indirect persuader 
activity by consultants supports the expansion of reporting beyond 
merely direct persuasion, in order to ensure the full reporting of 
persuader agreements envisioned by Congress, and to ensure adequate 
transparency.
    The Department also notes that this rule does not establish 
retroactive obligations or penalties. Further, the Department has not 
created a new category of persuader activity. Rather, indirect 
persuasion activities (including orchestration of counter-organizing 
campaigns through the use of employer representatives or supervisors), 
practiced by consultants in the name of ``advice,'' come within the 
plainly-described category of activities reportable under section 203. 
Employees need to know about persuader activities in order to make 
informed decisions on whether to organize and collectively bargain.
    In response to the comments stating that the NPRM did not provide 
sufficient evidence or analysis to justify its claims of 
underreporting, the Department notes that it did not purport to specify 
an exact reporting (or underreporting) rate. Rather, the Department, 
first, sought to develop an estimate of the underreporting of persuader 
agreements by generating a hypothesis from industrial relations 
research. The Department reiterates that such research is based on 
sound methodology and provides a solid basis for the Department's 
estimate that 75% of employers retain consultants to manage counter-
organizing campaigns.
    Second, the Department analyzed NLRB and NMB data to determine the 
number of election petitions filed.\53\ Data for the most recent five-
year period available (2005-2009) was used in order to reduce the 
effect of single-year spikes in the number of elections.\54\ Data for 
earlier years is less reliable, and could

[[Page 15965]]

potentially skew the average, because both agencies experienced 
significant decreases in the number of representation elections.
---------------------------------------------------------------------------

    \53\ The 75% estimate is based on available research that did 
not distinguish between NLRA and Railway Labor Act union organizing 
campaigns, so the Department is not able to separately calculate the 
estimated number of reports for counter-organizing campaigns in the 
railroad and airline industries. The Department utilized data from 
both agencies in an effort to be comprehensive in scope. The 
Department also notes that this rule utilizes the the mean rate 
(78%) of employer utilization of persuaders, rather than the median 
rate (75%) used in the NPRM, for the purpose of statistical 
consistency.
    \54\ As discussed in Sections VI.G, the Department has relied on 
updated data for FYs 10-14 (09-13 for the NLRB) to assess the burden 
associated with this rule.
---------------------------------------------------------------------------

    Third, the Department developed its estimate for the number of 
reports covering consultants managing counter-organizing campaigns by 
applying the 75% percentage figure to the number of NLRB and NMB 
election petitions filed. The Department also took into account the 
number of reports received by OLMS in recent years in arriving at this 
estimate. This data supported the conclusions reached in congressional 
hearings, executive branch commission reports, and labor-management 
relations research--that information Congress intended to be reported 
has not been reported.
    The commenters actually did not dispute the underlying factual 
premises of the Department's conclusion. That is, they did not reject 
the assertion that approximately 75% of employers' counter-organizing 
campaigns involve the use of outside consultants engaging largely in 
indirect activities. Rather, they disputed the Department's conclusion 
that indirect activity undertaken by consultants should be reportable. 
The Department emphasizes that the cited research characterized the 
consultants' activities as constituting the management or direction of 
the employer campaigns, and that many of the comments supporting the 
proposed rule concurred with that reading of the research and the 
conclusions of the studies.
    Finally, multiple commenters suggested that the Department need 
only increase its enforcement initiatives and compliance assistance 
efforts under the current ``advice'' interpretation to achieve an 
increase in reporting rates. A consulting firm stated that the 
Department has not adequately demonstrated why simply following current 
reporting rules could not solve the underreporting problem. A law firm 
argued that if there is currently underreporting, there is no reason to 
assume that those who do not report would suddenly do so if the 
Department broadened the scope of reportable persuader activity. This 
commenter argued that the proposed changes would adversely impact 
employers who are not underreporting, and who are already in compliance 
with the LMRDA. This commenter also asserted that the Department 
underestimated the potential effectiveness of the prior interpretation, 
and argued that the current rules would allow for investigation and 
enforcement of some of the examples described in the NPRM. The 
commenter suggested attempting to apply the prior interpretative 
standards before rejecting them in favor of new ones.
    In response to these comments, the Department acknowledges the 
importance of strengthening enforcement in all provisions of the LMRDA. 
However, increased enforcement alone would not be a sufficient 
substitute for the Department's revised interpretation of the reporting 
requirements. Limiting enforcement initiatives to those that address 
employer-consultant reporting under the prior interpretation would fail 
to secure reporting of indirect persuader activities (which predominate 
the persuader services provided by consultants). As a result, the 
``underreporting'' referred to in the NPRM exists in relation to the 
reporting necessary to achieve the aims envisioned by Congress in 
enacting the LMRDA, not in relation to the full reporting of only 
direct persuasion. Although the Department received several comments 
anecdotally suggesting that some direct persuasion was going 
unreported, there is little support in the rulemaking record that non-
compliance by consultants with regard to direct persuasion in some way 
indicates that they should be relieved from an obligation to disclose 
their indirect persuasion.
    The Department remains committed to providing effective compliance 
assistance for employers, consultants, and unions subject to LMRDA 
reporting requirements, and will continue to do so with this rule. 
Further, the Department notes that ``failure to file'' situations would 
be handled by various enforcement mechanisms, similar to those 
routinely used to enforce labor unions' reporting obligations. The 
Department's robust reporting regime that has long been in place for 
labor unions has yielded ``best practices'' that will be helpful in 
establishing enforcement methods in the employer-consultant reporting 
realm.
d. Comments on Consultant Industry Growth
    As stated above, several commenters supported the Department's 
conclusions regarding the underreporting of persuader activities 
despite the growth of the persuader industry. Comments from several 
international unions and one public policy organization reported that 
hiring labor relations consultants has become a prevalent practice 
whenever an employer faces a representation election.
    Multiple commenters argued that the Department had insufficient 
justification for its claim of growth in the labor relations consulting 
industry. One law firm commenter stated that the various studies citing 
percentages of consultant use over the years did not provide adequate 
evidence of significant industry growth. This commenter argued that the 
cited studies did not provide evidence of the number of consultants who 
actually engaged in reportable persuader activities, and did not 
provide data on the number of consultants or consulting firms in the 
United States.
    A law firm stated that the supposed increase in consultant use does 
not sufficiently justify the proposed rule, and argued that if no 
reporting is now occurring the Department has no way to measure an 
increase in the use of union avoidance consultants. Further, a trade 
association stated that the Department claimed that the current 
``advice'' interpretation itself has led to an increase in the union 
avoidance consulting industry. Another commenter claimed that the 
Department's goal is to reduce the number of consultants, regardless of 
their conduct, and argued that the fact that a majority of employers 
hire consultants during organizing campaigns is not germane to the 
Department's analysis. A trade association offered the interpretation 
that employers' increased use of consultants may simply mean that 
employers are working harder to ensure that they do not violate the 
Labor Management Relations Act (LMRA).
    In response to these comments, the Department repeats its earlier 
statements in this preamble that the purpose of this rule is not to 
criticize the use of labor relations consultants or in any way to 
curtail or interfere with their use by employers.\55\ In fact

[[Page 15966]]

consultants that limit their actions to providing legal services, 
distinct from persuader activities, incur no reporting obligation under 
this rule. This rule does not posit the growth of the labor relations 
consultant industry as justification for the proposed rule. In issuing 
this rule the Department is unconcerned about the outcome of particular 
elections or the overall number or rate of wins and losses. Our concern 
is that employees are provided the information that they need, as 
prescribed by Congress, in making choices about union representation 
and collective bargaining matters. With this information, it is up to 
the employees to sort through and resolve the competing positions of 
unions and employers in representation campaigns. As mentioned 
previously, the contemporary, prevalent use of labor relations 
consultants demonstrates the continuing need to ensure compliance with 
the reporting requirements prescribed by Congress. The size of the 
industry provides a useful backdrop to underscore the relative paucity 
of persuader reports filed with the Department. Since section 203 
requires disclosure of employer-consultant agreements or arrangements 
whereby the consultants undertake activities with an object to persuade 
employees concerning their rights to organize and bargain collectively, 
the low Form LM-20 reporting levels are especially striking when viewed 
in the context of consultant industry growth. It is this disparity that 
underscores the course taken by this rule, and the path earlier taken 
by the Department that failed to ensure the disclosure of persuader 
activities undertaken by labor relations consultants, behind the 
scenes, to influence employees in the exercise of their protected 
rights. Clarifying the ``advice'' exemption will allow the Department 
to more effectively and accurately administer and enforce section 203, 
and to secure the type of disclosure that Congress intended.
---------------------------------------------------------------------------

    \55\ Some commenters have suggested that the issuance of this 
rule will lead to a reduction in the number of firms in the industry 
because the required reporting will lead to employers opting to 
refrain from hiring consultants or consultants choosing to no longer 
offer their services. As we discuss further in section V.G.1 of the 
preamble, the Department is highly skeptical of such claims. Indeed, 
no commenter submitted any persuasive argument in support of that 
prediction. We think it more likely that, as an incidental result of 
the reporting, there may be greater competition within the industry, 
with some winners and losers, as employers review the reports to see 
which consultants are ``leaders'' within a particular business 
segment and the variety and the range of costs for services offered 
by the consultants. Given the prevalent and increasing use of 
consultants in representation campaigns over time and the 
significance that most employers attach to opposing union 
representation, it seems improbable that this rule will have even a 
marginal impact on the well-established practice whereby employers 
routinely seek the services of consultants when facing the prospect 
that the company's employees may choose union representation.
---------------------------------------------------------------------------

    On a more particular point, several commenters expressed confusion 
about the NPRM's discussion of the number and size of consulting firms. 
See 76 FR 36204-36206. In response to these comments, the Department 
notes that it was required to analyze financial burdens to covered 
employers and consultants in order to comply with the requirements of 
the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., Executive 
Order 13272, and the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et 
seq., and the PRA's implementing regulations, 5 CFR part 1320. 
Accordingly, the Department used quantitative methods to conduct its 
analysis, which was subsequently used to assess the rule's impact on 
small entities for the purposes of RFA compliance. In making this 
assessment, the Department presented an analysis of data from the U.S. 
Census Bureau's North American Industry Classification System Codes 
(NAICS) for ``Human Resources Consulting Services,'' which includes 
``Labor Relations Consulting Services,'' to determine the number of 
labor relations consultants and similar entities that can be classified 
as ``small entities'' affected by the Form LM-20 portion of the 
proposed rule.\56\ Additionally, the Department utilized the Small 
Business Administration's (SBA) ``small business'' standard of $7 
million in average annual receipts for ``Human Resources Consulting 
Services,'' NAICS code 541612.\57\
---------------------------------------------------------------------------

    \56\ See Statistics of U.S. Businesses: 2012: NAICS 541612--
Human resources & executive search consulting services, United 
States, accessed at: www.census.gov/econ/susb/.
    \57\ The NPRM referred to the U.S. Small Business 
Administration's Table of Small Business Size Standards Matched to 
the North American Industry Classification System Codes (2007). As 
discussed later in the text, the 2012 NAICS shows $14 million in 
average annual receipts for ``Human Resources Consulting Services,'' 
accessed at: www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf (at p. 32).
---------------------------------------------------------------------------

e. Comments on Election Outcomes
    A law firm stated that the Department is suggesting that unions 
would win more elections if more Form LM-20s were filed, and then 
argued that historical union success rates in representation elections 
contradict that point, since union success rates have been higher in 
the past decade than at any time since the 1970s. This commenter stated 
that the NPRM did not explain why unions' success rates in 
representation elections would be increasing during a time of growth in 
employers' hiring of consultants. Characterizing the NPRM as asserting 
that employers' increased use of consultants has an impact on the 
success of union organizing efforts, this commenter stated that the 
Department has not adequately shown how increasing employer-consultant 
reporting requirements would produce a change in representation 
election outcomes.
    One labor relations consulting firm questioned why the Department 
cited studies that suggest that losses by unions in representation 
elections are the result of anti-union tactics by consultants, given 
that ``unions win nearly 70% of contested elections each year.'' A law 
firm representing employers noted an increase in union win rates, 
stating that ``unions won 48% of NLRB elections in 1996 and nearly 68% 
in 2010.'' A trade association stated that the Department has not 
provided sufficient evidence that current employer-consultant reporting 
levels have any correlation to decreased unionization rates, noting 
that unions won 67.6% of elections in 2010. Number of NLRB Elections 
Held in 2010 Increased Substantially from Previous Year, Daily Labor 
Report (BNA), No. 85, at B-1, May 3, 2011. This commenter stated that 
the proposed changes are not supported by union election success rates.
    Further, a labor relations consulting firm argued that ``union 
tactics as a group play a greater role in explaining election outcome 
than any other group of variables, including employer characteristics 
and tactics.'' Additionally, a construction-related trade association 
commented that the unionization in the construction industry has 
declined because of union failures, and noted that there is no evidence 
to show that consultants' LMRDA violations are responsible for the 
decline. Finally, another trade association asserted that the proposed 
rule fails to specify the types of persuader activities that have 
increased and that have resulted in union election losses.
    Contrary to some commenters' assertions, the Department did not 
claim in the NPRM that the increasing usage of consultants has had a 
specific impact on unions' organizing success rates. Moreover, the 
issuance of this rule does not have an object to tilt the balance in 
favor of unions or against employers in representation matters. The 
object of the rule is to provide information that employees need, as 
intended by Congress, to be able to consider the extent to which an 
employer's choice to hire a labor relations consultant to manage the 
employer's campaign should affect their choice to accept or question 
the arguments presented in opposition to union representation. It seems 
beyond dispute that upon receipt of this information, workers will be 
better able to exercise their representation and collective bargaining 
rights, a particular benefit to them and a general benefit to the 
public.
    In response to the commenters that stated that the Department did 
not adequately explain how unions could have increased success rates in 
representation elections during a time of growth in employers' use of 
consultants, the Department reiterates that election outcome is not 
germane to this rule. The Department concurs with commenters stating 
that consultants are hired by

[[Page 15967]]

employers for purposes beyond counter-organizing persuader activities. 
As previously mentioned, consultants can be hired for a variety of 
purposes beyond orchestration of counter-organizing campaigns (e.g., to 
provide strictly legal advice or general management consultation, 
vulnerability assessments, or to provide services related to general 
union avoidance, first-contract avoidance services, or 
decertification).
3. Disclosure as a Benefit to Harmonious Labor Relations
    In the NPRM, the Department, referring to several research studies, 
expressed its view that there is strong evidence that the undisclosed 
activities of some labor relations consultants are interfering with 
workers' protected rights and that this interference is disruptive to 
effective and harmonious labor relations. The research included 
findings that some consultants counsel their employer-clients to fire 
union activists for pretextual reasons other than their union activity, 
or engage in other unfair labor practices, particularly because the 
penalties for unlawful conduct are typically delayed and may be 
insignificant, from the employer's viewpoint, compared to the longer-
term obligation to deal with employee representatives. See 76 FR 36189-
90 and Section III.B.1 of the preamble to this rule. This is not a new 
phenomenon. It is not the Department's intent in referring to this 
research to suggest that the increased use of consultants is the cause 
of, or an accelerator to, unlawful conduct by employers during 
organizational campaigns. At the same time, however, it cannot be 
ignored that Congress was concerned about and reacted to what it 
considered to be conduct by some consultants that, even if lawful, was 
viewed as disruptive to stable and harmonious labor relations. The 
Department recognizes, as we presume Congress did, that in most 
instances employers and labor relations consultants will adhere to the 
requirements of the NLRA and other laws.
    After a review of the pertinent comments, the Department continues 
to believe that its revised interpretation of consultant persuader 
activities will have a positive impact on labor relations.
    A number of commenters applauded the proposed rule as a long-needed 
response to what they viewed as the disruptive effect consultants have 
on labor-management relations, especially during representation 
campaigns. Several commenters viewed consultants as their chief 
antagonists in attempting to secure employee rights and appeared to 
view consultants as the root cause of most unlawful conduct by 
employers. Many of these commenters supported the rule, and several 
provided examples of the consultant activities they have witnessed. 
Other commenters, however, were critical of the Department's assessment 
of consultant and employer practices, arguing that the studies cited 
were inadequate to make such an assessment. Two commenters also argued 
that the rule is superfluous, contending that unlawful consultant 
activities are already governed by the NLRA and enforced by the NLRB.
    Several commenters opposing the revised interpretation disputed the 
idea that consultants have a harmful impact on labor relations. Many of 
these commenters challenged the research referenced in the NPRM and 
maintained that the Department has not provided sufficient evidence to 
justify this rule. For instance, the Department received a comment from 
an individual with more than thirty years of experience as a human 
resource and labor relations professional. This person stated that he 
had never intentionally committed an unfair labor practice, advised 
anyone to do so, nor received advice to do so from a labor relations 
consultant or attorney.
    Two associations representing small businesses stated that their 
members do not have any interest in deceiving employees or committing 
unfair labor practices. A trade association for manufacturers contended 
that the NPRM contained no ``substantial evidence'' to support a change 
in the Department's prior interpretation and that the Department failed 
to provide any evidence that contemporary consultants engage in the 
types of activities to which the LMRDA was intended to deter.
    Another trade association asserted that the NPRM, if implemented, 
would actually result in more election interference charges, despite 
the Department's stated goal of reducing improper conduct in 
representation elections. The association criticized the NPRM's 
reliance on the research of Kate Bronfenbrenner, Chirag Mehta, and John 
Logan. While the association admitted that certain consultants and 
lawyers engage in ``shady'' activities, it did not think the cited 
studies presented any evidence that ``all, most, or even many'' 
consultants engage in unlawful or unethical conduct.
    Many commenters appear to have misunderstood the Department's 
position. Several commenters read the Department's proposal to reflect 
a finding by the Department that labor relations consultants as a 
class, or the growth of their industry, have caused an increase in 
unfair labor practices by employers, that labor relations consultants, 
not employers, are chiefly responsible for such unfair labor practices, 
that labor relations consultants are disreputable, or that the 
reporting of indirect persuader activities will have a substantial or 
direct effect on deterring employers from undertaking actions that 
constitute unfair labor practices or other unlawful conduct. The 
Department did not adopt these observations of researchers as its own. 
The Department's conclusion was narrower. As stated in the NPRM: ``The 
Department concludes that, as was true in in the 1950s, the undisclosed 
use of labor relations consultants by employers interferes with 
employees' exercise of their protected rights to organize and bargain 
collectively and disrupts labor-management relations. The current state 
of affairs is clearly contrary to Congressional intent in enacting 
section 203 of the LMRDA.'' 76 FR at 36190. That is the key finding to 
this rulemaking.
    As we have reiterated throughout the rule, its purpose is to 
provide information to employees, consistent with section 203, where an 
employer has hired a consultant to engage in persuader activities, 
including those indirect, behind-the-scenes activities, that are 
currently left unreported. With this information, the employees can 
better assess the message they are receiving, including its content and 
tone, and the extent to which the message accurately reflects the 
employer's (or its supervisors') actual, concrete beliefs. Employees 
are entitled to receive this information under section 203 and this 
rule effectuates that provision without regard to whether the 
consultant, as we expect will be the norm, is fully compliant with the 
law.
    Some commenters stated that many consultants have never employed 
any unlawful or unethical tactics. Although these specific commenters, 
like most other labor relations consultants and employers, may have 
never engaged in these types of tactics, there are some consultants 
that are less scrupulous and whose actions unfairly tarnish the 
reputation of others. In addition, the Department cannot ignore the 
research that establishes that a significant number of tactics used in 
union avoidance and counter-organizing campaigns, whether lawful or 
unlawful, are disruptive of harmonious labor relations when not fully 
disclosed, as many commenters attested. For example, an international 
union commented that some consultants operate behind the scenes by 
coaching

[[Page 15968]]

employers on how to facilitate the ``spontaneous'' formation of 
employee committees, which are used as fronts for the employer's anti-
union activity. Other consultants, according to this commenter, design 
tests and surveys to help in identifying pro-union workers.
    Several commenters recounted their experiences with consultants 
during union organizing campaigns, noting particular activities they 
had observed and noting that these activities had been left unreported. 
One commenter recounted his past experience with a law firm's tactics 
to oppose representation, explaining that the consultants conducted 
face-to-face and group meetings with employees where literature, 
clearly not authored by the employer, was distributed. Another 
commenter described a consultant's effort to contest the union's 
efforts to organize a nonprofit health provider. He described the 
consultant's emphasis on indirect persuasion by educating managers 
about their role in the organizing campaign and training supervisors 
and coordinating their efforts to prevent unionization. The commenter 
stated that the consultant told managers to pull nurses from their 
patient-care duties to attend mandatory union avoidance meetings.
    A counsel for a labor organization stated that in the ``hundreds'' 
of organizing campaigns he has observed, consultants go far beyond 
merely advising employers. As he explained, consultants have undertaken 
the following activities: engaging in direct contact with employees in 
captive audience speeches and one-on-one meetings; routinely drafting 
and disseminating anti-union propaganda documents; interrogating 
employees about union sympathies; conducting polling and surveillance 
of employees; helping employers identify and fire union supporters; and 
bribing employees to vote the union down.
    A law firm representing unions stated that in its 50-plus years in 
existence it has seen how the LMRDA reporting requirements have been 
largely ignored because of the prior interpretation of reportable 
activities. The firm listed numerous indirect persuader activities that 
it has observed over the years. In addition, the firm stated that 
managers and supervisors are taught many other activities and tactics, 
some of which are unlawful under the NLRA and others which are not. The 
firm noted, however, that virtually none of these activities is 
reported.
    The Department recognizes that these comments in support of the 
NPRM, like the ones in opposition, are largely anecdotal. Nonetheless, 
the Department believes that these experiences from union members, 
organizers, and attorneys serve to confirm and buttress the research 
discussed in the NPRM and the preamble to this rule. Moreover, many of 
the commenters' experiences are akin to those heard before the Senate 
Subcommittee on Labor-Management Relations in 1980. The Subcommittee 
described as ``distressing'' a consultant's activities during a 
hospital organizing campaign, including the use of a captive audience 
meeting and staff changes, caused a decline in the quality of patient 
care. See 1980 Subcommittee Report at 42. The comment above concerning 
the recent efforts of a nonprofit health care provider to discourage 
its nurses from unionizing involved similar circumstances. This comment 
lends support to the Department's position that many consultant 
activities, hidden from employee view, which prompted the need for 
section 203, continue to be problematic in more contemporary times.
    In addition, the Department finds unpersuasive the criticism 
leveled by some commenters that the revised interpretation will 
actually result in more interference charges before the NLRB. A 
consultant merely engaging in legal services does not trigger 
reporting, so the Department is not persuaded that this rule will 
reduce the ability of employers to receive legal counsel. See Sections 
V.G and H discussing the rule's potential impact on free speech and the 
attorney-client privilege. Without any supporting data or analysis, the 
theory that this rule would lead to an increase in unfair labor 
practice charges is purely speculative and conclusory.
    Other commenters opposing the rule also challenged the Department's 
premise, as stated in the NPRM, that there is some correlation between 
``the proliferation of employers' use of labor relations consultants'' 
and ``the substantial utilization of anti-union tactics that are 
unlawful under the NLRA.'' 76 FR 36190. A trade association for the 
construction industry contended that this premise is not supported by 
any empirical data. According to the commenter, the fact that employers 
are engaging legal counsel more frequently does not indicate a desire 
to act unlawfully, but rather, is merely a means for them to maximize 
their right to educate and inform employees.
    Likewise, a law firm submitted comments disputing the view that the 
use of consultants is the cause of unfair labor practices or objections 
filed in NLRB-conducted elections. The firm pointed to the NLRB's well-
established policy of requiring that elections be conducted under 
``laboratory conditions.'' The firm then noted that objections are 
filed by parties in only approximately 5% of all NLRB elections, and of 
the cases in which objections are filed, the NLRB has found that 50% 
have no basis in fact or law. The firm also noted the low number of 
``test of certification'' cases filed with the NLRB, which, in its 
view, is at odds with the Department's perception that a new 
interpretation was needed. In contrast, a national labor union 
commented that the available evidence shows a strong correlation 
between the hiring of a consultant and unlawful behavior by 
supervisors, thereby undercutting the assertion by some commenters that 
consultants are merely instructing supervisors on how to comply with 
the law.
    As previously discussed, the Department finds no persuasive reason 
to doubt the studies cited in the NPRM, insofar as they conclude that 
the proliferation of employers' use of labor relations consultants has 
been accompanied by the substantial utilization of unlawful tactics. 
The Department clarifies, however, that it did not intend to conclude 
that a causal relationship exists between the use of consultants and 
unlawful activity. The Department also concurs with the comment by the 
trade association opposing the proposed rule, who asserted that there 
is no data showing that employers who hire consultants to engage in 
direct persuasion (and file LM reports under the prior rule) are more 
or less likely to interfere with employee rights than employers who 
hire consultants to engage in indirect activities.
    The Department also does not find the NLRB statistics cited by the 
law firm above to be persuasive. Many unknown variables may factor into 
a union's decision to file an election petition, withdraw that petition 
prior to an election, or file or not file an election objection. That 
objections were filed in only about 5% of all NLRB elections has very 
little, if any, correlation with the number of improper activities 
undertaken by many consultants on behalf of employers. The rate of 
``test of certification'' cases are even less related to the number of 
improper activities, as many of those cases challenge NLRB decisions on 
which persons can or cannot vote in an election.
    Finally, a labor consulting company argued that the revised 
interpretation of the advice exemption would not address the 
Department's concerns about improper consultant activities. A 
significant number of identical or nearly

[[Page 15969]]

identical comments came from other companies, organizations, and 
individuals using this labor consulting company's form letter. 
According to the commenters, alleged improper conduct by labor 
relations consultants (e.g., bribing employees, firing organizers, or 
spying on workers) are more properly investigated and enforced by the 
NLRB. A different commenter similarly stated that the NLRA already 
contains ample remedies for addressing unfair labor practices and that 
it is not the Department's role to address lawful labor practices that 
it finds ``offensive.'' As such, these commenters argued that new 
reporting requirements under the LMRDA would do nothing to reduce 
unlawful or egregious activities discussed in the NPRM.
    The Department rejects the contention that because unfair labor 
practices are already illegal under the NLRA and enforced by the NLRB, 
that this rule is unnecessary. The LMRDA is a companion statute to the 
NLRA. Disclosure helps employees understand the source of the 
information that is distributed. This type of exposure also discourages 
potential unlawful acts and reduces the appearance of impropriety. Id. 
at 708.
    That the NLRA works toward those same goals by offering procedures 
to remedy unfair labor practices does not diminish the Department's 
responsibility or ability to fulfill its congressional mandate under 
the LMRDA. The LMRDA requires the reporting of direct and indirect 
consultant persuasion of employees without regard to whether these 
activities are unfair labor practices. ``When enacting the LMRDA, 
Congress did not distinguish between disclosed and undisclosed 
persuaders or between legitimate and other types of persuader 
activities. Rather, Congress determined that persuasion itself was a 
suspect activity and concluded that the possible evil could best be 
remedied through disclosure.'' Humphreys, Hutcheson and Moseley, 755 
F.2d at 1215.

D. Comments on Clarity of Revised Interpretation

    Multiple commenters contended that the revised interpretation is 
``subjective'' and ``vague,'' unlike the ``clear,'' ``objective,'' and 
``bright-line'' test described in the prior interpretation. They 
advocated retaining the prior interpretation, which focused on whether 
the employer could accept or reject advice or materials offered by the 
consultant. Under the prior interpretation, reporting was required only 
if the consultant had ``direct contact'' with employees.
    One commenter contended that the proposed rule would inject 
``subjectivity'' and would create ``inconsistent and arbitrary 
outcomes.'' Another commenter argued that the Department is ignoring 
the complexity of today's workplaces, in which the line between ``union 
avoidance'' and ``positive employee relations'' has been blurred, as 
employers may have one or both purposes attached to a single activity, 
making it difficult to determine the underlying purpose. A consultant 
expressed concern that the proposed rule would require employers and 
consultants to always look at the ``intent behind consultant or 
attorney activities,'' adding unwarranted complexity and cost to 
reporting. Another commenter, a trade association, argued that the 
``arbitrariness'' of the proposal was exemplified by the requirement 
that persuasive communication submitted orally to the employer would 
not trigger reporting, but written ones would. This commenter also 
inquired into what the ``evidentiary standard'' would be for 
determining the intent of a consultant's activity, suggesting that the 
standard would unfairly impose a ``strict liability'' test.
    The Department disagrees with the assertion that this rule 
exchanges a clear, bright-line test for one that is subjective and 
vague. Contrary to commenters' assertions, reporting under both the 
prior interpretation and this rule rests upon whether the consultant 
undertakes activities with an object to persuade employees, which is 
determined, generally, by viewing the content of the communication and 
the underlying agreement with the employer.\58\ Indeed, at least one 
commenter who opposed the proposed rule acknowledged that the ``object 
to persuade'' test is identical under both reporting regimes. What 
differs with this rule is the context in which this test is applied. 
The prior rule administratively limited the application of the 
underlying test to direct, employee-contact situations; this rule 
requires that indirect persuader activities also be reported.
---------------------------------------------------------------------------

    \58\ See IM section 265.005, which states, in relevant part, 
``it is plain that the preparation of written material by a lawyer, 
consultant, or other independent contractor which he directly 
delivers or disseminates to employees for the purposes of persuading 
them with respect to their organizational or bargaining rights is 
reportable.'' (emphasis added).
---------------------------------------------------------------------------

    In response to the commenters' concerns that the indirect 
persuasion category is too amorphous, the Department notes that the 
term ``persuade'' is not ambiguous, uncertain, or vague. The Fourth 
Circuit in Master Printers of America, in construing section 203(b), 
stated that a statute is not vague if ``it conveys sufficiently 
definite warning as to the proscribed conduct when measured by common 
understanding and practices.'' 751 F.2d at 711 (citing United States v. 
Petrillo, 332 U.S. 1 (1947)). The court determined that the term 
``persuade,'' based on its common meaning and as used within the 
context of the LMRDA, is neither ambiguous nor confusing. Id. Further, 
in an effort to provide greater clarity, this rule groups the list of 
indirect persuader activities from the NPRM into four specific 
categories: The directing or coordinating of supervisors and other 
employer representatives; the preparation of persuader materials; 
presenting a union avoidance seminar; and the development and 
implementation of personnel policies and actions. Thus, not only is the 
underlying test (considering the object of the consultant's activity) 
consistent with the statute and the prior interpretation, it is also 
easily articulated and applied.
    Further, the test is not ``subjective,'' as has been suggested. To 
determine reportability of an employer-consultant agreement or 
arrangement, the consultant must engage in or agree to engage in direct 
or indirect persuasion of employees. The analysis has two parts: (a) 
Did the consultant engage in the direct and indirect contact activities 
identified in the instructions; and (b) did the consultant do so with 
an object to persuade employees? The latter does not require a review 
of all the actions undertaken for the employer. What is required is a 
consideration of specific, objective facts: \59\ The content of any 
communication created or provided by the consultant; the context in 
which a policy is established or action occurs; the labor relations 
environment (e.g., if there is an organizing effort ongoing, election 
pending, or other labor dispute); \60\ and the explicit and implicit

[[Page 15970]]

terms of the agreement or arrangement pursuant to which the consultant 
activities are undertaken. Application of the underlying test in 
``indirect'' situations is no different than with ``direct'' 
situations.\61\
---------------------------------------------------------------------------

    \59\ A mental state, such as ``object to persuade,'' is an 
objective fact. The ``state of a man's mind is as much a fact as the 
state of his digestion.'' Merck & Co., Inc. v. Reynolds, 130 S. Ct. 
1784, 1796 (2010) (quoting from Edgington v. Fitzmaurice, 29 Ch. 
Div. 459, 483 (1885)).
    \60\ The presence of a labor dispute is not a necessary 
condition to trigger the reporting of a persuader agreement; 
however, its existence can be an important fact to consider when 
evaluating the content of a communication and determining a 
consultant's objective in undertaking an activity. See IM section 
261.005 (Existence of Labor Dispute) (1961), which states, in 
pertinent part, ``Agreements with an employer to persuade his 
employees as to their rights to bargain collectively should be 
reported irrespective of whether there is a labor dispute.'' 
Moreover, section 203(c) explicitly provides that a consultant does 
not incur a reporting obligation by representing an employer in 
collective bargaining. Drafting a collective bargaining agreement 
does not indicate an object to persuade and thus, by itself, is no 
indication that a consultant has engaged in other activities that 
would be reportable.
    \61\ Even to the extent that the test, in its application, 
presents some borderline situations does not render it vague and 
subjective. Indeed, even the 1962 interpretation states that, ``the 
question of application of the `advice' exemption requires an 
examination of the intrinsic nature and purpose of the arrangement 
to ascertain whether it essentially calls exclusively for advice or 
other services in whole or in part. Such a test cannot be 
mechanically or perfunctorily applied. It involves a careful 
scrutiny of the basic fundamental characteristics of any arrangement 
to determine whether giving advice or furnishing some other services 
is the real underlying motivation for it.'' This rule provides a 
firm basis for making this evaluation, consistent with the text and 
intent of the statute.
---------------------------------------------------------------------------

    The ``object to persuade'' analysis focuses on whether the 
communication, explicitly or implicitly, disparaged unions, sought to 
demonstrate that a union is not needed, provided ways to defeat or 
remove a union, explained promises or threats made or benefits provided 
to the employees in connection with the exercise of their rights, or 
otherwise sought to affect employees' exercise of their rights. One 
would also look to see if the communication provided the employer's 
views, argument, or opinion concerning the exercise of employee rights 
to organize and bargain collectively, which would demonstrate 
persuasive-content. See IM 263.100 (Speech by Consultant).
    In such cases, every communication from the consultant to the 
employer would not be analyzed; rather, only communications created by 
the consultant and intended for dissemination or distribution to 
employees. Similarly, where a consultant directs or coordinates the 
supervisors' activities, the object is inferred from the content of the 
supervisors' communications and actions. Further, as explained in more 
detail in Section IV.B and Section V.E.1.e, the Department has made 
clear that personnel polices developed by the consultant will not 
trigger reporting merely because they improve employee pay, benefits, 
or working conditions, absent evidence of an object to persuade 
employees in the agreement, accompanying communication, timing, or 
other circumstances relevant to the undertaking.
    Regarding the commenter's inquiry concerning the ``evidentiary 
standards'' imposed by this rule, the commenter appears to be 
improperly conflating two principles: The reporting trigger created by 
section 203 and the criminal liability standard in section 209. 
Reporting is triggered by section 203(a)(4) and (b) by a showing that 
an employer and a consultant have entered into a persuader agreement or 
arrangement. Such an agreement involves the third-party undertaking 
activities with an object to persuade. This is the triggering mechanism 
for reporting, not a standard for civil or criminal liability. Section 
209 imposes criminal liability if the employer or the third party 
willfully violates the statute. As a result, the consultant would not 
incur any criminal liability unless it willfully fails to report or 
otherwise willfully violates the Act. In either case, there is no 
``strict liability'' standard.

E. Comments on Scope of Persuader Activities and Other Provisions of 
Section 203

1. Comments on Specific Persuader Activities and Changes Made to 
Proposed Advice Exemption Instructions
    In this section of the preamble, the Department further responds to 
comments concerning specific consultant activities and whether such 
activities trigger reporting. In response to these comments and to 
simplify reporting, the Department has revised the instructions to 
separately address direct and indirect persuader activities and to 
differentiate them from other activities undertaken by consultants that 
do not trigger reporting. To better address concerns about activities 
engaged in by consultants with an object, indirectly, to persuade 
employees, the instructions group such activities into four categories, 
illustrating those that will trigger reporting and those that will not. 
An in-depth overview of each of the persuasion categories (direct and 
indirect), as well a discussion of non-reportable activities appears 
earlier in the preamble at Section IV.B. In that section, the 
Department also explains other changes made to the proposed advice 
exemption instructions.
a. Direct Interaction by Consultant With Employees
    Reporting is required, as it had been under the prior 
interpretation, whenever a consultant meets face-to-face with an 
employee or employees, or directly communicates with them in some 
manner in order to influence them concerning how they exercise their 
representation and collective bargaining rights. Reporting is also 
required where the consultant engages the services of a third party to 
directly communicate with an employee or employees.
b. Planning, Directing, or Coordinating Supervisors and Other Employer 
Representatives
    Reporting is triggered when the consultant directs the employer 
representatives' meetings with employees or the consultant plans or 
coordinates such meetings. If the consultant establishes or facilitates 
employee committees (groups of bargaining unit or potential bargaining 
unit employees that advocate a particular position concerning 
organizing and collective bargaining), either directly or indirectly 
through the directing or coordinating of supervisors and similar 
employer representatives, reporting is triggered. If the consultant 
trains the supervisor to engage in union avoidance (lawfully or 
otherwise), reporting is triggered. As stated more fully in Section 
IV.B, consultants must report if they plan, direct, or coordinate 
activities undertaken by supervisors or other employer representatives 
with an object to persuade, including their meetings and interactions 
with employees. Merely advising supervisors or other employer 
representatives to comply with the NLRA or other laws, however, does 
not itself trigger reporting.
    The Department disagrees with the suggestion that the NPRM focused 
on the persuasion of supervisors as opposed to employees. The 
Department clearly stated, at 76 FR 36191, and repeats here, that 
reporting is triggered by indirect persuasion of employees through the 
planning, direction, or coordination of the supervisors or other 
employer representatives. Commenters inquired into potential reporting 
stemming from materials, such as those contained in a newsletter, 
provided to train supervisors or other representatives of their member 
organizations on how to improve their communication with employees. The 
mere provision of such material to employer-members does not trigger 
reporting. However, the Department cautions that any tailoring of 
existing training material by a consultant for a particular employer 
triggers reporting, as does a selection by a consultant of training 
material designed to instruct supervisors in the persuasion of 
employees about their representation and collective bargaining rights. 
Training or other directing of supervisors to persuade triggers

[[Page 15971]]

reporting regardless of the format (oral, written, electronic, or 
otherwise).
    For purposes of clarity, in the final rule the Department has 
modified the checkbox item, ``Planning or conducting individual or 
group employee meetings,'' by separating this activity into two items: 
``planning or conducting individual employee meetings'' and ``planning 
or conducting group employee meetings.''
c. Providing and Revising Materials
    The provision of materials includes--drafting, revising, or 
providing persuasive speeches, written material, Web site, audiovisual 
or multimedia content for presentation, dissemination, or distribution 
to employees, directly or indirectly (including the sale of generic or 
off-the shelf materials where the consultant assists the employer in 
the selection of materials). Obviously, the same information may be 
conveyed orally; to ensure consistent reporting, the Department 
requires reporting regardless of how the consultant chooses to convey 
the material.
    Many of these activities were listed in the instructions to the 
proposed rule and were addressed in comments. See 76 FR 36225. They are 
also addressed in the instructions published as part of this rule. See 
Appendices.\62\
---------------------------------------------------------------------------

    \62\ The proposed instructions stated that the following 
activities would trigger reporting: ``Drafting, revising, or 
providing a persuader speech, written material, Web site content, 
audiovisual or multimedia presentation, or other material or 
communication of any sort, to an employer for presentation, 
dissemination, or distribution to employees, directly or 
indirectly.'' 76 FR 36211 (emphasis added). The italicized language 
was intended to broadly encompass persuasive communications provided 
by the consultant to the employer orally or in writing, as well as 
communications intended to be disseminated to the employees orally 
or in writing. To avoid the perception that persuader activities 
communicated orally are exempt from reporting, the final rule has 
been clarified on this point. The instructions now state that 
reporting is triggered if the consultant, with an object to 
persuade, ``provides material or communications to the employer, in 
oral, written, or electronic form, for dissemination or distribution 
to employees.'' See Revised Form LM-20 Instructions in the Appendix 
to this rule (emphasis added).
---------------------------------------------------------------------------

    Counseling an employer's representatives on what they can lawfully 
say to employees does not trigger reporting because it is ``advice.'' A 
consultant may provide services to an employer in any manner 
contemplated by their agreement; this rule imposes no restrictions on 
any such activities. This rule only affects whether certain activities 
undertaken by the consultant will trigger reporting. So long as the 
consultant engages only in advice, no reporting is triggered. Typical 
advice situations would include--providing the client with an overview 
of NLRB case law relating to the right of employees to organize and 
bargain collectively, including a recitation of examples of 
communication that has been found to be lawful and unlawful by the NLRB 
or other body; and reviewing and revising--to ensure legality or to 
correct typographical or grammatical errors--employer-prepared 
speeches, flyers, leaflets, posters, employee letters, or other 
materials to be used in presenting the employer's position on union 
representation or collective bargaining issues.\63\ In contrast, adding 
to or revising the document to make it more persuasive, or providing or 
selecting persuasive communications for use by the employer, intended 
for distribution to employees, triggers reporting by the consultant, 
whether provided to the employer in oral, written, or electronic form.
---------------------------------------------------------------------------

    \63\ It is the agreement to undertake or provide persuader 
activities that triggers reporting. A consultant who merely solicits 
business from an employer by offering to provide the employer with 
persuader services or merely provides off-the-shelf materials 
requested by the employer, does not trigger reporting.
---------------------------------------------------------------------------

    One law firm questioned the reportability of communications in 
connection with the collective bargaining process. The Department 
emphasizes that the presence of a labor dispute is not a prerequisite 
for reporting of persuader agreements, although it may provide 
important context to determine if the consultant engaged in persuader 
activities. Section 203 exempts from reporting activities involved in 
negotiating an agreement, or resolving any questions arising from the 
agreement. An activity, however, that involves the persuasion of 
employees would be reportable. For example, a communication for 
employees, drafted by the consultant, about the parties' progress in 
negotiations, arguing the union's proposals are unacceptable to the 
employer, encouraging employees to participate in a union ratification 
vote or support the union committee's recommendations, or concerning 
the possible ramifications of striking, would trigger reporting.
    This rule, as described above in Section IV.B, makes clear that the 
provision of pre-existing, ``off-the-shelf'' materials does not 
evidence a consultant's object to persuade employees, therefore is not 
itself reportable, without any communication between the employer and 
consultant. However, the Department cautions that any tailoring of 
existing persuasive documents by the consultant for a particular 
employer triggers reporting, as does the consultant's communication 
with the employer to select the appropriate persuasive materials for 
that employer. However, as noted below, trade associations are not 
required to file a report by reason of their membership agreements, or 
by reason of selecting off-the-shelf persuader materials for individual 
member-employers.
    On a different point, some commenters inquired about the 
reportability of communications, prepared by consultants or other 
persons, which do not have an object to persuade an employer's 
employees, such as those directed at vendors or customers of an 
employer that have engaged the consultant's services, or members of the 
public. Such communications would not trigger reporting because they do 
not involve the persuasion of employees. In contrast, for example, 
newspaper, Internet, or similar advertisements created by a consultant 
and targeted for employees will trigger reporting because they have an 
object to persuade. See IM Section 255.600 (Newspaper Ads of Employers' 
Views) (1960, rev. 1962), Example 4.
d. Seminars
    In the NPRM, seminars for supervisors or other employer 
representatives undertaken with an object to persuade employees are 
listed among the reportable activities identified on the proposed Forms 
LM-10 and LM-20. See 76 FR 36208, 36218. The preamble to the NPRM 
stated that such seminars, as well as webinars, conferences, and 
similar events offered by lawyers and consultants to multiple employer 
attendees concerning labor relations services, are reportable, to the 
extent that they involve a consultant undertaking activities with an 
object to persuade employees. See 76 FR 36191.
    Commenters opposed the reporting of seminars, arguing that they 
should be exempt as ``advice'' and that, even if not exempt, such 
reporting would be overly burdensome. One law firm stressed that, in 
many cases, there was no ``agreement or arrangement'' in place for the 
presenter at the seminar. This law firm also inquired into whether it 
mattered if the consultant trained the employer attendees on what 
materials to disseminate to employees, or presented a ``campaign in a 
can,'' as opposed to a consultant reviewing materials communicated by 
employers in past campaigns. The comment also discussed the 
consultant's difficulty in determining whether it must report the 
seminar, particularly if the consultant merely volunteered to be a 
presenter at

[[Page 15972]]

the seminar, and expressed uncertainty about how to report employers 
who may have attended the seminars if a roll of attendees is not 
maintained. This comment suggested that the Department should either 
remove multi-employer seminars from reportability, or state that they 
would only be reportable if there is a ``specific `arrangement or 
agreement' '' in place. A business association stated that seminar 
providers do not know what the attendees will do with the information 
offered. Another commenter argued that the reporting of such activities 
``essentially imposes a penalty on the employer for attending such a 
session, because the employer must then devote additional staff time to 
understanding, completing, and filing the Form LM-10.''
    Several commenters noted that presenters may lack some information 
about the employer attendees at a union avoidance seminar. One policy 
group stated that, ``absent mind reading skills, it will be impossible 
for a law firm, consulting firm, . . . or other entity to comply with 
the rule unless they report all attendees to their events and the fees 
that they paid.'' This requirement, stated the commenter, constitutes a 
grave violation of privacy and a tremendous administrative burden on 
providers and will reduce the number of informational programs and will 
increase their cost. It added that the proposed rule will lead to a 
less informed business and inevitably result in less, not more, 
compliance with the law. Additionally, a commenter stated that there is 
no textual or historical support to assert such coverage, and that the 
requirements could apply even where the instructor of the seminar has 
no familiarity with any individual employer and no knowledge of the 
employees. Further, it stated there is no evidence that programs of 
this type are sponsored with the promoters' advance knowledge that any 
materials or messages are being distributed specifically to any set of 
employees.
    In response to comments received, the Department has modified and 
clarified the reporting of such union avoidance seminars. Initially, a 
trade association must report a seminar only if its own officials or 
staff members actually make a presentation at the event that includes 
employee persuasion as an object, as distinct from merely sponsoring or 
hosting the event. Further, in no case would an employer attending the 
seminar be required to file a Form LM-10 for attendance at a seminar. 
See Sections IV.B and D for more guidance concerning the reporting of 
seminars.
    The Department acknowledges that seminars presented by labor 
relations consultants may provide guidance and recommendations to the 
employer attendees on a variety of labor relations topics, including 
the persuading of employees. Thus, some seminars may exclusively 
involve advice to employers, without the consultant intending any 
persuasion, direct or indirect, of employees. However, if the 
consultant develops or assists the employer with developing anti-union 
tactics and strategies to be used by the employers' supervisors or 
other representatives, such activity triggers reporting. In such cases, 
the consultant clearly has the goal of indirectly persuading similarly 
situated employees by helping their employers to direct or coordinate 
their supervisors and other representatives to engage in tactics 
designed to prevent union organizing. Such activities clearly involve 
more than merely providing recommendations to the employers, but, 
rather, are intended to assist the employers in persuading their 
employees.
    Additionally, the Department shares the commenters' concerns about 
the potential reporting burden on the seminar organizer and presenter, 
as well as on the employer attendees. However, the Department disagrees 
with the suggestion by one commenter that requiring seminars to be 
reported is intended or operates as a penalty for attendance. 
Initially, the Department notes that only union avoidance seminars 
trigger reporting. Such seminars typically involve the development of 
persuader tactics that the employer and its supervisors and other 
representatives can use to persuade employees. These seminars do not 
include those focusing exclusively on maintaining a legally compliant 
workplace, one that is better for workers, more productive, efficient, 
tolerant, or diverse--nor do they include efforts to merely solicit 
business by recommending persuader services. Thus, this rule will not 
require reporting from lawyers and consultants who offer seminars that 
provide guidance to employers on labor law and practices. Further, this 
rule exempts employers from filing reports for agreements concerning 
attendance at union avoidance seminars, thus reducing burden for the 
thousands of employer representatives that commenters suggested attend 
such events. Moreover, trade associations will not need to report if 
they merely organize the seminar, and those entities that do file will 
only need to file one report for each seminar, listing employer 
attendees, as described in Section IV.E.
    While these changes depart from the general approach that all 
parties to the agreement or arrangement must report persuader 
activities, the change, in the Department's view, is appropriate due to 
the unique characteristics of trade associations and the nature of 
seminars attended by multiple employers. Because an agreement arising 
from the seminar will be identical for all employers, there is little 
utility served by requiring separate reports for each employer 
attending the seminar, and any benefit from requiring each employer to 
file a report in such circumstances (potentially affecting thousands of 
employers in the view of some commenters) would be outweighed by the 
cumulative burden on employers. With regard to seminars that are 
sponsored or hosted by trade associations, requiring them to require 
reports would largely duplicate the information that will be reported 
by presenters. Importantly, this information will include the names of 
employer attendees, ensuring that this important information will be 
disclosed to employees and the public, as well as a description of the 
seminar. Furthermore, requiring the presenter to file the single Form 
LM-20 report, rather than the organizer, ensures that the most 
comprehensive information concerning the seminar is disclosed, such as 
which employees of the consultant made the presentation. See Form LM-20 
Item 11.d in Appendix A.
    Because persuader agreements stemming from attendance at seminars 
will arise when an employer registers for the seminar, thereby under 
the general rule triggering the 30-day deadline for filing a Form LM-20 
upon entering into a persuader agreement, consultants could be faced 
with having to file a series of forms, a potentially significant 
burden. To ameliorate such burden, the instructions and Sec.  406.2 of 
the Department's regulations, 29 CFR 406.2, have been amended so that a 
single Form LM-20, compiling information related to the employers that 
attend the seminar, may be filed. Such filing is due within 30 days 
after the date of the seminar.
    Finally, the Department notes that the seminar presenter(s) would 
be required to report as indirect parties to the agreement, regardless 
of whether they volunteer or receive compensation for their services. 
In this regard, they incur the same obligation as they would in any 
circumstance in which they agree to provide persuader services.

[[Page 15973]]

e. Personnel Policies
    Several commenters expressed a concern that under the proposed rule 
any personnel practice proposed by a consultant would be reportable. A 
consultant firm stated that ``virtually any positive employee relations 
practice'' could be reportable; even ``facially neutral'' activities 
could still trigger reporting if their ``intent is to reduce the 
likelihood'' of unionization. A trade association expressed concern 
that any communication from an attorney or consultant to the employer-
client, which ``could have any influence'' on employer's communication 
with employees, would be reportable. A commenter expressed concern that 
even a seminar offered by a bar association on the drafting of employee 
handbooks would have to be reported.
    A trade association expressed its view that under the Department's 
proposal a lawyer would be required to file a report if he or she 
drafted an employee handbook that contains policies supportive of the 
right of employees to choose whether or not to join a union through 
NLRB-conducted secret ballot elections. Another commenter expressed 
concern that under the proposal a report would be required whenever a 
consultant drafted a handbook that contained an open-door policy or 
other ``employee-friendly'' policies that encourage positive and lawful 
labor-management relations. The same commenter also thought that 
reporting would be required if a consultant made an audio-visual 
presentation for use in training employees about the employer's anti-
discrimination or harassment policies. A law firm similarly expressed 
concern about the potential reporting requirements for employee 
handbooks, acknowledging that consultants often draft or revise such 
handbooks with the intent to cast the employer in a positive light and 
thus ``persuade'' employees. Another commenter stated that, on 
occasion, an employer asks a consultant to draft a ``union-free'' 
statement expressing the employer's policy against unions.
    A law firm suggested that the proposed rule would require reporting 
from anyone whose work ``affects employees,'' including any 
communications between a lawyer and an employer, which could be viewed 
as an ``indirect attempt'' to persuade employees. It offered examples 
from the human relations industry, such as ``benchmarking'' best 
practices and other measures designed to ensure employee satisfaction, 
as well as the drafting of legally-compliant documents that meet the 
client's business purposes. The commenter also posed a number of 
hypothetical questions, which it proffered to illustrate the alleged 
compliance difficulties posed under the Department's proposal. Another 
law firm and a public policy organization also presented multiple 
hypothetical situations.\64\
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    \64\ The Department has addressed herein numerous inquiries 
about particular activities that may or may not trigger reporting. 
This preamble, however, cannot respond to all, hypothetical 
situations that could arise under agreements between consultants and 
employers. In implementing this rule, the Department will provide 
compliance assistance and additional guidance as questions arise. 
Such assistance and guidance will benefit from inquiries that are 
based on more complete and concrete facts than provided by 
hypothetical situations presented by some commenters.
---------------------------------------------------------------------------

    As stated in Section IV.B, reporting is not required merely because 
a consultant develops policies that improve the pay, benefits, or 
working conditions of employees, even where the policies or actions may 
subtly influence or affect the decisions of employees. However, 
reporting is triggered if the consultant undertakes the development of 
such policies with an object to persuade, as evidenced by the 
agreement, any accompanying communication, the timing, or other 
circumstances relevant to the undertaking.
    For example, reporting is required if the consultant determines 
that a monthly bonus to employees should be the equivalent of one 
month's dues payments of the union involved in an election. Further, 
even outside of an organizing drive reportable events can occur if the 
consultant enters into a union avoidance agreement with the employer 
and then develops a policy in which employees can come to management to 
grieve certain matters, or otherwise establishes an ``open door'' 
policy. In this situation, the open door policy was implemented to 
dissuade employees from exercising their rights to seek a union, and 
thereby secure, through collective bargaining, a grievance procedure. 
It is not determinative if the consultant develops a personnel policy 
proactively or in response to employee complaints. The inquiry will 
focus on whether or not the consultant developed the policy with an 
object to persuade employees.
    This position is consistent with prior Departmental policy. In IM 
section 261.120 (Management Consulting Service) (1959), the Department 
advised: ``While the fact that a management consulting service is 
engaged in the development of `Company Policy Manuals' and `Job 
Evaluation and Classification' and `Wage Administration Plans' intended 
to improve employee-employer relations does not, alone and in itself, 
bring that service within the reporting requirements of section 203(b), 
if the purpose of the service were in fact, directly or indirectly, to 
persuade employees in relation to collective bargaining, then it would 
[be reportable].'' Similarly, the fact that a management consulting 
service is engaged in the development of policies intended to improve 
workplace productivity or efficiency does not, alone and in itself, 
bring that service within the reporting requirements.
    A consultant who develops a series of pay or benefit increases 
would not, merely because of this activity, trigger the reporting 
requirements, without some evidence that this was intended by the 
consultant to show the employees that a union is unnecessary. 
Communications explaining the reasons for the increase, drafted by the 
consultant, would not trigger reporting, unless circumstances indicated 
that the object was to persuade employees, such as how they should vote 
in an upcoming election. Merely providing advice on industry pay, FLSA 
classifications, NLRB posters, the use of surveillance cameras, or any 
other matter does not trigger reporting, as it is not undertaken with 
an object to persuade employees about their protected rights. For the 
same reason, if a consultant-lawyer's activities are limited to 
advice--such as reviewing personnel actions by the employer to ensure 
legal compliance, drafting documents unintended to influence the 
exercise of employee rights, or handling litigation or grievances--then 
the lawyer's activities will not trigger reporting. If the consultant-
attorney, instead, identifies employees for targeted personnel actions 
as part of the strategy to defeat the union, then reporting is 
required.
    If the consultant develops or revises a policy on the employer's 
use of social media or solicitation or distribution in the workplace--
without doing so in a manner designed to influence employee decisions 
concerning union representation--then reporting would not be required. 
However, if there is evidence in the underlying agreement or 
accompanying communications that the policies were not established 
neutrally, but instead to affect the rights of employees to organize, 
then reporting would be required. That such a policy may potentially 
violate the NLRA is not relevant; it would trigger reporting because it 
was undertaken with an object to persuade.

[[Page 15974]]

    Merely drafting an employee handbook without some evidence in the 
handbook or any accompanying communication of an object to persuade, 
such as language that explicitly or implicitly disparages unions, will 
not trigger reporting.\65\ For example, if the handbook includes 
statements such as--the employer's business model does not allow for 
union representation (regardless of how cleverly phrased), discussion 
among co-workers (or with ``outsiders'') with problems in the workplace 
is disapproved, or an employee must alert the employer if approached by 
a person advocating for a union, especially if the handbook is created 
or revised during an organizing campaign--then the consultant's 
development of such a handbook would trigger reporting. On the other 
hand, the development by consultants of personnel policies concerning 
plant moves, relocations, or closures, as well as workforce reductions, 
outsourcing, and subcontracting, do not, per se, trigger reporting, 
absent evidence showing an object to persuade employees.
---------------------------------------------------------------------------

    \65\ As for a seminar offered by a bar association on the 
drafting of employee handbooks, such an event would not trigger 
reporting unless it was part of a union avoidance seminar (in which 
the consultant develops or assists the attending employers in 
developing anti-union tactics and strategies for use by the 
employers' supervisors or other representatives). Moreover, as 
discussed above, it is unlikely that in such setting there would be 
an object to persuade employees in their exercise of their protected 
rights. See later discussion in the text for more guidance on 
seminars.
---------------------------------------------------------------------------

    Similarly, in response to a hypothetical posed by one commenter, an 
employer who hires an interior decorator to improve the working 
conditions at its facilities would not trigger a reporting requirement, 
per se, merely because a possible effect of such workplace change could 
be the subtle influencing of employees concerning their right to 
organize. Rather, to trigger reporting the interior decorator, like any 
third party, must undertake its activities with that object in mind. 
That such a scenario would be reportable is highly unlikely. That an 
agreement between the parties would call for the design of a workplace 
-layout, furnishings, wall coverings, lighting, fixtures, and so 
forth--to create an anti-union ambience seems a remote prospect.
    With regard to personnel actions, the key to the analysis, to be 
made in the first instance by the consultant and employer, is whether 
the employer and consultant have agreed that the consultant will 
undertake an activity or activities with an object to persuade 
employees about how they should exercise their union representation and 
collective bargaining rights. Timing, content, and context will be 
important factors in making this determination. As mentioned 
previously, it is unlikely that a particular task, by itself, will be 
the sole consideration in making this determination. Reporting, 
however, would be triggered where a consultant identifies a specific 
employee or group of employees for reward or discipline, or other 
targeted persuasion, because of the exercise or potential exercise of 
organizing and collective bargaining rights or his or her views 
concerning such rights. In assessing a complaint that a consultant or 
employer has engaged in persuader activity but failed to file the 
required reports, OLMS will consider the nature of the agreement 
between the consultant and employer, any accompanying documents or 
communications, the timing, such as whether the hire occurred in 
connection with a labor dispute, and any statements by persons with 
firsthand knowledge about the allegations in the complaint.
    For purposes of clarity, the Department has modified the two 
personnel policies and actions checkbox items. In the NPRM, the 
proposed checklist included: ``Developing personnel policies or 
practices'' and ``Deciding which employees to target for persuader 
activity or disciplinary action.'' The checklist in this rule modifies 
these to read: ``Developing employer personnel policies or practices'' 
and ``Identifying employees for disciplinary action, reward, or other 
targeting.''
f. Employee Attitude Surveys/Employer Vulnerability Assessments
    Multiple commenters opposed to the NPRM expressed concern that 
employee attitude surveys are routine products offered by consultants 
to employers, products that seek to gain general insight in employee 
attitudes on compensation, benefits, and other employee concerns and 
complaints, without necessarily seeking to persuade employees or gather 
information on employee attitudes to unions. These surveys often do not 
mention unions, and the consultant may not be aware of the employer's 
interests concerning possible unionization.
    One trade association asserted that given a concept as vague as 
``union . . . proneness,'' almost any kind of survey could be 
characterized as persuasion. The proposal would deter employers from 
conducting employee surveys intended to improve working conditions and 
other initiatives related to positive employee relations (for example, 
opinions on benefits). Employers regularly survey their employees to 
assess overall job satisfaction, perceived effectiveness of management, 
and employees' attitudes toward current and potential new benefits.
    In response to comments, the Department has removed this item from 
the list of persuader activities. The Department concurs with the 
comments stating that such surveys do not generally evidence an object 
to persuade, and therefore should not be separately listed. Further, 
the Department has added language to the revised instructions stating 
that, more broadly, vulnerability assessments conducted by the 
consultant are not reportable persuader agreements, as the consultant 
is merely providing advice concerning the employer's proneness to 
organizing, and possible recommended courses of conduct, but is not 
engaging in persuader activities. They may evidence such an object, 
however, if they are ``push surveys'' with leading questions designed 
to influence the views of the survey taker rather than ascertain the 
employees' views, or otherwise are intended to persuade employees. In 
such a case, the consultant (and employer) would check the appropriate 
box for the provision of persuasive materials.\66\
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    \66\ Some surveys, however, may trigger reporting of an 
information-supplying agreement, if the information gathered 
concerns the activities of employees or unions in connection with a 
labor dispute involving the employer. See IM Section 264.006 
(Employee Survey). Section 264.006 states: ``During an effort by a 
union to organize his employees, an employer hired an `Employee 
Opinion Survey' firm to take a survey of his employees. Each 
employee was asked one question: `Do you feel a union here would 
help or harm you?' `Why?' Employees did not put their names on the 
forms. After the forms were returned, the survey firm tabulated the 
results. After tabulation, the forms were destroyed by one of the 
employees of the survey firm. The results were then turned over to 
management.'' It continues; ``Since these activities were designed 
to gather information and to supply it to the employer for use in 
connection with a labor dispute, the survey organization must file 
reports under the provisions of section 203(b)(2).''
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2. Comments on the Scope of Employee Labor Rights Included in Section 
203
    In describing the reporting threshold in the NPRM, the Department 
stated that reporting would be required if a consultant, pursuant to an 
agreement or arrangement with an employer, ``engages in activities that 
have as a direct or indirect object, explicitly or implicitly, to 
influence the decisions of employees with respect to forming, joining 
or assisting a union, collective bargaining, or any protected concerted 
activity (such as a strike) in the workplace.'' 76 FR 36192 (emphasis 
added). The Department discusses

[[Page 15975]]

below comments that address specifically the italicized language.
    Numerous commenters argued that section 203 should not be read to 
require reporting unless consultant activities relate to union 
representation and collective bargaining rights of employees, not other 
employee rights to engage in ``any protected concerted activity.'' 
These commenters noted that unlike section 7 of the NLRA, section 203 
does not refer to ``concerted activity.''
    The Department concurs with the views expressed by these 
commenters. Section 203 requires reporting when consultants, pursuant 
to an agreement or arrangement with employers, undertake activities 
with an object to ``persuade employees to exercise or not to exercise 
or persuade employees as to the manner of exercising, the right to 
organize and bargain collectively through representatives of their own 
choosing.'' Thus, to be reportable, the persuasion must be keyed to 
organizing and collective bargaining, specifically, and not the larger 
``bundle'' of employee rights protected by section 7 of the NLRA. As a 
result, the Department has revised the instructions in this rule by 
removing the ``protected concerted activity'' language. To avoid any 
ambiguity on this point, the Department also has deleted the language 
``forming, joining, or assisting'' a union, terms which more closely 
resemble the text of section 7 of the NLRA.
    The Department stresses, however, that the rights expressly 
protected by section 203 that trigger reporting--relating to union 
representation and collective bargaining--are not to be narrowly 
construed and would include, for example, actions regarding strikes 
over representation issues. Moreover, the reporting obligations imposed 
by section 203 are not limited to activities involving employers 
covered by the NLRA, but extend to activities undertaken by a 
consultant to persuade employees about their union representation and 
collective bargaining rights under the Railway Labor Act (RLA), or 
another statute that protects the rights of private sector employees to 
organize and bargain collectively.
    Regarding the use of the term ``influence,'' the Department did not 
use that term in the proposed instructions based on its connection with 
the larger universe of NLRA section 7 rights that had been proposed for 
inclusion in the LMRDA, but was not enacted as part of the statute. 
Rather, its use was intended to further explain the term ``persuade.'' 
Moreover, the Department notes that reporting is triggered when the 
consultant undertakes activities with an object to persuade or 
influence, not merely undertakes activities that could influence 
employees. Thus, as explained, the Department has clarified that not 
all personnel policies developed by the consultant would trigger 
reporting. Rather, only those that were developed with an object to 
persuade employees.
3. Comments on the Scope of ``Agreement or Arrangement''
    A law firm suggested that the proposed rule was overbroad in 
describing the scope of the terms ``agreement or arrangement'' and 
``undertakes activities.'' It cited to the proposed instructions, which 
state that the term agreement or arrangement ``should be construed 
broadly and does not need to be in writing'' and that ``a person 
undertakes activities not only when he/she performs the activity but 
also when he/she agrees to perform the activity or to have it 
performed.''
    The Department declines to narrow the scope of the terms 
``agreement or arrangement'' or ``undertakes activities.'' In this 
respect, the proposed instructions repeated the existing interpretation 
regarding the application of the term to oral agreements or 
arrangements. See prior Form LM-20 Instructions, Part X--Completing the 
Form LM-20, Item 10 (Terms and Conditions). The use of ``agreement or 
arrangement'' in the statute, without any limiting language, rather 
than the use of ``contract,'' or any other arguably less inclusive 
term, suggests that Congress intended the term to be broadly construed, 
including any informal understanding between the parties, and 
regardless of whether the agreement or arrangement is in writing. This 
broad construct of the term is consistent with the Department's 
longstanding reading of the statute. See IM Section 260.500 (Written 
Agreement Not Necessary) (1962) \67\ and 261.300 (Oral or Supplementary 
Agreement or Arrangement) (1961).\68\
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    \67\ IM Section 260.500 states: ``It is not necessary that an 
agreement or arrangement be formal or in writing in order to be 
within the scope of section 203(b). There may be no more than an 
understanding between an employer and an employer council that 
reportable services will be performed as necessary by the council. 
For example, both parties may understand perfectly that if an 
attempt is made to organize the employees of the employer, the 
council will provide material assistance (beyond the mere giving of 
advice) in persuading employees as to the manner of exercising their 
collective bargaining rights. Where such an understanding exists, 
both parties are required to report the terms of their arrangement 
or agreement, the employer's report being required by section 
203(a)(4) of the Act. If periodic membership dues are paid by the 
employer to the association, annual reports would be required from 
each party for as long as the understanding continued to exist.''
    \68\ IM Section 261.300 states: ``Any decision or mutual accord 
between a firm and its attorney that the attorney was to render 
services which are described by section 203(b) of the Act would be 
reportable. Such an arrangement may be oral and may supplement a 
previous arrangement establishing the attorney's relationship with 
his client.''
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    Regarding the term ``undertakes,'' the prior instructions also 
state that the term includes both the actual performance of the 
activity and the agreement to perform it. See the prior Form LM-20 
Instructions, Part II--Who Must File. This is consistent with the 
concept that reporting is based upon the agreement itself. Moreover, a 
narrower construction would enable persuaders to delay reporting the 
agreement or arrangement, beyond the statutory 30-day period, thus 
thwarting the statute's goal of transparency for workers. See response 
to comments on issue of timing in Section V.C.1.f.
    Multiple commenters inquired about the reporting obligations of 
employer and trade associations and similar membership organizations 
composed of employers. In such organizations, employers pay annual dues 
and receive a variety of services, including persuader services; as 
well as employee relations videos, webinars and seminars; and materials 
and newsletters intended to advise member companies how to improve 
employee relations and lawfully respond to union organizing. Similarly, 
a human resources association inquired into the coverage of franchisors 
that provide persuader and similar services as described above for 
their franchisees.
    In response, the Department clarifies that because these 
organizations agree to provide persuader services to their members, an 
employer's membership in those organizations constitutes an ``agreement 
or arrangement.'' The association provides services by virtue of the 
membership agreement, even if no fee is charged.\69\ The Department,

[[Page 15976]]

however, emphasizes that under the final rule reporting is triggered 
only where the association engages in persuader activities, not by 
virtue of the membership agreement itself. This point is specifically 
included in the instructions to the reporting forms. Further, as 
discussed earlier in this preamble, the Department has clarified the 
instructions to address three other points affecting reporting by trade 
associations. First, the mere distribution of a newsletter addressed to 
its member-employers does not trigger reporting. Second, sponsoring or 
hosting a union avoidance seminar will not trigger a reporting 
obligation for the association. Third, the Department has exempted 
trade associations from the general requirement that reporting is 
required by the selection of pre-existing, off-the-shelf persuader 
materials for an employer. See Section X of the instructions, in 
Appendix A. However, trade associations that, in whole or part, manage 
union avoidance or counter-organizing campaigns for member-employers, 
by engaging in other persuader activities, will be required to report. 
Therefore, meaningful transparency is ensured while reducing 
unnecessary burden.
---------------------------------------------------------------------------

    \69\ See IM Section 260.600 (Associations as Consultants), which 
states: ``Reports must be filed by an employers council which 
provides, as a regular service to its members, discussion meetings 
with the employees of the member employers which are intended to 
persuade such employees in the exercise of their bargaining rights. 
A report must be submitted by the council within 30 days after each 
employer entered into membership with the council, since the 
discussion meeting service is part of the membership agreements of 
the council. In addition the council would have to file an annual 
financial report within 90 days after the end of the council's 
fiscal year. The employers who are members of the council would also 
be required to report the arrangement under section 203(a).'' See 
also Master Printers of America v. Donovan, 751 F.2d 700 (4th Cir. 
1984) (holding that employer association that distributed persuasive 
newsletters to employees of member employers must submit consultant 
reports).
---------------------------------------------------------------------------

    If engaged in reportable persuader activities for an employer, the 
trade association must file a separate report for each agreement that 
it enters into with a member-employer to engage in such persuader 
activities, with the employer filing a separate Form LM-10.
    Additionally, in response to comments received, this rule modifies 
the Form LM-20 and LM-10 instructions to limit reporting for 
franchisor-franchisee arrangements. Although such franchise 
relationships would constitute an agreement or arrangement between 
separate legal entities, the Department considers that this 
relationship is substantially the same as would exist within a single 
corporate hierarchy (for which, generally, no reporting would be 
required for ``in-house'' activities by virtue of section 202(e)). In 
the Department's view, there would be limited utility in requiring 
disclosure of these activities by the franchisor, franchisee, or both. 
Employees and the public would generally know of the relationship 
between the parties, and they would naturally assume that the 
franchisee will follow the franchisor's approach to employment matters, 
including its views on union representation and collective bargaining 
matters. Limiting reporting in such fashion would therefore reduce 
burden on employers while not frustrating needed transparency. The 
Department cautions that this limitation does not affect the obligation 
of franchisors and franchisees (or their outside consultants) to report 
persuader agreements or arrangements with such consultants.
4. Comments on the Scope of ``Labor Relations'' Consultant and the 
Perception by Some Commenters That the Proposed Rule Favors Unions
    The consultant reporting requirements of section 203(b) cover 
``every person'' who enters into a reportable agreement, and the 
Department did not propose any changes affecting this coverage. Some 
commenters, however, suggested that the Department's proposal could be 
read to require reporting by an employer's in-house labor relations 
specialists. Others expressed the view that the Department also should 
have required labor relations consultants who provide ``persuader 
services'' to unions to report their activities on behalf of the union. 
Other commenters expressed the view that certain industries would be 
particularly burdened by the reporting requirements, as proposed, 
stating that circumstances in these industries demonstrated a central 
flaw in the proposal. Additionally, other commenters addressed coverage 
of the reporting requirements to consultants engaging with employers 
covered by the RLA, as well as those employers and consultants who 
engage in activities outside of the U.S.
a. Reporting by Employer's ``In-House'' Labor Relations Staff
    As stated in Section V.E.4 of this rule, the Department did not 
propose any substantive changes to the Form LM-10 reporting 
requirements prescribed by sections 203(a)(1)-(3), and this rule does 
not implement any changes. The changes concerning those sections relate 
only to the layout of the form and instructions. Nevertheless, the 
Department received comments regarding reporting pursuant to section 
203(a)(2), expressing concern that employers would have to report 
certain payments made to their own employees related to persuader 
activities. In response, the Department clarifies that the changes in 
this rule do not affect the reporting requirements pursuant to section 
203(a)(2), or Part B of the revised Form LM-10, and that employers are 
not required to file a report covering expenditures made to any regular 
officer, supervisor, or employee of the employer as compensation for 
service as a regular officer, supervisor, or employee of such employer. 
See section 203(e). See also IM section 254.300 (Industrial Relations 
Counselor) (1960), which states in part, ``an employer will not be 
required to report in those parts payments made to an industrial 
relations counselor in his capacity as full-time director of industrial 
relations.'' Rather, this rule implements changes to the employer 
reporting requirements pursuant to sections 203(a)(4) and (5), where 
employers must report on Part C of the revised Form LM-10 concerning 
agreements or arrangements with consultants and other third-party 
independent contractors or organizations. The Department also has 
retained language in the instructions to Form LM-20 to make clear that 
in-house employer representatives, who qualify as regular officers, 
supervisors, or employees of the employer, are not required to complete 
the Form LM-20 report in connection with services rendered to such 
employer. See LMRDA section 203(e), 29 U.S.C. 433(e).
b. Industry-Specific Reporting Requirements
    Several commenters highlighted particular facets of certain 
industries, such as construction, healthcare, and higher education, as 
evidence of the particularly burdensome nature of the proposed rule. 
The Department is unpersuaded that the rule will unreasonably burden 
any particular industry. With the limited exception of some 
requirements applicable to trade associations and franchisees, the 
Department does not see any factual, legal, or policy reason why 
particular businesses or industries should be treated differently than 
the norm. See Section V.E.3, concerning trade associations and 
franchises.
c. Perceived Bias Between Reporting Requirements for Employers and 
Those for Unions
    Several commenters expressed the view that the proposed rule 
demonstrates that the Department applies the LMRDA more stringently to 
employers and consultants than to unions. In this regard, commenters 
expressed two principal arguments. First, the commenters asserted that 
the proposed rule fails to require consultants that advise unions on 
representation and collective bargaining matters (or, presumably, to 
persuade employees on such matters) to report such activities on the 
Form LM-10 and LM-20, even though unions may be employers and should be 
required, they assert, to file the same reports required

[[Page 15977]]

of other employers and consultants. Second, the commenters argued that 
the proposed rule requires employers on the Form LM-10 to disclose how 
they conduct their strategy relating to union representation and 
collective bargaining, while unions are excepted from reporting such 
information on the labor organization Form LM-2 report due to a 
confidentiality exception. See the Instructions for the Form LM-2 Labor 
Organization Annual Report, concerning Procedures for Completing 
Schedules 14-19.
    Regarding the first point, several commenters suggested that the 
employer-consultant reporting requirements would cover labor 
organizations that qualify as ``employers'' under the statute. 
According to these commenters, because unions are often employers, they 
and their consultants should also be covered by the section 203 
reporting requirements. One law firm cited the Department's recent Form 
LM-30 rulemaking that exempted reporting by union officials for certain 
payments from unions as similarly contrary to the plain language and 
structure of the LMRDA. The commenter argued that the Department's 
justification for persuader reporting, i.e., that it provides employees 
with essential information, applies equally to unions. A public policy 
organization similarly argued that the proposed rule should apply to 
unions and provided examples of union use of consultants from an 
international union's publicly-disclosed Form LM-2 report. One labor 
organization concurred with the Department's view in IM section 260.005 
(Consultant for Labor Organization) (1961) that labor organizations and 
their consultants are not covered by section 203, and requested that 
the Department reiterate this view in this rule.
    The Department has previously determined that the term ``employer'' 
in section 203(a)(1) does not include a ``labor organization,'' and 
this rule confirms this understanding with respect to the other 
subsections of 203. See 76 FR 66465-66. Section 260.005 of the IM 
provides that no report is required for activities performed by an 
attorney on behalf of a union (distinct from activities performed for 
an employer), even though the attorney meets the definition of ``labor 
relations consultants'' under section 3(m), because the only section of 
the Act which requires reports from labor relations consultants is 
section 203(b), which provides for reports from every person who has an 
agreement with an employer for certain purposes. In this rule, the 
Department confirms the interpretation in IM section 260.005, and notes 
that this position also reduces redundancy in the reporting 
requirements and burden on unions, as payments from labor organizations 
to third parties, including consultants, are reportable on the Form LM-
2.
    Although unions are not required to file the Form LM-10 and their 
consultants incur no Form LM-20 obligation for providing union 
representation and collective bargaining services to the union, union 
members and the public receive information relating to such activities. 
The Form LM-2, filed by unions that have $250,000 or more in total 
annual receipts, provides detailed and itemized information, including 
separately identified disbursements of $5,000 or more, as well as all 
disbursements to any person or entity receiving a total of $5,000 or 
more from that union in that fiscal year. Such itemized disclosure 
reveals the amount and nature of the disbursement, the name and contact 
information of the recipient, as well as the purpose of the 
disbursement, in a variety of categories, including representational 
activities. See Form LM-2 Instructions, Schedules 14 through 19. This 
information reveals disbursements of $5,000 or more, or totaling more 
than $5,000 within a year to any person or entity, and the nature and 
purpose of the payments in a variety of categories, including 
representational activities. These disbursements would thus include 
payments to consultants hired by the union.
    Additionally, unions must report all disbursements to their own 
internal staff on the Form LM-2, and they must provide functional 
reporting that details the percentage of time devoted to a variety of 
tasks, including organizing and representational activities. See Form 
LM-2 Instructions, Schedules 11-12 (All Officers and Disbursements to 
Officers; Disbursements to Employees). Furthermore, union members, for 
just cause, may view the Form LM-2 report's underlying documents. See 
section 201(c); 29 U.S.C. 431(c). Employers do not have to provide this 
level of detail, particularly concerning their internal staff, in this 
rule or the previous rule, nor are they required to disclose underlying 
documents.
    Regarding the second point, that the confidentiality exception in 
the Form LM-2 allows union filers to avoid itemized disclosure of 
certain payments and information that would be required on the Form LM-
10, the Department disagrees with the contention that its reporting 
requirements for persuader agreements should provide a similar 
exception. In contrast to section 201, which is silent on the question 
whether Congress intended that unions would have to specifically 
identify financial expenditures relating to their organizational 
efforts, the language of section 203 specifically targets reporting by 
employers and labor relations consultants of their efforts to persuade 
employees about their representation and collective bargaining rights. 
Notwithstanding this clear mandate to require such reporting, the 
Department has fashioned this rule in a manner consistent with the 
overall intent of Congress to balance the twin goals of labor-
management transparency and the prevention of unnecessary intrusion 
into labor relations. See 74 FR 52405-06. Indeed, as explained further 
below, the exemptions in sections 203(c), 203(e), and 204 serve largely 
the same purpose and effect as the confidentiality exception in the 
Form LM-2 Instructions, with labor organizations reporting much of the 
same information concerning consultants as do employers. Further, in 
many cases, labor organizations report greater information than do 
employers, such as information concerning payments to their in-house 
staff. For example, unions are mandated to file initial and annual 
reports by virtue of their status as labor organizations, which 
disclose almost all payments of $5,000 or more, while employers and 
consultants are only required to file as a result of entering into 
particular agreements or arrangements or, for employers, making certain 
payments or entering into certain transactions. Compare sections 201 
and 203.
    More specifically, this rule protects the exemptions that promote 
employer free speech, the attorney-client relationship, and the role of 
management in labor relations. In the preamble to the 2003 rule that 
expanded the reporting required on the Form LM-2 report, the Department 
responded to comments that it was imposing more stringent reporting 
requirements on unions than for employers by stating: ``[U]nlike the 
situation with regard to labor organizations, for over 40 years 
employers and their consultants have been statutorily required (29 
U.S.C. 433(a) and (b)) to include particular `persuader' information in 
their annual reports, while labor organizations have not. 
Implementation of this statutory scheme by the Department cannot be 
considered as evidence of either antiunion or anti-employer bias, and 
the suggestion of a double standard is unwarranted.'' See 68 FR 58397.
    Under the Form LM-2, unions can avoid itemized reporting of certain

[[Page 15978]]

confidential information, such as information that would expose the 
reporting union's prospective organizing strategy. This exception 
ensures that the reporting requirements do not impair workers' rights 
to organize and bargain collectively or otherwise ``weaken unions in 
their role as the bargaining representatives of employees.'' Similarly, 
too stringent reporting requirements--such as requiring that a report 
be filed whenever a labor relations consultant enters into an agreement 
with an employer to provide any services if the agreement is entered 
into during a union organizing campaign (on the presumption that the 
agreement had persuasion as an object)--could restrict employer speech 
or weaken the attorney-client relationship. However, the statute and 
this rule, as stated, protects against these dangers, while ensuring 
the protection of workers' rights by providing them with information 
that enables them to effectively exercise their rights to union 
representation and collective bargaining. Through these provisions, a 
generally analogous exemption is maintained. Thus, employers are not 
required to report agreements with consultants in which the consultant 
provides a vulnerability assessment or other services, such as employee 
surveys designed to inform the employer about employee attitudes about 
workplace issues (as distinct from trying to influence employees 
against union representation), or a consultant's sales pitch, in 
anticipation of a union organizing effort, employer counter-organizing, 
or other union avoidance efforts by the employer.\70\ Moreover, other 
provisions of the Form LM-2 confidentiality exception provide for 
similar protections as does the LMRDA employer-consultant reporting 
provisions. For example, section 203(c) provides an exception for 
representation, while the Form LM-2 protects against itemization of 
payments that would provide a tactical advantage to certain parties in 
negotiations; and section 204's exception concerning attorney-client 
communications is similar to the Form LM-2 exception regarding 
information pursuant to a settlement that is subject to a 
confidentiality agreement, or that the union is otherwise prohibited by 
law from disclosing.
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    \70\ If the consultant and an employer reach an agreement by 
which the consultant will undertake activities with an object to 
persuade, then that agreement, however, will be reportable.
---------------------------------------------------------------------------

    Further, unions can avoid itemized reporting of information in 
those situations where disclosure would endanger the health or safety 
of an individual. This provision is in the Form LM-2 instructions 
because commenters to the proposed changes to the form in 2002 
indicated such itemization in certain cases could endanger the lives of 
foreign labor activists supported by the union. In response, the 
Department agreed that in ``the extremely rare situation where 
disclosure would endanger the health or safety of an individual, the 
information need only be reported in the'' aggregate, not itemized. 68 
FR 58387. Concerning this rule, there is no indication in the 
rulemaking record that the lives of employer or consultant 
representatives may be endangered. As in all cases, however, 
individuals with questions or concerns about filing procedures or 
matters to be reported, including health and safety issues, should 
contact OLMS for assistance.
d. Railway Labor Act
    One commenter expressed the view that the rule is focused only on 
labor relations governed by the NLRA, as opposed to the RLA or other 
statutes. The Department rejects this contention, as the text of 
section 203's reporting obligations concerning the persuading of 
employees regarding their collective bargaining rights is not limited 
to the NLRA. Rather, it is written broadly to include, without 
qualification, the ``right to organize and bargain collectively. . . 
.'' As such, these collective bargaining rights include the RLA and any 
other statutes concerning these rights for private-sector employees.
e. Extraterritorial Application
    One commenter, an international law firm, contended that persuader 
activities undertaken outside of the territorial United States need not 
be reported. The firm cited to EEOC v. Arabian American Oil Co., 499 
U.S. 244 (1991) for the principle that federal laws do not have 
extraterritorial effect unless Congress expresses an intention for them 
to apply to activities occurring outside the U.S. The firm noted that 
many of the persuader activities addressed in the NPRM can be and are 
often performed outside the U.S. According to the firm, it is important 
to consider where the employer and consultant execute their agreement 
or arrangement, where the consultant performs the persuader activities, 
and where payment for such activity occurs. Therefore, the firm 
suggested that the Department state in the LM-10 and LM-20 forms and 
instructions that the LMRDA's reporting requirements do not apply to 
activities that take place outside of the U.S. or its territories. The 
firm provided several hypothetical extraterritorial scenarios in which 
it believed reporting should not be required.
    The Department recognizes the general presumption against reading a 
statute to have extraterritorial effect, absent congressional intent, 
as described in Arabian American Oil Co. This principle is consistent 
with the Department's long-standing position with respect to labor 
organization and union officer reporting under the LMRDA to not 
regulate the activities of foreign labor organizations carried on under 
the laws of countries in which they are domiciled or maintain their 
principal place of business. 29 CFR 451.6(a); IM section 030.670 
(Foreign Locals) (1959). The Department, however, does not agree that 
this principle necessarily extends to the hypothetical factual 
scenarios posed by the above law firm in its comments. Instead, the 
Department finds instructive its position with regard to reporting for 
union officers based outside the U.S.:

    While the Department takes the position that the reporting 
provisions of the LMRDA are limited to ``activities of persons or 
organizations within the territorial jurisdiction of the United 
States,'' its application in any particular case will depend on 
whether there is a substantial relationship between the transactions 
in question and United States property or interests which are the 
objects of the Act's protection.
* * * * *
    In other words, each case would require evaluation of the 
substantiality of the official's contacts with the United States and 
of the impact on United States interests.

IM section 240.200 (Union Officers Based Outside the United States) 
(1966). The Department believes that a case-by-case evaluation is the 
better approach in determining the extraterritorial application of 
section 203's reporting requirements for employers and consultants. 
This approach more closely aligns with the spirit of the LMRDA's 
transparency goals while adhering to the presumption against 
extraterritorial effect. As a result, the Department declines to add 
specific language to the LM-10 and LM-20 forms and instructions 
concerning persuader activities performed outside of the U.S.

F. Comments on Revised Forms and Instructions

    The Department proposed revisions to the layout and structure of 
the Form LM-20 and instructions, as well as the Form LM-10 and 
instructions. See 76 FR 36193-96 and Appendices. As described in 
Section IV.D of this rule,

[[Page 15979]]

the Department has largely adopted its proposed revisions to the forms 
and instructions, unless otherwise noted within that section and the 
description in Section IV.B of the ``advice'' exemption instructions.
    Commenters supportive of this rule, as well as commenters opposed 
to it, provided feedback and offered suggestions on the proposed LM-20 
and LM-10 forms and instructions. Multiple commenters voiced strong 
support of the revisions to Forms LM-20 and LM-10.
    One international union commenter stated that the proposed changes 
to the Form LM-20 will improve both the quantity of reports received 
and the quality of the reports that are filed. An additional 
international union commenter urged the Department to make the Form LM-
20 reports available online as soon as possible, so that workers can 
have the information when it will be relevant to them (i.e., before the 
conclusion of an organizing campaign).
    More specific comments are addressed below:
1. Proposed Form LM-20/Form LM-10, Part C
a. Contact and Identifying Information
    In the NPRM, the Department proposed to require employers and 
consultants to identify their employer identification number (EIN) and 
that of the other party, if applicable. Several commenters supported 
the requirement, stating that the EIN will help the Department and the 
public determine whether employers are complying with their own filing 
obligations. The Department concurs with these comments and retains 
this requirement in this rule.
    Additionally, the Department proposed that under Item 8 of the Form 
LM-20 (Person(s) Through Whom Agreement or Arrangement Made) filers 
would identify the ``prime consultant,'' if the filer is a ``sub-
consultant'' who entered into the agreement with the employer as an 
indirect party. Several commenters offered support for the requirement 
that the primary consultant be identified on the Form LM-20, stating 
that it will aid the Department in determining whether additional 
reports must be filed. One commenter added that disclosure of the 
primary consultant helps employees better understand the persuader 
activities at play. The Department concurs with these comments and 
adopts this proposal in the final rule.
b. Hardship Exemption
    In the NPRM, the Department proposed mandatory electronic filing 
for Form LM-20 and LM-10 filers, with a hardship exemption process 
modeled after the existing requirement for Form LM-2 labor organization 
filers. Several international union commenters supported the electronic 
filing requirement for employer-consultant reporting, stating that it 
will improve efficiency, facilitate more timely public disclosure, and 
provide a simpler filing method. One of these international union 
commenters urged the Department to limit electronic filing hardship 
exemptions, and stated that the proposed exemption language lacks 
adequate explanation of the required elements for demonstrating 
hardship. The commenter suggested that the Department not excuse 
electronic filing without a ``compelling demonstration of serious 
technical difficulty, burden, or expense.''
    After considering this suggestion regarding filing hardship 
exemptions, the Department has determined to retain the originally 
proposed language in order to maintain consistency with other the Form 
LM-2 hardship exemption guidelines, which have worked well in practice. 
The Department also notes that Forms LM-20 and LM-10 filers will 
benefit greatly from OLMS's new, web-based, and free Electronic Forms 
System (EFS), which, based upon Form LM-2 experience, will greatly ease 
burdens on filers and reduce hardship applications and exemptions. As 
such, the Department will not grant a continuing hardship exemption 
without a ``compelling demonstration of serious technical difficulty, 
burden, or expense,'' and under no circumstances would the exemption 
equal or exceed one year. Thus, all filers must file an electronic 
report via EFS, even if, under this stringent standard, they are 
granted a continuing hardship exemption of less than one year.
c. Reporting the Terms and Conditions of the Agreement or Arrangement
    As with the prior Forms LM-20 and LM-10, the Department proposed 
that filers must provide a detailed statement concerning the terms and 
conditions of the persuader agreement or arrangement, including 
attaching a copy of any written agreement. A law firm representing 
unions concurred with this requirement, commenting that workers are 
entitled to know how much consultants charge for the activities they 
perform.
    Some commenters raised questions about the reportability of 
particular arrangements. For example, a consulting firm raised 
questions about how to report the drafting of a ``union free'' 
statement in an employer handbook and how to report the fee associated 
with the reportable activity when drafting the ``union free'' paragraph 
may have required comparatively little time. A law firm provided a 
hypothetical example of an attorney who was primarily retained to 
represent an employer in an NLRB hearing, but also spent 15 minutes 
drafting a letter that the Department subsequently determined to be 
reportable because it was prepared with an object to persuade 
employees. The commenter queried how the fee for representing the 
employer in the NLRB hearing should be reported, and if the filer would 
need to report (in Item 10 of Form LM-20) the terms and conditions of 
the arrangement to represent the employer in both the hearing and the 
campaign. The commenter asked if the filer would need to select under 
Item 11.a all of the services performed for the NLRB hearing, or just 
the 15 minutes spent drafting the letter for the employer. The 
commenter also remarked that the form seems to be drafted for labor 
relations consultants who are retained to perform persuader services, 
and not for attorneys who provide primarily legal services for the 
employer. Further, the consulting firm questioned how fees should be 
reported since the firm does not track the billable hours worked by its 
attorneys and human resources advisers. The firm also asked if actual 
monthly membership dues paid by the firm's member companies to the firm 
would need to be calculated.
    The Department reiterates in this rule that filers must provide a 
detailed explanation, in Item 10 of the Form LM-20 and Item 13.b in the 
Form LM-10, of the fee arrangement of the agreement or arrangement, as 
well as all other terms and conditions of the agreement. If the 
agreement or arrangement provided that the consultant would engage in 
persuader services, among other services, the filer must explain the 
full fee arrangement for all services required by the agreement or 
arrangement and describe fully the persuader services, regardless of 
the duration or extent of the persuader services in relation to other 
services provided. Regarding membership organizations, if they and 
their member-employers are required to file reports, then the 
membership organizations must explain all fee arrangements such as the 
details of membership dues. The explanation

[[Page 15980]]

must fully describe the nature of the persuader services provided. For 
example, a filer must plainly state if it was hired to manage a 
counter-organizing or union-avoidance campaign, to conduct a union 
avoidance seminar, or to provide assistance to an employer in such a 
campaign through the persuader activities identified in Form LM-20, 
Item 11.a or Form LM-10, Item 14.a. The Department added language in 
the Instructions to clarify this point.
    Insofar as non-persuader services are concerned, the filer need 
provide only a brief, general description of the non-persuader services 
in Form LM-20, Item 10 or Form LM-10, Item 13.b; a description, such as 
``legal services were also provided,'' will suffice.\71\ In all cases, 
however, a copy of any written agreement should be submitted as an 
attachment to the form. For a reportable union avoidance seminar, this 
includes a single copy of the registration form and a description of 
the seminar provided to attendees.
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    \71\ In the example provided by the commenter, the law firm 
would have to fully report in Form LM-20, Item 10 the details of the 
agreement to assist the employer in its anti-union efforts by 
drafting the persuader letter. Regarding the representation at the 
NLRB hearing, the firm would provide a brief description stating 
that ``legal services were also provided.'' The firm would also have 
to report the full details concerning the actual amount paid for all 
services.
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    Concerning reporting by business associations and similar employer 
membership organizations, in response to comments received and as 
explained in Section V.E.3 of this rule, trade associations are not 
required to file a report by reason of their membership agreements, or 
by reason of selecting off-the-shelf persuader materials for employers, 
or for distributing an employer newsletter to member-employers. Trade 
associations as a general rule will only be required to report in two 
situations--where the trade association's employees serve as presenters 
in union avoidance seminars or where they undertake persuader 
activities for a particular employer or employers (other than by 
providing off-the shelf materials to employer-members).
d. Identifying Persuader Activities
    In the NPRM, the Department proposed to simplify reporting by 
allowing filers to describe reportable activities by using a checklist 
of common persuader and information-supplying activities. Filers are 
required to identify other persuader activities not appearing on the 
checklist by providing a narrative description. See proposed Form LM-
20, Item 11, and proposed Form LM-10 Item 14, 76 FR 36207-36230.
    Several commenters supported the checklist approach on Forms LM-20 
and LM-10. These commenters stated that the checklist will allow for 
more ``detailed'' and ``accurate'' disclosure of persuader activities, 
and that the checklist will assist filers in accurately completing the 
forms. Commenters stated that the current forms allow filers to provide 
only vague descriptions of their activities that are unhelpful to 
employees who seek information about consultants' participation in 
counter-organizing campaigns. Another union commenter mentioned 
firsthand experience with the persuader reporting ``loophole'' used by 
consultants, and supports the form revisions because filers will be 
required to identify specific persuader and information-supplying 
activities, as opposed to only providing general information lacking 
details on a consultant's actions.
    Other commenters voiced opposition to the proposed changes to Forms 
LM-20 and LM-10, describing them as ``burdensome'' and needing 
additional clarification. One commenter objected to the new questions 
about specific types of persuader activities, and, for example, 
described requiring specific information concerning employees 
identified for persuasion as ``intrusive.'' Several commenters opposed 
the addition of the checklist on Forms LM-20 and LM-10. One commenter 
criticized the list as being ``specifically non-exhaustive.'' Another 
commenter did not oppose the checklist concept, but suggested that the 
checklist be limited to items that are currently considered to be 
persuader activities under the prior interpretation.
    One law firm took issue with the checklist item 14.a on Form LM-10, 
expressing concern that every time an employer revises work rules, the 
employer would need to guess whether the drafting consultant 
recommended a course of action for business reasons or to prevent 
employees from discussing collective bargaining. This commenter also 
took issue with the fact that the checklists on the proposed forms 
(Item 11.a on Form LM-20 Item and 14.a on Form LM-10) do not include a 
reference to the advice exemption. The commenter stated that an 
employer or consultant might provide ``unnecessary and/or misleading 
information'' without clarification that the activities need not be 
reported if they involved advice, as opposed to persuasion. Similarly, 
the commenter suggested that the information-supplying exemption 
(regarding information used solely in conjunction with an 
administrative, arbitral, or judicial proceeding) be added to Items 
11.a and 14.a of Forms LM-20 and LM-10, respectively.
    In response to these comments on the checklist, the Department 
retains the checklist format in the final rule, with some modifications 
of the checklist items, as explained in Section V.E.3. The checklist 
items were intended to cover the most common categories of persuader 
activity--not to represent an exhaustive list of all possible persuader 
services. Further, the checklist is specifically designed to include 
both direct and indirect persuader activities--not merely direct 
persuader services. To limit the checklist items to activities that are 
currently considered persuader activities--namely, only direct 
persuader activities--would defeat the purpose of this rule. Moreover, 
the Department disagrees with the suggestion that the list is 
burdensome or intrusive. Rather, it is less demanding than a narrative 
description and only focuses on persuader and information-supplying 
activities (as opposed to advice or other activities). The Department 
has also clarified in this rule what triggers reporting and how to 
determine if the consultant undertook activities with the object to 
persuade employees. See Section IV.B. In particular, the Department has 
explained the four sub-categories of indirect persuasion; the non-
exhaustive list of persuader activities all fit within these four sub-
categories or the category of direct persuasion. If an activity fits 
within those categories and is not on the list, then the filer must 
check ``Other'' and identify the activity. Filers will also have an 
opportunity to more fully explain a checked item in a narrative format, 
if they so choose.
    In response to the commenter who suggested that the checklist 
include a reference to the ``advice'' exemption (and that the 
information-supplying exemption be added to Items 11.a and 14.a of 
Forms LM-20 and LM-10, respectively), an activity is not reportable 
unless it is undertaken by the consultant with an object to persuade 
employees or supply information to the employer. As such, persuader 
activities do not overlap with tasks that may constitute advice to the 
employer. The instructions to each form explain this point clearly, and 
the forms themselves alert filers that they should ``read the 
instructions carefully before completing the form.'' See Appendices.
    A law firm suggested deleting the phrase ``their right to engage in 
any protected concerted activity in the workplace'' from Item 11.a in 
Form LM-20 and Item 14.a in Form LM-10. The

[[Page 15981]]

commenter argued that, since this phrase is not in the LMRDA, the 
Department is unable to require reporting on such activities. As 
explained in Section V.E.2, the Department has deleted the phrase 
``their right to engage in any protected concerted activity in the 
workplace'' from Item 11.a in Form LM-20 and Item 14.a in Form LM-10.
e. Identifying Information-Supplying Activities
    Several commenters offered support for the Department's revisions 
to the form concerning reporting of information-supplying activities by 
consultants, with several union commenters offering examples of such 
activity. One union stated that an attorney-consultant posed as a union 
member and asked questions of workers. Another union stated that 
consultants secretly took photos of individuals attending a union 
meeting attended by potential members. Another union stated that during 
a union organizing drive the consultant provided ``significant research 
for management,'' publicized union staff salaries, prepared persuader 
letters to be sent to employees, and conducted meetings with the 
employer's staff.
    Several commenters contended that the Department's proposal 
expanded, without explanation, the Department's historical 
interpretation of the reporting obligations for ``information supplying 
activities.'' A commenter asserted that the Department's ``silence'' 
concerning the ``intended scope'' of this reporting area suggests that 
it is limited to past statements on ``direct surveillance and spying'' 
by outside consultants. One commenter argued that the Department 
proposed to expand the reporting requirements beyond exposing ``labor 
spies'' and surveillance of union activities, meetings, and 
communications.\72\ The commenter suggested that the proposed rule 
expands such reporting to include ``research from publicly available 
sources,'' as well as ``general research services, including research 
within publicly available sources and databases.'' This increased 
reporting, it contended, is not supported by the statute or its 
legislative history.
---------------------------------------------------------------------------

    \72\ The comment cited IM sections 256.100 (Labor Spying), 
257.205 (Example of Consultant ``Spying''), and 257.210 
(Surveillance in Connection with Labor Dispute) (1963).
---------------------------------------------------------------------------

    One commenter requested that the Department amend the proposed 
instructions to make clear that there is no reporting for ``information 
that is generally available to the public,'' such as ``newspaper 
clippings, law review articles, LM-2 reports, etc.'' Thus, according to 
the commenter, it should not be reportable for the consultant to copy 
such material and supply it to the employer, pursuant to the Form LM-20 
or Part C of the Form LM-10, nor should it be reportable on Part D of 
the Form LM-10 by the employer if it acquires such materials itself.
    These commenters have mischaracterized the proposed rule. The 
revised forms merely provide a format to report consultant activities 
that have an object to supply information to the employer concerning 
the activities of employees or a labor organization in connection with 
a labor dispute. The format requires filers to check boxes indicating 
if the consultant supplied information obtained from the source 
categories: (1) Research or investigation concerning employees or labor 
organizations; (2) supervisors or employer representatives; (3) 
employees, employee representatives, or union meetings; (4) 
surveillance of employees or union representatives (video, audio, 
internet, or in-person). Filers can also check the ``Other'' box and 
provide information concerning any other information-supplying activity 
engaged in by the consultant.\73\ Contrary to the commenters' 
conclusions, these categories are consistent with the legislative 
history and existing Department policy, which are not as limited as 
suggested by the commenters.
---------------------------------------------------------------------------

    \73\ The Department also notes that Form LM-10 filers completing 
Part D must note the method of obtaining such information in Item 
17.d (``Explain fully the circumstances of the expenditure(s).'').
---------------------------------------------------------------------------

    The first category concerns any information about employees or the 
union involved obtained through research or investigation. In this 
rule, the Department clarifies that this category would not include the 
mere provision of public documents, such as publicly-available 
collective bargaining agreements or LM reports. This is consistent with 
existing Department policy. See Employer and Consultant Reporting, 
Technical Assistance Aid No. 6, at 12 (1964) where non-reportable 
activities are discussed (``obtain[ing] copies of a public document and 
transmit[ting] it to the employer'').\74\ While the Department has in 
the past exempted the provision of such public documents, and continues 
to do so in this rule, this exemption does not preclude reporting of 
the provision of private documents or information obtained from private 
sources. In contrast, expenditures for ``inside'' information 
concerning the bargaining demands of a union involved in a labor 
dispute with the employer are reportable. Id. at 8.
---------------------------------------------------------------------------

    \74\ A law firm suggested that ``Research in public or other 
sources outside the employer concerning the employees or labor 
organizations'' should be added to the checklist as an 
``information-supplying activity.'' As noted in the text, reporting 
of public documents is not required. With regard to the checklist 
suggestion, the Department believes that the existing checklist 
language under the ``Information-Supplying Activities'' heading 
(``Research or investigation concerning employees or labor 
organizations'') provides sufficient disclosure for workers and the 
public.
---------------------------------------------------------------------------

    The second category concerns information that the consultant helped 
to acquire, indirectly, through the employer's supervisors and other 
representatives. For example, the category includes situations where 
the consultant has coached the supervisors in methods of acquiring 
information via informal conversations with employees, or undertaken 
efforts to convince employees to provide the information to the 
supervisors. Such reporting is consistent with past Department policy, 
which requires the reporting of agreements in which the consultant 
handles ``all phases of labor-management relations,'' if such 
agreements include activities whereby the consultant furnishes the 
employer, ``directly or indirectly'' (italics included in the 
original), information concerning employees or the union. Id. at 9. 
Another reportable example, derived from the legislative history, would 
include designing psychometric employee tests designed to weed out pro-
union workers. S. Rep. No. 85-1417, at 255-300 (1958).
    The final two categories generally encompass the types of 
surveillance mentioned by the commenters, as well as other activities 
that the Department has long considered reportable, such as any attempt 
to get information directly from the employees or their representatives 
or through a survey.\75\ See IM section 264.006 (Employee Survey); see 
also Technical Assistance Aid No. 6, at 12 (The consultant must report 
if it convinces ``an employee to report to [the consultant] on the 
bargaining tactics of a union in the employer's plant''). Thus, the 
Department did not expand or otherwise alter the existing reporting 
requirements in this area.
---------------------------------------------------------------------------

    \75\ While the Department has explained in this rule that 
employee surveys generally do not trigger reporting as persuader 
activities, see Section IV.B and Section V.E.1.f, these surveys do 
trigger reporting as information-supplying activities if designed or 
implemented by consultants to supply information to the employer 
about a union or employees in conjunction with a labor dispute. 
Surveys that gather information about the proneness of employees to 
an organizing effort as part of a vulnerability assessment, entirely 
outside of a labor dispute, would not trigger reporting.

---------------------------------------------------------------------------

[[Page 15982]]

    Of particular concern to one commenter was its utilization of 
closed circuit television surveillance cameras for customer safety 
purposes and to detect and stop theft and other types of crimes in 
grocery stores, warehouses and outside premises. The commenter noted 
that the surveillance tapes invariably include video footage of 
employees at work including some who are union members. The commenter 
suggested that employers who utilize this or similar technology, such 
as computers, point-of-sale equipment, and the internet, to monitor for 
this or similar purposes, such as productivity and job performance, 
should not have to report those types of activities.
    In response to these comments, the Department notes first, that 
neither these commenters nor others have made a persuasive showing for 
any industry-specific exceptions to the reporting requirements. 
Further, the installation or use of surveillance technology would not, 
by itself, be viewed as an information-supplying activity pursuant to 
the revised Form LM-20 or Part C or D of the revised Form LM-10. To be 
reportable, the installation or use must have an object of supplying or 
obtaining information about the activities of the employer's employees 
or a labor organization.\76\ Such an object could be discerned from the 
agreement or arrangement with the consultant, as well as the context 
surrounding the use of the technology, such as the proximity of its 
installation to the onset of the labor dispute, the location of the 
technology in relation to where the employees work or congregate, and 
whether information concerning the activities of the employees or union 
is used. However, the installation of additional cameras, as well as 
the use of camera surveillance or similar technology by a retail store, 
prior to the onset of a labor dispute, would be a reportable 
information-supplying activity if the employer or consultant had the 
object to supply or obtain information about the activities of the 
employees or labor union and the information was supplied or obtained 
during a labor dispute.
---------------------------------------------------------------------------

    \76\ See IM section 264.200 (Surveillance ``In Connection'' with 
Labor Dispute'') (1963).
---------------------------------------------------------------------------

    For purposes of clarity, the Department modified the checklist item 
to state that the surveillance of employees or union representatives 
can either be ``electronically or in person,'' rather than ``video, 
audio, internet, or in person,'' as provided in the NPRM.
f. Identifying Targeted Employees
    Several commenters stated that filers should not have to provide 
detailed information about employees that consultants have targeted for 
persuasion, as proposed in Item 12.a on the Form LM-20, and in Item 
14.e. on the Form LM-10. Filers are instructed to identify, by 
department, job classification(s), work location, and/or shift(s) of 
the employee(s) who are to be persuaded or concerning whose activities 
information is to be supplied to the employer. Filers should not 
identify targeted employees by name.
    One commenter asserted that the LMRDA does not authorize the 
Department to require disclosure of this type of information, and added 
that the statute only requires filers to identify the persuader 
agreement and the financial arrangement and payments that were made. 
The commenter stated that requiring disclosure of information about 
employees, job titles, and shifts creates privacy and confidentiality 
concerns. Another commenter asserted that disclosing details about 
subject employees would reveal privileged information. Another 
commenter noted that the current Form LM-10 does not require this 
information, and that the current Form LM-20 only asks the filer to 
``identify subject groups of employees.'' Asserting that the Department 
did not explain why this additional information on subject employees is 
being requested and that the employers and consultants who file these 
forms might not know the identity of the targeted employees, the 
commenter suggested that the Forms LM-20 and LM-10 should be left 
unchanged. The commenter also inquired into whether another report 
would be required if a different group of subject employees is 
identified after the initial report is filed.
    In response to these comments, the Department notes that the 
current Form LM-20 (Item 12.a) already requires filers to identify 
subject employees. The new form promulgated by this rule simply asks 
for more detail concerning the department, job classification(s), work 
location, and/or shift(s) of the employees targeted. See Section IV.D. 
Section 203(b) requires a ``detailed statement of the terms and 
conditions of such agreement or arrangement.'' The Secretary has the 
authority to determine how to capture such a detailed statement on 
Forms LM-20 and LM-10. Under section 208 of the LMRDA, 29 U.S.C. 438, 
the Secretary of Labor is authorized to issue, amend, and rescind rules 
and regulations to implement the LMRDA's reporting provisions.
    The information required by the proposal includes details 
concerning the job classifications of employees targeted for 
persuasion, so that employees can identify persuader activities that 
affect them in the workplace. Therefore, the commenter's concern about 
intruding upon worker's privacy is misplaced. Further, as explained in 
the burden analysis in Section VI of this rule, filers typically will 
know the category or type of targeted employees, whether or not this 
includes all employees in a potential bargaining unit. Additionally, as 
explained in Section IV.D of this rule, the Department has revised the 
instructions to simplify the reporting of this information for union 
avoidance seminars.
    Finally, in response to the comment concerning amended reports, an 
amended report is only required if the information in the submitted 
report is incorrect, although new reports are required for any 
agreement or arrangement that has been modified.
2. Comments Received on Other Aspects of Form LM-10
    The Department did not propose any substantive changes to the Form 
LM-10 reporting requirements pursuant to sections 203(a)(1)-(3); and 
this rule, like the NPRM, only affects the layout of the form and 
instructions that concern those reporting provisions. The Department, 
however, received comments expressing concern that under the proposal 
employers would have to report certain payments made to their own 
employees related to persuader activities. In response, the Department 
explicitly states that employers are not required to file a report 
covering expenditures made to any regular officer, supervisor, or 
employee of the employer as compensation for service as a regular 
officer, supervisor, or employee of such employer. See section 203(e), 
29 U.S.C. 433(e). See also IM section 254.300 (Industrial Relations 
Counselor), which states in part, ``an employer will not be required to 
report in those parts payments made to an industrial relations 
counselor in his capacity as full-time director of industrial 
relations.'' Rather, this rule implements changes to the employer 
reporting requirements pursuant to sections 203(a)(4) and (5), where 
employers must report on Part C of the revised Form LM-10 concerning 
agreements or arrangements with consultants and other third-party 
independent contractors or organizations.
    The Department also received comments concerning reporting of 
expenditures pursuant to section 203(a)(3) on Part D of the revised 
Form

[[Page 15983]]

LM-10. One commenter argued that ``virtually none'' of the expenditures 
used to commit unfair labor practices committed under the NLRA are 
currently reported, as can be illustrated by the number of reported 
cases and settlements by the NLRB concerning such conduct and the lack 
of reporting with the Department of expenditures for such activity. The 
commenter praised the design of the revised form for its ease in aiding 
compliance in this regard, and it also encouraged the Department to 
coordinate with the NLRB in ensuring reporting pursuant to section 
203(a)(3).
    A law firm suggested that Part D (Item 17.d) of the proposed Form 
LM-10 should require a statement of how the expenditure had the object 
``to interfere with, restrain or coerce employees in the right to 
organize and bargain collectively through representatives of their own 
choosing.'' The commenter stated that requiring the purpose of the 
expenditure to be reported would create more meaningful disclosure. The 
commenter also suggested replacing ``and'' with ``and/or,'' to read as 
follows: ``. . . in the right to organize and/or bargain collectively 
through representatives of their own choosing.'' (Emphasis added.)
    Upon consideration of this suggestion, the Department has decided 
to not modify the proposed Part D of the Form LM-10 instructions. In 
the Department's view, the language in Part D, Item 17.d of the form 
and instructions requires filers to fully explain the circumstances of 
the expenditure, which includes how the expenditure had as an object 
``to interfere with, restrain or coerce employees in the right to 
organize and bargain collectively through representatives of their own 
choosing.'' More specifically, the form states, ``Explain fully the 
circumstances of the expenditure(s), including the terms of any oral 
agreement or understanding pursuant to which they were made.'' The 
instructions for Item 17.d, further provides that, in part, ``Your 
explanation must clearly indicate why you must report the 
expenditure.'' Additionally, the phrase ``organize and bargain 
collectively'' will be retained without modification, as it derives 
from the statute. See LMRDA section 203(a)(3), 29 U.S.C. 433(a)(3).

G. Comments Asserting Constitutional Infirmities With Revised 
Interpretation, Including First Amendment Concerns, and Alleged 
Inconsistency With Employer Free Speech Rights Under NLRA

    The Department received numerous comments contending that the 
proposed interpretation of the advice exemption would violate 
employers' free speech rights guaranteed under the First Amendment of 
the U.S. Constitution or, by extension, section 8(c) of the National 
Labor Relations Act (NLRA). Many of these comments stated that the 
proposed reporting requirements would have a ``chilling effect'' on 
employers' ability to exercise their free speech rights.\77\ Several 
commenters asserted that this chilling effect extends to employees by 
effectively denying them balanced information on unionization. Some 
commenters that supported the proposed rule expressed the view that the 
reporting requirements would not impermissibly burden employer speech, 
nor conflict with the NLRA. These and related comments are discussed 
below.
---------------------------------------------------------------------------

    \77\ The Department received a few comments concerning the 
impact of this rule on the consultants' reporting requirements on 
the Form LM-21, Receipts and Disbursements Report. According to 
these commenters, the free speech issues are compounded because an 
LM-20 filer must also file the annual LM-21, which requires the 
reporting and public disclosure of clients and fees on account of 
any labor relations advice or services, even if unrelated to 
persuader activity. Similar comments were raised in connection with 
the proposal's impact on attorney-client relationships. See Section 
V.H.
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1. Comments Involving First Amendment Concerns
    The Department received numerous comments asserting that the 
Department's proposed rule was constitutionally infirm. Many of these 
commenters attempted to distinguish the instant rule, with its focus on 
the required disclosure of indirect persuader activity, from the 
longstanding interpretation requiring only the reporting of direct 
persuader activities, an interpretation that has survived 
constitutional challenges. We discuss below the comments addressing 
this issue and the judicial precedent that upheld the constitutionality 
of the Department's interpretation. In short, it is the Department's 
position that the principles established or applied in those cases 
provide a firm constitutional basis for this rule, even though they 
dealt with direct persuader activity. Commenters opposing the rule also 
took issue with the Department's reliance, as support for the rule, on 
analogous disclosure regimes under other statutes that have withstood 
attack on First Amendment grounds. These commenters have failed to 
persuade the Department that its reliance on these disclosure statutes 
and precedent was mistaken. Similarly, the Department has not been 
persuaded by the argument, seemingly without regard to whether the 
LMRDA requires the disclosure mandated by the rule, that the 
Government's interest in requiring disclosure is insufficient to 
survive constitutional scrutiny.
    In the NPRM and earlier in the preamble to this rule, the 
Department explained the legal and policy bases for the rule, and the 
Department's intent to remedy its longstanding failure to effectuate 
the purpose of section 203 of the LMRDA--whereby it allowed consultants 
and employers to withhold information about consultant persuader 
activities from employees. Such information if known to employees may 
have affected their assessment of the employer's campaign message 
against representation and their choice whether to support or oppose 
representation. Based on the comments received on the NPRM, consistent 
with the Department's own experience, this information is a necessary 
component to national labor policy that aims to achieve stability and 
harmony among employees, employers, and unions. See Sections V.C.1.a, 
b, c. We have pointed out that employees often are unaware that their 
employer has hired a consultant to manage its campaign, including 
scripting the employer's message in speeches, letters, and other 
documents, and that the consultant is directing the employer's 
supervisors to provide a uniform position in opposition to 
representation--which may be contrary to the actual views of individual 
supervisors--denying the employees information that would reasonably 
affect their assessment of the employer's message. In this regard, we 
pointed out the situations in which this information would be 
particularly important to employees--where a central theme of a 
company's anti-union message is that the company's supervisors, 
managers, and employees have functioned as a harmonious family, a 
relationship that is put in jeopardy by bringing in a union, an outside 
third-party, or where an employer, while claiming the need for fiscal 
responsibility, is spending what to some employees may seem like an 
exorbitant sum to hire a consultant to sway the employees against 
representation. As we discuss below, the need to provide employees with 
this essential information, a need met by this rule, demonstrates the 
compelling governmental interest served by this rule.
    Notwithstanding the large number of commenters that hold a contrary 
view, the Department remains convinced that its interpretation of the 
Act's reporting requirements, both as proposed and modified in this 
rule, fully satisfies constitutional requirements.

[[Page 15984]]

    It is important to emphasize at the outset of the constitutional 
discussion the purposes served by the disclosure required by the rule, 
combined with the absence from the rule of any constraints on the 
content, timing, or methods that consultants use in their efforts to 
shape how employees exercise their rights to union representation and 
collective bargaining. The Department is obliged under section 203 to 
require the disclosure of persuader agreements between employers and 
labor relations consultants whenever the agreement provides for direct 
or indirect persuader activities to be undertaken by the consultant. In 
enacting the LMRDA's disclosure requirements, Congress determined that 
in order to ensure a properly functioning labor-management relations 
system, employees must be informed if their employer chooses to hire a 
labor relations consultant to assist it in persuading them about how to 
exercise their rights under the NLRA.
    In the NLRA, Congress chose to regulate directly the conduct of 
employers and unions by establishing duties upon both and sanctions 
(for engaging in unfair labor practices). In contrast, under the LMRDA 
generally, and section 203 specifically, Congress simply chose to 
require disclosure. This rule implements this congressional disclosure 
regime mandate. Under the final rule, the Department does not regulate 
in any way the content of any communications by the consultant or the 
employer, the nature of such communications, or their timing. The 
Department emphasizes that nothing in this final rule or in section 203 
requires employers to file disclosure reports merely by virtue of 
engaging in speech, or by engaging the services of an attorney or 
outside consultant. Thus, the rule in no way regulates speech, and, 
apart from requiring reporting in prescribed situations, it does not 
regulate conduct at all. Under the proposed rule, as before, a labor 
relations consultant remains in control of whether he or she engages in 
persuader activities and thus whether, as a consequence, a report must 
be filed.
    With that factual understanding in place, the constitutional 
validity of the proposed rule is independently supported by two related 
lines of First Amendment precedent: Cases sustaining the validity of 
the direct persuader rule and cases sustaining the validity of 
disclosure requirements under other statutes against First Amendment 
attack. We address both here.
a. First Amendment Precedent Sustaining the Direct Persuader Rule
    Section 203's reporting requirement has uniformly withstood First 
Amendment challenges in court.\78\ The reporting and disclosure 
requirements meet the ``exacting scrutiny'' standard applied under 
governing Supreme Court precedent in those cases because they are 
tailored to effectuate the purposes of the LMRDA and bear a 
``substantial relation'' to ``sufficiently important'' governmental 
interests. See Doe v. Reed, 130 S. Ct. 2811, 2818 (2010) (holding that 
signatory disclosure requirements in state referendum petitions are not 
unconstitutional because the State has an interest in preserving the 
integrity of the electoral process). Similarly, these requirements have 
survived First Amendment associational challenges in federal appellate 
cases involving LMRDA reporting requirements (discussed below) under 
the ``deterrent effect'' standard articulated in Buckley v. Valeo, 424 
U.S. 1, 64-74 (1976) (involving disclosure requirements under the 
Federal Election Campaign Act, in which the court opined that exacting 
scrutiny is necessary even if any deterrent effect on the exercise of 
First Amendment rights arises, not through direct government action, 
but indirectly as an unintended but inevitable result of the 
government's conduct in requiring disclosure) (citing to NAACP v. 
Alabama, 357 U.S. 449, 464-65 (1958), in which the court concluded that 
the State of Alabama failed to show a controlling justification for the 
deterrent effect that would result from a statute requiring disclosure 
of the NAACP membership lists).
---------------------------------------------------------------------------

    \78\ See Humphreys, Hutcheson and Mosely v. Donovan, 755 F. 2d 
1211 (6th 1985); Master Printers of America v. Donovan, 751 F.2d 700 
(4th Cir. 1984); Master Printers Association v. Donovan, 699 F.2d 
370, 371 (7th Cir. 1983)), cert. denied, 464 U.S. 1040 (1984) 
(adopting district court's opinion, 532 F. Supp. 1140 (N.D. Ill. 
1981)). See also Marshall v. Stevens People and Friends for Freedom, 
669 F.2d 171, 176-177 (4th Cir. 1981), cert dismissed sub. nom. J.P. 
Stevens Employees Education Committee v. Donovan, 455 U.S. 930 
(1982), cert. denied sub. nom. Ramsey v. Donovan, 455 U.S. 940 
(1982).
---------------------------------------------------------------------------

    In Donovan v. Master Printers Association 532 F. Supp. 1140, 1148, 
1150 (N.D. Ill. 1981), aff'd 699.F2d 370, 371 (7th Cir. 1983) (adopting 
district court's opinion), cert. denied, 464 U.S. 1040 (1984), the 
court held that the statute survived both the ``deterrent effect'' and 
the ``exacting scrutiny'' standards articulated by the Supreme Court in 
Buckley v. Valeo. With respect to the deterrent effect standard, the 
court concluded that the associational claims amounted to nothing more 
than employers ``fear[ing] criticism of . . . dealing with a labor 
relations consultant and possible economic harm.'' These failed to 
``make out a claim under the first amendment'' because they ``fall far 
short'' of the concrete harm required by NAACP v. Alabama. Id. at 1148 
& n. 11. Examining both the legislative history of section 203 and the 
similarities between political and workplace elections, the court 
concluded that the required disclosure furthers the goals of the 
statute by exposing the suspect activities of persuaders to the 
``disinfectant'' effects of sunlight, id. at 1149 (quoting Buckley, 424 
U.S. at 67), and by ensuring proper enforcement of the statute, id. at 
1150. ``The disclosure permits employees in a labor setting, like 
voters in an election, to understand the sources of the information 
being distributed.'' Id.
    Similarly, the Fourth Circuit in Master Printers of America 
determined that the challenger had not met its burden of showing that 
the section 203 disclosures had exposed its members to economic 
reprisal, loss of employment, threat of physical coercion and other 
manifestations of public hostility directed at specific individuals 
necessary to establish a ``deterrent effect'' under Buckley v. Valeo 
and NAACP v. Alabama. 751 F.2d at 704-705. The Fourth Circuit 
considered both the legislative history of section 203 and the overall 
goals of the LMRDA, and noted the similarity between union 
certification and political elections. Based on that analysis, the 
court concluded that the Department had demonstrated the disclosure 
required by section 203 served the governmental interest to deter 
unlawful conduct and to facilitate its interest in securing compliance 
with federal labor laws. 751 F.2d at 707. The court also identified a 
third governmental interest in the section 203 disclosure requirement, 
to maintain ``antiseptic conditions in the labor relations context.'' 
Id. at n. 8. The Fourth Circuit not only held that the statute serve 
these important government interests, it acknowledged ``the precision 
with which section 203(b) has been tailored to serve its purpose.'' Id. 
at 709.
    In Humphreys, the Sixth Circuit also rejected First Amendment 
challenges to the prior interpretation of the disclosure obligation 
under section 203. The court concluded that the persuader law firm had 
failed to meet the ``deterrent effect'' standard for demonstrating an 
unconstitutional violation of its right to freely associate. 755 F. 2d 
at 1220-1222. The court rejected the persuader's free speech claim, 
ruling instead that the disclosures ``are unquestionably 
`substantially' related to the

[[Page 15985]]

government's compelling interest'' in preventing improper activities in 
labor-management relations. 755 F. 2d at 1222. In support of that 
conclusion, the court observed that the required disclosures would help 
employees exercise their right to support or not support a union, 
``enabl[ing] employees in the labor relations setting, like voters in 
the political arena, to understand the source of the information they 
are given during the course of a labor election campaign.'' Id.
    These cases support the validity of this rule concerning indirect 
disclosure requirements. While as many commenters have emphasized, 
these cases involved direct persuader activities by consultants, this 
difference does not render that precedent inapplicable to the indirect 
persuader disclosure requirement. As discussed above, like the 
disclosure requirement for direct persuader activities, the requirement 
at issue here provides information to employees about the source of 
statements relevant to a decision about how to vote in a union 
election. This rule addresses the need to understand the true source of 
messages that might otherwise appear to have been crafted by an 
employer's representative (like a supervisor), which, for the reasons 
stated above, will materially affect the statement's credibility and 
the context in which it is placed. The Department's final rule provides 
clear instruction to employers and consultants about the kinds of 
activities that must be reported and, most importantly, better aligns 
the reporting obligation with the essential governmental interest to 
establish an effective and fair national system of labor-management 
relations. This final proposed rule does not present any circumstance 
that would alter the constitutional analysis in those precedential 
cases, which rejected the argument that such reporting was 
constitutionally infirm.
b. First Amendment Precedent Sustaining Disclosure of the Source of 
Speech
    The constitutional validity of this rule is independently supported 
by the U.S. Supreme Court's case law sustaining analogous disclosure 
requirements from other statutory contexts against First Amendment 
attack. The Department remains of this view after carefully reviewing 
the comments that have argued otherwise.
    In the NPRM, the Department explained that the LMRDA's provisions 
requiring the disclosure of consultant participation in representation 
elections have close analogs in Federal election campaign law. 76 FR 
36188. The Department cited to Buckley v. Valeo, 424 U.S. 1, 60-84 
(1976), in which the Supreme Court found ``no constitutional 
infirmities'' in the reporting and disclosure requirements under the 
Federal Election Campaign Act (FECA). The FECA imposed reporting 
obligations on political action committees and candidates receiving 
contributions or making expenditures over a certain threshold. Id. at 
62. As the Department explained in the NPRM, 76 FR 36188, Buckley, in 
assessing whether these disclosure requirements served a substantial 
government interest, noted that FECA's disclosure requirements:

provide[ ] the electorate with information ``as to where political 
campaign money comes from and how it is spent by the candidate'' in 
order to aid the voters in evaluating those who seek Federal office. It 
allows voters to place each candidate in the political spectrum more 
precisely than is often possible solely on the basis of party labels 
and campaign speeches. The sources of a candidate's financial support 
also alert the voter to the interests to which a candidate is most 
likely to be responsive and thus facilitate predictions of future 
performance in office.

Id. at 66-67, quoting H.R.Rep. No. 92-564, p. 4 (1971). This 
governmental interest, the Court held, was substantial, and the 
disclosure requirements were constitutional. Id. at 68.
    The NPRM also referenced the recent Supreme Court opinion in 
Citizens United v. Federal Election Commission, 558 U.S. 310, 371 
(2010), for the proposition that ``disclosure permits citizens and 
shareholders to react to the speech of corporate entities in a proper 
way. This transparency enables the electorate to make informed 
decisions and give proper weight to different speakers and messages.'' 
76 FR 36188. Citizens United, in upholding the disclosure requirements 
of the statute there at issue, discussed Buckley and the Court's later 
opinion in McConnell v. Federal Election Commission, 540 U.S. 93 (2003) 
and instructed that: ``Disclaimer and disclosure requirements may 
burden the ability to speak, but they . . . ``do not prevent anyone 
from speaking''; they help citizens to ``make informed choices in the 
political marketplace.'' 558 U.S. at 367 (internal citations and 
quotations omitted). The interests served by requiring labor relations 
consultants to report on persuader services are also congruent with 
those interests served by disclosure provisions in federal and state 
laws regulating lobbyists.\79\
---------------------------------------------------------------------------

    \79\ See United States v. Harriss, 347 U.S. 612, 625-626 (1954) 
(holding that ``those who for hire attempt to influence 
legislation'' may be required to disclose the sources and amounts of 
the funds they receive to undertake lobbying activities); accord, 
e.g., Florida League of Prof'l Lobbyists, Inc. v. Meggs, 87 F.3d 
457, 460 (11th Cir. 1996) (upholding state lobbyist disclosure 
statutes in light of state interest in helping citizens ``apprais[e] 
the integrity and performance of officeholders and candidates, in 
view of the pressures they face''). See also National Ass'n of Mfrs. 
v. Taylor, 582 F.3d 1, 9-10 (D.C. Cir. 2009) (upholding requirement 
that registered lobbyists disclose the identity of organizations 
that made monetary contributions and actively participated in or 
controlled the registrant's lobbying activities); Kimbell v. Hooper, 
164 Vt. 80, 85-88, 665 A.2d 44 (1995) (upholding state lobbying 
statute against First Amendment challenge); Gmerek v. State Ethics 
Commission, 569 Pa. 579, 595, n. 1, 807 A.2d 812, 822 (2002) 
(dissent) (collects cases in which state lobbying disclosure laws 
upheld against First Amendment and other challenges). Harriss, which 
serves as a touchstone for later Supreme Court precedent on the 
constitutionality of disclosure requirements, involved a challenge 
to a statute that required disclosure by ``any person . . . who by 
himself, or through any agent, or other person in any manner 
whatsoever, directly or indirectly, solicits, collects, or receives 
money . . . to be used . . . to influence directly or indirectly, 
the passage or defeat or any legislation.'' (emphasis added). 347 
U.S. at 619 (quoting section 307 of the Federal Regulation of 
Lobbying Act, 60 Stat. 812).
---------------------------------------------------------------------------

    As discussed earlier in the preamble, at Section V.C.1.e., the 
Department acknowledges that the campaign financing and lobbying 
disclosure regimes differ in some respects from the LMRDA's reporting 
system. Under the Supreme Court's decisions, it is the source of the 
speech (the lobbyists or donors) that is important for the public to 
know in evaluating candidates for public office.
    Understood in this regard, the fit between the Court's campaign 
finance disclosure cases and the speech analysis governing the required 
disclosures here is sound. Just as the Court in Citizens United v. 
Federal Election Commission, 558 U.S. 310, 371 (2010), recognized that 
``disclosure permits citizens and shareholders to react to the speech 
of corporate entities in a proper way. This transparency enables the 
electorate to make informed decisions and give proper weight to 
different speakers and messages''--and therefore required that the 
identity of the donor be disclosed--in the indirect persuader context, 
the ``voter'' may find it highly material to know who besides the 
employer is actually speaking by developing the script, the strategy, 
and other tools of persuasion, and that is why the rule is 
constitutionally valid.
    The Department has fully considered that, in the context of union 
representation campaigns, one might argue that the consultant's 
arrangement with the employer is of less interest to

[[Page 15986]]

an employee who is evaluating whether to support or oppose a union as 
his or her representative or to consider the employer's stance in 
negotiations with a union. The thought might be that the consultant is 
only operationalizing the employer's position against representation 
and, whether the consultant is directing the campaign and crafting the 
message, it remains the employer's message. However, as the legislative 
history to the LMRDA, certain persuasive comments submitted, and this 
Department's experience in administering and enforcing the LMRDA make 
clear, the hiring of a labor relations consultant by an employer, and 
the consultant's role in the representation campaign, are important 
factors to be considered by employees as they weigh their choice for or 
against union representation. In particular, knowledge of the 
consultant's role will enable employees to more accurately assess the 
credibility, and put into the proper context, statements that might be 
made by representatives of the employer. Though the financial and 
lobbying disclosure statutes occupy a different political sphere than 
the LMRDA, each seeks to provide pertinent information to voters as 
they make their choices.
    Commenters have raised a variety of related points, none of which 
the Department finds persuasive. A public policy organization's 
comments criticized the analogy to campaign disclosure laws; it 
explained that the Federal Election Campaign Act (FECA) grew out of 
concerns over voter inequality and the undue influence of special 
interests. A trade association similarly criticized the Department's 
position, as, in its view, there is no potential ``influence-peddling'' 
concerning employer agreements with consultants as there could be with 
election contributions. In contrast, the interests of the employer and 
the consultants are ``coterminous and obvious,'' and do not highlight 
to the employee an outside party that may have divergent interests from 
the employer. The commenter argued further that FECA involves donations 
to candidates and not attorney-client relationships. Similarly, a law 
firm argued that campaign disclosure rules and the LMRDA's reporting 
requirements would be analogous if there was a requirement for 
political candidates to disclose the public relations or law firms that 
they hire. The commenter stated that there is no ``public interest'' in 
such disclosure because these persons ``are not running for office.''
    The Department disagrees with these contentions. First, the 
benefits to workers, as voters in a representation election, from 
disclosure about persuader communications are analogous to the benefits 
from campaign disclosure laws to voters in a political election. And 
the governmental interest in disclosure in the campaign finance context 
was recently upheld by the Supreme Court in Citizens United against 
First Amendment attack on the grounds that it ``can provide 
shareholders and citizens with the information needed to hold 
corporations and elected officials accountable for their positions and 
supporters. This transparency enables the electorate to make informed 
decisions and give proper weight to different speakers and message . . 
.'' 130 S. Ct. at 916 (emphasis added). Second, while the precise 
nature of the disclosure and election dynamics are different in this 
context from the campaign finance context, the fundamental point that 
transparency facilitates informed decisionmaking does not depend on the 
particular political setting. In this case, the dynamics of union 
elections make the use of third parties relevant to the ultimate issue 
of whether or not employees choose a representative for purposes of 
collective bargaining. Ultimately, while the dynamics and structures of 
elections differ, the use of third-party persuaders, whether using 
direct or indirect contact, is relevant to decisionmaking in union 
elections.
    Other federal statutes center their regulatory focus on reporting 
and disclosure. The reporting and disclosure requirements in the LMRDA 
closely resemble those in other statutes, which similarly seek to 
create a more informed electorate. As discussed in greater detail in 
Section V.G.1.a and c, courts that have addressed challenges by 
attorney-consultants that refused altogether to report direct persuader 
activities or to provide only limited disclosure of other activities 
after engaging in direct persuasion have pointed out the congruent 
purposes served by the LMRDA and federal statutes regulating campaign 
financing and lobbying activities. While direct and indirect persuader 
activity differ, in that the former involves face-to-face contact 
between the consultant and the worker while the latter does not, 
disclosure in both instances serves the same core compelling 
governmental purpose: Disclosing to workers the source of the persuader 
campaign and communications, which serves to ``[empower] voters so that 
they use their vote effectively,'' thus increasing voter competence. 
See Garrett, Elizabeth, The William J. Brennan Lecture in 
Constitutional Law: The Future of Campaign Finance Reform Laws in the 
Courts and in Congress, 27 Okla. City U.L. Rev. 665, 675 (2002). ``Just 
as disclosure in the corporate realm improves confidence in the 
economic system and demonstrates values undergirding the economy, 
disclosure can serve the same function in the political realm.'' Id. at 
691.
c. Addressing Additional Commenter Points
    In Master Printers of America and Humphreys, the Courts of Appeals 
for the Fourth and Sixth Circuits focused on four factors in 
determining whether section 203(b) of the LMRDA violated the respective 
appellants' free speech rights: (1) The degree of infringement on free 
speech; (2) the importance of the governmental interest protected by 
the LMRDA; (3) whether a ``substantial relation'' exists between the 
governmental interest and the information required to be disclosed; and 
(4) the closeness of the fit between the LMRDA and the governmental 
interest it purports to further. Master Printers of America, 751 F.2d 
at 704; Humphreys, 755 F.2d at 1220.\80\
---------------------------------------------------------------------------

    \80\ The ``outlier'' among the courts of appeal to have 
considered constitutional issues posed by persuader reporting, 
Donovan v. Rose Law Firm, 768 F.2d 964, 975 (8th Cir. 1985), did not 
concern the obligation of a labor relations consultant to report 
persuader activities in which the consultant had engaged. Instead, 
its focus was on whether a consultant that had engaged in persuader 
activities was required, by virtue of that activity, to disclose 
information about non-persuader labor relations services provided to 
other employer clients. The court, concluding that Congress did not 
intend that consultants would have to report such non-persuader 
services performed for other clients, did not reach the 
constitutional issue.
---------------------------------------------------------------------------

    With respect to the first factor examined in Master Printers of 
America and Humphreys, the degree of infringement on free speech, the 
Department concludes that any potential reduction in employer speech 
that might result from the rule, as raised in the comments, is 
speculative and not of the sort that amounts to a substantial chill on 
free speech. Commenters have argued that the proposed rule will have a 
chilling effect on employers and consultants. As several commenters 
noted, this argument has been raised before--under the LMRDA as well as 
in analogous contexts--and rejected by all the federal courts of 
appeals to have decided this question.
    Many of the commenters contended that the rule would infringe on 
First Amendment rights by severely limiting the ability of employers to 
retain qualified labor attorneys and

[[Page 15987]]

consultants to provide the guidance necessary to lawfully navigate the 
federal laws on union organizing campaigns. They claimed that the 
revised interpretation of the advice exemption would lead many labor 
law firms to cease providing advice to employers due to the new 
disclosure requirements. As a result, they claimed, employers would be 
forced to either remain silent or risk inadvertently violating 
complicated labor laws if they attempt to navigate the organizing 
effort without adequate guidance. These commenters contended that the 
rule would essentially deprive employers of their right to counsel with 
regard to labor relations matters. Some of the commenters asserted 
that, in effect, employers' ability to communicate with their employees 
would be impaired, thereby depriving employees of information to 
balance out the pro-unionization message. For instance, one local 
chamber of commerce commented that employers, lacking access to legal 
advice, would inadvertently make statements or engage in conduct that 
results in unfair labor practices, which in turn may result in 
intervention by the NLRB to compel recognition of and bargaining with 
the labor union. Other commenters, including a law firm and a trade 
association, argued that employers cannot be expected to know and 
understand the complexities involved in labor relations laws. 
Therefore, according to several commenters, this rule would result in 
more costly re-run elections, NLRB investigations, hearings, bargaining 
orders, delays, interference charges, and litigation.
    The Department is not persuaded by these arguments. The Supreme 
Court rejected a similar contention under the federal lobbying act, 
holding that it would not strike down a statute based on speculative 
arguments, particularly those relating to assertions that amount to 
``self-censorship.'' The Court stated:

    Hypothetical borderline situations are conjured up in which such 
persons choose to remain silent because of fear of possible 
prosecution for failure to comply with the Act. Our narrow 
construction of the Act, precluding as it does reasonable fears, is 
calculated to avoid such restraint. But, even assuming some such 
deterrent effect, the restraint is at most an indirect one resulting 
from self-censorship, comparable in many ways to the restraint 
resulting from criminal libel laws. The hazard of such restraint is 
too remote to require striking down a statute which on its face is 
otherwise plainly within the area of congressional power and is 
designed to safeguard a vital national interest.

United States v. Harriss, 347 U.S. 612, 626 (1954). Moreover, the 
courts in Master Printers of America and Humphreys determined that a 
showing of threats, harassment, or reprisals to specific individuals 
must be shown to prove that government regulation will substantially 
chill free speech. Master Printers of America, 751 F.2d at 704; 
Humphreys, 755 F.2d at 1220. The courts were able to weigh proffered 
evidence in reaching their conclusions. Neither the Department nor the 
commenters, of course, have at this stage of the final rule the benefit 
of any actual evidence to review the effects of requiring the 
disclosure of indirect persuader activities.
    Earlier in the preamble, at Section V.C.2.d, we discussed our 
strong skepticism about the claims that this rule would discourage 
employers from continuing to rely on labor relations consultants in 
contesting union representation efforts or that it would drive some 
consultants out of the industry because they would have to report 
indirect persuader activities. In our view, given the importance that 
most employers attach to defeating union representation, the use of 
labor relations consultants will remain prevalent. Thus, we do not 
foresee a decline in industry business. While, as noted, an incidental 
effect of disclosure may be to increase competition within the 
consultant industry--as the particular persuader activities of 
consultants, along with the cost of their services, become better 
known, this informational gain can hardly be characterized as chilling. 
Further, while we recognize that the predictive value of information 
about experience under the Department's Form LM-2, required by the 
Department's LMRDA regulations--where unions are required to report 
particular information on their payments of $5,000 or more per year to 
attorneys, consultants, and others--has some limitations, the 
Department has seen no drop off in the reported amounts expended by 
unions on such matters between 2005 (the first year in which unions had 
to report such payments) and 2014 (the most recent complete year for 
which such reports are available). Nor has the Department received 
complaints that such disclosure has hampered unions in obtaining the 
services of attorneys or others. See 68 FR 58374, 58391 (Oct. 8, 2003) 
(noting that a union must report the recipient's name and address, the 
nature of its business, the purpose or reason for making the 
disbursement, the amount of the disbursement, and its date).
    The principles provided in Harriss, Master Printers of America, and 
Humphreys lead the Department to conclude that the commenters' 
contentions are too speculative to set aside or substantially modify 
the proposed reporting requirements. See also Donovan v. Master 
Printers Association, 532 F. Supp. at 1148-49. Indeed, in some 
respects, the commenters have bootstrapped their argument on the 
Department's mistaken view that section 203 could be effectuated 
without requiring reporting by employers and consultants where the 
consultant agreed to stay behind the scenes. Their position at bottom 
is that the disclosure prescribed by Congress in enacting the LMRDA, 
which the Department proposed in the NPRM and requires under the final 
rule, will impose a filing burden on them and, perhaps, make their jobs 
a little more difficult because the consultant's role in persuading 
employees will become publicly known. But their position--from a 
constitutional vantage--is no stronger under the final rule than it was 
under the prior interpretation. The information to be reported--the 
agreement and the particular persuader activities to be undertaken--are 
materially the same, whether the agreement provides for direct 
communication by the consultant with the employees or the consultant 
conducts the organizing campaign behind the scenes.
    The Department is not persuaded that the revised interpretation 
will substantially chill employers from retaining counsel. As stated 
earlier, reporting is only triggered when a law firm chooses to perform 
a persuader activity. Thus, a law firm exclusively providing advice, 
representation or other legal services is under no obligation to file a 
report, eliminating any concerns that the law firm or the employer may 
have with regard to disclosing their relationship. The Department 
rejects the contention that the revised interpretation, or the statute 
itself, limits the ability of an employer to retain counsel. Moreover, 
the rule provides guidance that further clarifies the kinds of direct 
and indirect activities that trigger reporting, minimizing the 
possibility that reporting will be triggered by an inadvertent action 
by the lawyer or vague boundaries between reportable and non-reportable 
activities. See Section IV.B and Section V.E.1. Law firms will know the 
test for determining when reporting is triggered and when to apply it, 
and that legal services themselves do not trigger reporting. Thus, as 
stated, there is no limitation on the ability of an attorney to provide 
persuader services in addition to legal services, by virtue of the 
statute or this

[[Page 15988]]

rule, because an attorney is not required to disclose any privileged 
communication nor is the attorney encumbered by any ethical 
restrictions that prevent disclosure. See Section V.H.
    The commenters have not provided any substantive indication that 
all, some, or even any law firms would cease representing clients as a 
result of the broadened reporting requirements under the final rule, or 
even that they would cease to provide persuader services in addition to 
legal services. Even assuming that some labor law firms might decline 
to offer persuader services, in addition to advising or representing 
certain employers, due to required disclosure, the commenters do not 
adequately explain why employers would be unable to retain competing 
firms that offer persuader services.
    Indeed, one law firm pointed out in its comments that an employer 
must weigh a number of different factors in deciding whether or not to 
communicate with its employees regarding unionization. Which factors 
are assessed and how much weight to be given to each are entirely 
speculative because these considerations will surely vary depending on 
the circumstances. As the Supreme Court concluded, the possibility of 
significant self-restraint, as the commenters maintained is the case 
here, is simply too remote for the Department to justify rejecting the 
proposed rule, especially given the important purposes served by 
disclosure. See Harriss, 347 U.S. at 626.
    On the present rulemaking record, we see no reasonable probability 
that the fears raised by commenters will be realized. If questions 
arise about perceived infringement of an employer's rights, the 
Department will answer these queries on a case-by-case basis through 
interpretive letters or other compliance assistance activities.\81\
---------------------------------------------------------------------------

    \81\ The Department declines in this final rule to respond 
specifically to comments that pose hypothetical situations in an 
attempt to illustrate how application of the final rule would 
violate employers' free speech rights. The Department is guided by 
the Harriss decision, in which the Supreme Court discounted 
hypothetical borderline situations as the basis upon which to 
evaluate a general challenge to a statute's constitutionality. Id. 
The Eleventh Circuit answered a similar question in Meggs, 87 F.3d 
at 461. Citing to Harriss, the Meggs court established that it was 
unwilling to accept the appellant's hypothesized, fact-specific 
worst-case scenarios. 87 F.3d 461. See Center for Competitive 
Politics v. Harris, 784 F.3d 1307, 1317 (9th Cir. 2015), petition 
for cert. docketed, 84 U.S.L.W. 3080 (U.S. Aug. 3, 2015) (No. 15-
152).
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    In addition, the potential effects on expressive activity discussed 
in the comments do not constitute the sort of threat of physical harm 
and loss of employment that would give rise to a finding of a 
substantial chill on free speech. See Master Printers of America, 751 
F.2d. at 704 (citing NAACP v. Alabama, 357 U.S. 449, 462-63 (1958)). In 
Humphreys, for example, the Sixth Circuit reviewed the evidence 
provided by the plaintiff-appellant law firm to determine whether the 
alleged infringement on First Amendment rights would result in 
``threats, harassment, or reprisals.'' In an affidavit, the appellant 
had claimed that if it were compelled to report the required 
information, the firm's disclosed clients would suffer reprisals and 
retaliation from private parties and government officials. The 
appellant claimed that a labor union would use the information to 
embarrass the firm's clients, to compile an ``enemies list,'' and to 
urge its members to boycott the publicly-disclosed firms. The appellant 
also asserted that the Department of Labor might harass the disclosed 
clients. The Court of Appeals, however, found these allegations to be 
speculative and held that the reporting requirements in section 203(b) 
do not substantially burden the appellant's First Amendment rights. 
Humphreys, 755 F.2d at 1220-21; see also Citizens United, 558 U.S. at 
370 (``Citizens United, however, has offered no evidence that its 
members may face similar threats or reprisals. To the contrary, 
Citizens United has been disclosing its donors for years and has 
identified no instance of harassment or retaliation'').
    The types of infringement speculated upon by the commenters, such 
as the rule's effect on the ability of employers to retain counsel and 
the potential for employers to ``muzzle'' or ``gag'' themselves, do not 
constitute the sort of infringement that would result in physical 
threats, harassment, or reprisals that are necessary for a finding of 
an impermissible chilling effect. For example, a local chamber of 
commerce submitted comments contending that employers, fearing the risk 
of committing unfair labor practices, would alternatively simply remain 
neutral during a union organizing campaign. A few commenters stated 
that union organizers would use the financial information required to 
be disclosed under the revised LM-10, LM-20, and LM-21 forms as more 
ammunition in their organizing campaigns. Even assuming this holds 
true, however, such tactics would not rise to the level of 
unconstitutional infringement.
    Similarly, as mentioned above, some commenters suggested that the 
rule effectively deprives employees of balanced information, denying 
them the full exercise of their speech rights under the NLRA. The 
Department disagrees with this position, considering that a primary 
purpose of this rule is to provide employees with more information 
regarding the role of consultants in anti-union campaigns, without 
chilling the speech of employers. Moreover, as set out in Master 
Printers of America, 751 F.2d at 710, disclosure laws unlike other 
types of restrictive laws actually promote speech by making more 
information available to the public, thereby bolstering the 
``marketplace of ideas.'' The court in Humphreys similarly determined 
that the ``disclosure requirements aid employees in understanding the 
source of the information they receive.'' 755 F.2d at 1222.
    The second factor examined in Master Printers of America and 
Humphreys involves the importance of the governmental interest 
protected by the LMRDA. See Sections III.B.2 and V.C (Policy 
Justification for Revised Interpretation). The governmental interests 
that were considered in Humphreys and Master Printers of America as 
constitutionally appropriate bases for persuader reporting continue to 
undergird the interpretation embodied in this final rule. In Humphreys, 
755 F.2d at 1221-22, the Sixth Circuit, focusing on the government's 
compelling interest in maintaining harmonious labor relations, 
determined that this interest justified the burden on the appellant's 
exercise of its First Amendment rights. The court explained that 
reporting persuader activities ``aid[s] employees in understanding the 
source of the information they receive,'' and that this information 
would ``enable employees in the labor relations setting, like voters in 
the political arena, to understand the source of the information they 
are given during the course of a labor election campaign.'' Id. at 
1222. In Master Printers of America, 751 F.2d at 707, the Court of 
Appeals, after an extensive review of the LMRDA's legislative history, 
acknowledged that section 203 was enacted to serve two compelling 
governmental interests: To deter actual corruption in the labor 
management field and to bolster the government's ability to investigate 
in order to act and protect its legitimate and vital interests in 
maintaining sound and harmonious labor relations. As explained earlier 
in the preamble, the final rule, by increasing transparency and 
fairness during the organizing process, promotes the government's 
compelling interest in ensuring that employees receive information 
about persuader activities

[[Page 15989]]

that is necessary for them to assess anti-union messages directed at 
them so they may make informed decisions about union representation and 
collective bargaining, and in bolstering the government's investigative 
ability, and maintaining stable and harmonious labor relations. See 
Sections III B.3-.5, and V.C. The position taken in this final rule is 
fully justified. It is supported not only by the language of section 
203 and its legislative history, but also the lessons drawn by the 
Department from its own administration of the LMRDA and the substantial 
research findings on the widespread, contemporary use of labor 
relations consultants to influence employees in the exercise of their 
representation and collective bargaining rights. See National 
Association of Manufacturers v. Taylor, 582 F.3d 1, 16 (D.C. Cir. 2009) 
(state and federal disclosure laws may be justified upon a legislative 
determination that good government requires transparency, no empirical 
showing is required); see also Edwards v. District of Columbia, 755 
F.3d 996, 1005 (D.C. Cir. 2014) (noting that unlike the regulation 
there at issue, a constitutional challenge will fail where the 
regulation is supported by a legislative record and contemporary 
accounts that explain ``the ills at which the law was aimed'').
    With respect to the third factor--whether there is a substantial 
relationship between the governmental interests and the information to 
be disclosed--the Master Printers of America court understood that 
disclosure requirements are an effective means of protecting employee 
rights under the NLRA. The court further reasoned that the LMRDA's 
scheme ensures that the Department has the means to gather data and 
detect violations. In Humphreys, the Sixth Circuit also concluded that 
the requirements in section 203 are substantially related to compelling 
governmental interests: To assist employees in understanding the source 
of the information they receive, to discourage unlawful labor 
practices, reduce the appearance of impropriety, and supply information 
to the Department that will aid in detecting violations. In contrast to 
the court's findings, one commenter claimed that most of the 
information required to be reported under the final rule is unlikely to 
have any relation to persuader activity, resulting in a false and 
misleading picture of employers' practices and intentions with respect 
to labor relations. The Department disagrees. The final rule will help 
employees better understand the source of information that is designed 
to persuade them in exercising their union representation and 
collective bargaining rights, as it will reveal that the source of the 
persuader materials is an anti-union campaign managed by an outsider. 
See Evergreen Association, Inc. v. City of New York, 740 F.3d 233, 247-
248 (2d Cir. 2014), cert. denied, Pregnancy Care Center of New York v. 
City of New York, 135 S. Ct. 435 (U.S. 2014) (the government has a 
strong ``interest in informing consumers and combating 
misinformation'').\82\ Further, the Department's experience 
administering the persuader reporting requirements indicates that the 
amended Forms LM-10 and LM-20 will provide more information to 
employees. The Form LM-10 and LM-20 provide transparency as to the 
terms of the agreement between the employer and the consultant. A 
properly completed form will include the fees the employer will pay the 
consultant and the services the consultant will perform. In many 
senses, this data is neutral. Depending on the worker reading the 
report, the disclosures may benefit a union attempting to organize or, 
on the other hand, it may benefit an employer seeking to avoid a union. 
Despite the uncertainty of predicting how the worker will interpret and 
react to the disclosed information, the information is generally the 
type that an involved worker will consider relevant.
---------------------------------------------------------------------------

    \82\ In that case, the court of appeals upheld a state law 
requiring that a pregnancy services center publicly disclose, by 
postings and otherwise, whether it had a licensed medical provider, 
information which the state deemed important for consumers to know 
upfront when considering whether to use the provider's services.
---------------------------------------------------------------------------

    A worker who is weighing the pros and cons of unionization, for 
example, will be interested in knowing the depth of his or her 
employer's attitude toward union representation. One employer may hire 
a consultant for $85,000 per year. Another may choose to pay as little 
as $25 an hour. It will, of course, already be clear to the employee 
that both employers oppose unionization. But the amount of money an 
employer actually invests in the endeavor is nevertheless informative. 
The axiom that actions speak louder than words applies here. One worker 
may reasonably conclude that an employer willing to commit substantial 
sums to avoid a union, will enter into a bargaining relationship with 
greater reluctance and prove to be a more intransigent negotiator. That 
worker may deem unionization too difficult a path for him or her to 
support. Conversely, a different worker, one who believes that 
collective bargaining is a zero sum game, may infer that the employer 
correctly understands that it might have to make major concessions at 
the bargaining table. This worker may conclude that union 
representation has potential for substantial increases in compensation 
and benefits. Whichever conclusion is reached, both workers will 
consider the information valuable in making their determination.
    The increased transparency, by requiring that both direct and 
indirect activities be reported, will also serve a prophylactic effect, 
discouraging and preventing corruption and other improprieties in the 
midst of organizing campaigns or collective bargaining controversy. 
Moreover, given that the proposed rule, adopted with some modification 
in the final rule, better effectuates the statute's mandate that both 
direct and indirect persuader activity be reported, there is no merit 
to the suggestion that the link between the purposes served by 
disclosure and the particular information to be disclosed is less 
strong than the link approved in Humphreys and Master Printers of 
America.\83\
---------------------------------------------------------------------------

    \83\ Following the Court's opinions in Buckley and Citizens 
United upholding disclosure requirements of the statutes there at 
issue, litigants have continued to assert, without success, in 
various statutory contexts, that disclosure provisions impede the 
exercise of their First Amendment rights. See cases cited in this 
section of the preamble. These decisions indicate that the tests 
applied in Masters Printers of America and Humphreys, and the 
results reached there, fully accord with more recent precedent.
---------------------------------------------------------------------------

    The fourth factor examined in Master Printers of America and 
Humphreys involves the closeness of the fit between section 203 and the 
governmental interest it purports to further. One commenter, a law firm 
association, averred that the statute must be narrowly construed 
because it places a burden on free expression. A law firm commenter 
stated that the Department's proposed interpretation is not narrowly 
tailored to a compelling purpose. The firm analogized the Department's 
rulemaking with what the City of Chicago attempted to accomplish in 
Police Dep't of City of Chicago v. Moseley, 408 U.S. 92 (1972), where 
the city enacted an ordinance that prohibited certain types of 
picketing or demonstrating within 150 feet of a secondary school. The 
firm also cited to the Supreme Court's decision in Sorrell v. IMS 
Health, Inc., 131 S. Ct. 2653 (2011). The circumstances in those cases 
are distinct from those posed by this rule. While the law firm 
suggests, in effect, that the Department cannot require employer 
consultants to disclose activities without requiring the same for 
consultants providing similar assistance

[[Page 15990]]

to labor unions, the law firm ignores that the LMRDA contains separate 
reporting requirements for consultants, employers, and unions and that 
the proposed regulation conforms to these statutory requirements. Even 
assuming that the regulation affects consultant free speech rights, it 
does so in a way that permissibly advances a substantial government 
interest--a critical factor which the Supreme Court found wanting in 
Moseley and Sorrell.
    The analysis in Master Printers of America is more analogous to the 
present circumstances than the cases relied upon by the commenters. In 
examining whether section 203 of the LMRDA is carefully tailored to 
achieve its purpose, the Fourth Circuit emphasized that Congress 
foresaw that full disclosure of persuader activities was needed to 
achieve the Act's purposes. Master Printers of America, 751 F.2d at 
708. In the court's view, full financial disclosure is appropriate. The 
court also noted that it was Congress's intent to require the 
disclosure of a wide-ranging number of employers and activities, even 
if it meant reporting activities that were not improper. Id. With these 
legislative aims in mind, the court determined that section 203(b) is 
tailored with ``precision'' to serve its purpose. The revised 
interpretation of the advice exemption indeed broadens the scope of 
reporting in sections 203(a)(4) and 203(b), but the broadened 
disclosure requirements are still within the confines of Congress's 
goals when it enacted the LMRDA. The Department believes that the final 
rule more closely aligns section 203 with the legislative aim of full, 
detailed exposure of persuader activities, direct or indirect. It 
ensures that workers know the source of all materials provided by 
outside parties and generally promotes the various harmonious aspects 
of labor-management relations, not just the limited circumstances 
involving direct persuasion by consultants. The Department thus finds 
no reason to believe that revising the interpretation of the advice 
exemption, even though it broadens the scope of what was previously 
required to be reported, in any way renders section 203 overbroad. 
Congress established a comprehensive scheme to ensure transparency in 
the field of labor-management relations; it created various reporting 
and disclosure requirements on the parties engaged in union 
representation campaigns and collective bargaining, including the 
disclosure of agreements between employers and labor relations 
consultants, in the limited situations where the consultant agrees to 
undertake persuader activities.
    The Department's final rule is the least restrictive means by which 
this important governmental interest can be achieved. Indeed, 
commenters have failed to articulate an alternative approach that would 
effectuate the congressional determination that an effective and fair 
labor-management relations system requires the reporting of both direct 
and indirect persuader activities. Cf. Dole v. Shenandoah Baptist 
Church, 899 F.2d 1389, 1398 (4th Cir. 1990) (recognizing that even 
restrictions on conduct that impair the exercise of religion may 
constitutionally be imposed where necessary to establish uniform 
requirements under the Fair Labor Standards Act). In sum, the 
Department believes section 203, as interpreted in this final rule, is 
narrowly and constitutionally tailored to achieve its purpose and will 
not unlawfully infringe on employers' or consultants' free speech 
rights under the First Amendment.\84\
---------------------------------------------------------------------------

    \84\ In addition to raising the free speech concerns, a few 
commenters objected on the grounds that the rule violates employers' 
freedom of association guaranteed under the First Amendment. The 
Department disagrees that the revised interpretation of the advice 
exemption infringes on employers' associational rights. The courts 
in Buckley, 424 U.S. at 657, Master Printers of America, 751 F.2d at 
704, and Humphreys, 755 F.2d at 1219, addressed both free speech and 
associational rights using the same principles and analytical 
framework. Therefore, for the same reasons articulated above with 
respect to the free speech issue, the Department concludes that the 
rule does not infringe on employers' First Amendment associational 
rights.
---------------------------------------------------------------------------

2. Comments on Revised Interpretation's Impact on NLRA Section 8(c)
    Many of the commenters contended that the Department's proposed 
interpretation of the advice exemption violates employers' free speech 
rights under section 8(c) of the NLRA. This provision guarantees that 
the ``expressing of any views, argument, or opinion, or the 
dissemination thereof, whether in written, printed, graphic, or visual 
form, shall not constitute or be evidence of an unfair labor practice 
under any of the provisions of [the NLRA], if such expression contains 
no threat of reprisal or force or promise of benefit.'' 29 U.S.C. 
158(c).
    In support of their argument, the commenters cited primarily to 
three Supreme Court cases: Chamber of Commerce v. Brown, 554 U.S. 60 
(2008); NLRB v. Gissel Packing Co., 395 U.S. 575 (1969); and Linn v. 
United Plant Guard Workers of America, Local 114, 383 U.S. 53 (1966). 
These cases are referenced for the proposition that the enactment of 
section 8(c) manifested a congressional intent to encourage free debate 
and a policy judgment ``favoring uninhibited, robust, and wide-open 
debate in labor disputes.'' Brown, 554 U.S. at 67-68. In essence, the 
commenters asserted that the proposed rule either violates section 8(c) 
outright or runs counter to its purpose by limiting the opportunity for 
uninhibited, robust debate, or both. Implementation of the proposed 
rule would, according to one local chamber of commerce, eviscerate 
section 8(c) by virtually eliminating the reasonable opportunity for 
employers to communicate with their employees about union organizing 
campaign issues. Another commenter, a national law firm, posed the 
question of how an employer's section 8(c) rights can even be exercised 
when the employer is restricted from accessing competent legal counsel 
to ensure it does not inadvertently make statements deemed to be a 
threat or promise.\85\ The Department disagrees with these challenges 
to the proposed rule; the disclosure required by this rule in no way 
inhibits ``robust and wide-open debate'' over union representation and 
collective bargaining issues. Both the proposed and final rules 
expressly state that a consultant's guidance about whether a statement 
constitutes a threat or promise does not trigger reporting.
---------------------------------------------------------------------------

    \85\ In contrast, one labor organization submitted comments 
pointing out that employers' section 8(c) free speech rights must be 
balanced against employees' section 7 rights to associate freely. 
The labor organization cited to the Supreme Court's reasoning in 
Gissel Packing Co., 395 U.S. at 617, that any balancing of these 
rights ``must take into account the economic dependence of the 
employees on their employers, and the necessary tendency of the 
former, because of that relationship, to pick up intended 
implications of the latter that might be more readily dismissed by a 
more disinterested ear.'' Neither the proposed nor final rule alters 
the balance struck under the NLRA.
---------------------------------------------------------------------------

    The Department notes first that section 203(f) states that 
``[n]othing contained in this section shall be construed as an 
amendment to, or modification of the rights protected by, section 8(c) 
of the National Labor Relations Act, as amended.'' 29 U.S.C. 433(f). 
One law firm commented that section 203(f) of the LMRDA obligates the 
Department to uphold employers' section 8(c) rights. Notwithstanding 
our obligations under section 203(f), the Department believes that the 
commenters' reliance on section 8(c) in this context is misplaced. 
Since 1963, the Department, through its regulations, has unequivocally 
stated that while nothing contained in section 203 of the LMRDA shall 
be construed to amend or modify the rights protected by section 8(c) of 
the NLRA, activities protected by section 8(c) are not exempted from 
the

[[Page 15991]]

reporting requirements of section 203(a) of the LMRDA, and, if 
otherwise subject to such reporting requirements, are required to be 
reported. 29 CFR 405.7. With respect to the reporting obligations of 
labor relations consultants, the Department's regulations are also 
unequivocal. Although nothing contained in section 203 of the LMRDA 
shall be construed to amend or modify the rights protected by section 
8(c) of the NLRA, activities protected by section 8(c) are not for that 
reason exempted from the reporting requirements of the LMRDA, and, if 
otherwise subject to those reporting requirements, are required to be 
reported. Therefore, information required to be included in Forms LM-20 
and 21 must be reported regardless of whether that information relates 
to activities which are protected by section 8(c) of the NLRA. See 29 
CFR 405.7; 29 CFR 406.6.
    Sections 405.7 and 406.6 make clear that persuader activities, even 
if they constitute protected speech under section 8(c) of the NLRA, are 
nevertheless subject to the reporting and disclosure requirements of 
sections 203(a)(4) and 203(b) of the LMRDA. Moreover, the Department in 
this rule does not encourage workers to take any position concerning 
the exercise of their rights to organize and bargain collectively, nor 
does it take any position concerning whether or how an employer should 
exercise its rights under section 8(c). Rather, as stated, the 
Department contends that this rule promotes peaceful and stable labor 
relations, in part through disclosure to workers of information that 
assists them in making decisions regarding their rights, while 
simultaneously protecting the section 8(c) rights of employers. The 
Department thus concludes that this final rule, which merely interprets 
section 203 of the LMRDA and imposes broader reporting and disclosure 
requirements, does not violate employers' rights of expression under 
section 8(c) of the NLRA.
3. Comments Alleging Vagueness of Revised Interpretation
    The Department received a few comments contending that the final 
rule would render section 203 impermissibly vague, especially in light 
of the possibility for criminal penalties. For example, one trade 
association claimed that the rule would sacrifice the clarity of the 
previous interpretation of the advice exemption in favor of an 
unworkable redefinition. Another commenter argued that the proposal is 
unconstitutionally vague because the disclosure requirements are not 
carefully tailored under any reasonable definition of ``persuasion 
activity.'' The commenters relied on several federal cases in support 
of their argument that the final rule is too vague. However, almost all 
of these commenters cited to the Supreme Court opinion in Grayned v. 
City of Rockford, 408 U.S. 104 (1972), which addresses this issue as 
follows:

    It is a basic principle of due process that an enactment is void 
for vagueness if its prohibitions are not clearly defined. Vague 
laws offend several important values. First, because we assume that 
man is free to steer between lawful and unlawful conduct, we insist 
that laws give the person of ordinary intelligence a reasonable 
opportunity to know what is prohibited, so that he may act 
accordingly. Vague laws may trap the innocent by not providing fair 
warning. Second, if arbitrary and discriminatory enforcement is to 
be prevented, laws must provide explicit standards for those who 
apply them. A vague law impermissibly delegates basic policy matters 
to policemen, judges, and juries for resolution on an ad hoc and 
subjective basis, with the attendant dangers of arbitrary and 
discriminatory application. Third, but related, where a vague 
statute `abut(s) upon sensitive areas of basic First Amendment 
freedoms,' it `operates to inhibit the exercise of (those) 
freedoms.' Uncertain meanings inevitably lead citizens to `` `steer 
far wider of the unlawful zone' . . . than if the boundaries of the 
forbidden areas were clearly marked.' ''

Id. at 108-09 (citations omitted).
    As discussed below, the final rule provides clear guidance to 
filers about their reporting obligations, easily meeting the Grayned 
standard for statutes and regulations. Essentially, the commenters' 
vagueness argument--that is, the apparent difficulty in categorizing an 
activity as nonreportable advice or reportable persuasion--boils down 
to their claimed confusion regarding when and how to apply the rule in 
indirect persuasion situations. However, as the Department explained 
above, reporting is triggered when a consultant enters into an 
agreement with an employer under which the consultant undertakes 
activities that have an object to persuade employees about whether and 
how they should exercise their representation and collective bargaining 
rights. See Section IV.B and Section V.E.1. While the scope of 
reporting under the proposed and final rule is broader than under the 
Department's prior interpretation, the trigger for reporting remains 
the same--the object for which the activity is undertaken. Further, 
contrary to the view of some commenters, the Department believes that 
the term ``persuade'' has an easy to understand meaning, and the term 
``object,'' like similar terms such as ``intent'' or ``purpose,'' is 
measured by objective factors that consultants and employers can take 
into account in guiding their actions. See Master Printers of America, 
751 F.2d at 710-12; see also Yamada v. Snipes, 786 F.3d 1182, 1187-1188 
(9th Cir. 2015), petition for cert. docketed, 84 U.S.L.W. 3092 (U.S. 
Aug. 18, 2015) (No. 15-215) (ambiguity should not be allowed to chill 
protected speech, but ``perfect clarity and precise guidance'' are not 
required for a disclosure requirement to survive scrutiny). The 
proposed rule included checklists and examples to assist filers in 
identifying reportable activities, and the final rule provides 
additional clarity by grouping the list of indirect persuader 
activities from the NPRM into four specific categories: the directing 
or coordinating of supervisors and other employer representatives; the 
preparation of persuader materials; the conducting of union avoidance 
seminars; and the development and implementation of personnel policies 
and actions. See discussion above at Section IV.B. In short, the final 
rule adopts clear reporting requirements, eliminating any of the 
concerns articulated in Grayned.

H. Comments Alleging Conflict Between Revised Interpretation and 
Attorney-Client Privilege and Attorney's Duty To Protect Confidential 
Information

1. Comments Involving the Attorney-Client Privilege and LMRDA Section 
204
    In the NPRM, the Department stated that section 204 of the LMRDA 
exempts attorneys from reporting any information protected by the 
attorney-client privilege. 76 FR 36192. By this provision, Congress 
intended to afford to attorneys the same protection as that provided in 
the common-law attorney-client privilege, which protects from 
disclosure communications made in confidence between a client seeking 
legal counsel and an attorney. The Department explained that as a 
general rule information such as the fact of legal consultation, 
clients' identities, attorney's fees, and the scope and nature of the 
employment are not deemed privileged. The Department further explained 
that the section 204 privilege is operative only after the attorney has 
engaged in persuader activity. Therefore, attorneys who engage in 
persuader activity must file the Form LM-20, which requires information 
about the fact of the persuader agreement with an employer-client 
(including the parties' fee arrangements), the client's identity, and 
the scope and nature of the

[[Page 15992]]

employment.\86\ The Department further noted, consistent with its prior 
interpretation, that, to the extent that an attorney must report his or 
her agreement or arrangement with an employer, any privileged 
communications are protected from disclosure. Id. In support of its 
position, the Department cited to the Sixth Circuit's opinion in 
Humphreys, Hutcheson and Moseley v. Donovan, 755 F.2d 1211, 1216 (6th 
Cir. 1985) and the Restatement (Third) of the Law Governing Lawyers 
section 69. Id.
---------------------------------------------------------------------------

    \86\ The Form LM-21 requires the attorney-consultant to provide 
additional information about the financial arrangements concerning 
the persuader agreement, including the recipient and purpose of any 
disbursement, e.g., payment to Quickprint, Inc. for printing ``vote 
no'' pamphlets for distribution to Acme's employees. See discussion 
later in the text.
---------------------------------------------------------------------------

    Several commenters rejected the analysis in the NPRM, maintaining 
that the proposed rule was inconsistent with section 204 by requiring 
the disclosure of confidential client information protected by the 
attorney-client privilege. The American Bar Association (ABA) stated 
its view that ``[b]y requiring lawyers to file detailed reports with 
the Department, stating the identity of their employer clients, the 
nature of the representation and the types of legal tasks performed, 
and the receipt and disbursement of legal fees whenever the lawyers 
provide advice or legal services relating to the clients' '' persuader 
activities, the proposed rule would ``seriously undermine the 
confidential client-lawyer relationship.'' Characterizing these 
reporting requirements as ``unfair reporting burdens,'' the ABA stated 
that the rule could discourage employers ``from seeking the expert 
legal representation that they need, thereby chilling their ability to 
obtain counsel.'' \87\ Another commenter, a trade organization for the 
construction industry, stated that the rule would require employers and 
their clients to reveal, for public dissemination, information long 
considered to be privileged, such as information concerning the 
existence of the relationship, the terms and conditions of the 
engagement (including written agreements), the nature of the advice 
provided, payments made, receipts from all clients, and disbursements 
made by the firm in connection with labor relations advice or services 
rendered, among other things. Similarly, a law firm commented that 
information that has for decades been treated as privileged now risks 
being disclosed.
---------------------------------------------------------------------------

    \87\ The assertion that the rule could chill employers' ability 
to obtain counsel is discussed in greater detail near the end of 
this section and in Section V.G.
---------------------------------------------------------------------------

    On the other hand, a number of commenters, including two labor 
organizations, supported the Department's revised interpretation of the 
advice exemption. The commenters believed that the rule, as proposed, 
would not violate the attorney-client privilege. In part, they relied 
upon the court's observations in Humphreys and various authorities 
rejecting the defense of attorney-client privilege and attorney-client 
confidentiality where disclosure of information is required by law.
    Before responding to the comments, the Department notes the limited 
information required to be reported under this rule:
     A copy of the persuader agreement between the employer and 
consultant (including attorneys);
     the identity of the persons and employers that are parties 
to the agreement;
     a description of the terms and conditions of the 
agreement;
     the nature of the persuader and information-supplying 
activities, direct or indirect, undertaken or to be undertaken pursuant 
to the agreement--information provided by simply selecting from a 
checklist of activities;
     a description of any reportable persuader and information-
supplying activities: the period during which the activities were 
performed, and the extent to which the activities have been performed 
as of the date of the report's submission; and
     the name(s) of the person(s) who performed the persuader 
or information-supplying activities; and the dates, amounts, and 
purposes of payments made under the agreement.
    After a review of the comments submitted and based on the following 
reasons, the Department affirms its position in the NPRM that the 
revised interpretation of section 203(c) does not infringe upon the 
common law attorney-client privilege, which is still preserved by 
section 204, nor an attorney's ethical duty of confidentiality. 
Although the ABA and the other commenters expressed strong opposition 
to any reporting as a matter of principle, notably lacking from the 
submissions is any discussion of the types of activities that labor 
relations consultants, including attorneys, routinely engage in while 
providing their services to employer-clients seeking to avoid 
representation. Similarly lacking is any persuasive argument that the 
``soup to nuts'' persuader services offered by attorneys should be 
shielded from employees and the public while the very same activities 
would be reported by their non-attorney colleagues in the union 
avoidance industry. See discussion at Section III.B of this preamble. 
As noted earlier, law firms have engaged in the same kinds of 
activities as other consultant firms, providing services similar to 
practices advocated by Nathan Shefferman, the face of the 
``middlemen,'' mentioned in the McClellan hearings and the LMRDA's 
legislative history. Logan, The Union Avoidance Industry in the United 
States, at 658-661. In the Department's view, none of the information 
required to be reported under the revised interpretation is protected 
as a general rule by the attorney-client privilege. Only copies of or 
details about persuader aspects of the agreement are reportable. To the 
extent the agreement provides confidential details about services other 
than reportable persuader/information supplying activities, the 
principles of attorney-client privilege would apply and such 
information is not reportable. While some of the comments submitted in 
response to the NPRM concern issues that may arise in connection with 
the Form LM-21, such as the scope and detail of reporting about service 
provided to other employer clients, that report is not the subject of 
this rulemaking.\88\ The Department has publicly stated its intention 
to revisit these requirements in rulemaking. While it would be 
premature to address the form that such rulemaking may take, the 
Department briefly summarizes and discusses those comments at the close 
of this section.
---------------------------------------------------------------------------

    \88\ The agenda for the Form LM-21 rulemaking is set out in the 
Department's Semiannual Unified Agenda and Regulatory Plan, viewable 
at www.reginfo.gov. The Department currently estimates that a 
proposed rule on the Form LM-21 will be published in September 2016.
---------------------------------------------------------------------------

    As noted above, several commenters claimed that the revised 
interpretation infringes upon the common law attorney-client privilege 
and attorneys' ethical duty of confidentiality. Although several 
commenters acknowledged that these principles are separate, others did 
not differentiate between the two. As explained by the ABA in its Model 
Rules of Professional Conduct:

    The evidentiary attorney-client privilege is closely related to 
the ethical duty of confidentiality. They are so closely related 
that the terms ``privileged'' and ``confidential'' are often used 
interchangeably. But the two are entirely separate concepts, 
applicable under different sets of circumstances. The ethical duty, 
on the one hand, is extremely broad: it protects from disclosure all 
``information relating to the representation of a client,'' and 
applies at all times. The attorney-client privilege, on the other 
hand, is more limited: it protects

[[Page 15993]]

from disclosure the substance of a lawyer-client communication made 
for the purpose of obtaining or imparting legal advice or 
assistance, and applies only in the context of a legal proceeding. 
See Model Rule 1. 6, cmt. [3]; Restatement (Third) of the Law 
Governing Lawyers Sec. Sec.  68-86 (2000).

Annotated Model Rules of Professional Conduct, Seventh Edition 
Annotated Model Rules of Professional Conduct (7th ed. 2011), available 
on Westlaw at ABA-AMRPC S 1.6. To a large extent, the policy reasons 
under each principle are similar--to facilitate the relationship 
between the attorney and client by allowing the client to freely 
communicate matters relating to the legal issue for which the 
attorney's service has been engaged. However, both principles recognize 
that this general non-disclosure policy is subject to various 
exceptions and that ``external law'' controls over the profession's 
preference for non-disclosure.
    Indeed, the tension between disclosure of persuader agreements and 
the general attorney non-disclosure principle is largely illusory 
because this principle recognizes many exceptions that directly apply 
to the reporting required by this rule. Further, attorneys who restrict 
their activities to legal services are not required to file any report; 
only those attorneys who engage in persuader services are required to 
file a report. The information that would be disclosed in filing the 
LM-20 report, principally the identity of the employer-client, the 
amount to be paid for the persuader activity, and a general description 
of the services, are not ordinarily protected by the attorney-client 
privilege. While this information could not be released as a matter of 
course under codes requiring the preservation of client confidences, 
such information is routinely disclosed where sought by subpoena or 
required by law. The LMRDA and the Department's rule requiring 
disclosure stands in the same stead. Moreover, the Department's rule 
recognizes that there may be rare occasions when some information 
should not be disclosed, e.g., where disclosure would reveal 
confidential client information unrelated to persuader activity. Thus, 
commenters are mistaken in suggesting that particularly sensitive 
client information will be disclosed.
    The Department agrees with those commenters who stated that the 
attorney-client privilege does not protect from disclosure ``the fact 
of legal consultation or employment, clients' identities, attorneys' 
fees, and the scope and nature of employment.'' Humphreys, 755 F.2d at 
1219. At issue in Humphreys was whether a consultant-law firm had to 
file a report disclosing receipts and disbursements relating to labor 
relations advice and services because it had engaged in persuader 
activities. There were no particular documents discussed.
    The court noted that the ABA had sought a broader disclosure 
exemption from Congress than that provided by section 204. This broader 
exemption would have barred the disclosure:

of any matter which has traditionally been considered as 
confidential between a client and his attorney, including but not 
limited to the existence of the relationship of attorney and client, 
the financial details thereof, and any advice or activities of the 
attorney on behalf of his client which fall within the scope of the 
legitimate practice of law.

Id. at 1218 (internal quotations omitted). The court rejected the law 
firm's argument that Congress intended to provide a broad disclosure 
exemption such as that sought by the ABA, holding instead that 
Congress, in enacting section 204, intended to provide the same 
protection against disclosure as the traditional attorney-client 
privilege. The court recognized that Congress rejected such an approach 
during its consideration of competing legislative proposals concerning 
the breadth of the reporting exception for attorneys. Id. at 1216, 
1218.
    The court further explained that ``the attorney-client privilege 
does not envelope everything arising from the existence of an attorney-
client relationship,'' emphasizing that ``the attorney-client privilege 
is an exception carved from the rule requiring full disclosure, and, as 
an exception, should not be extended to accomplish more than its 
purpose.'' Id. at 1219. (internal quotations omitted). The court made 
the additional points:

     ``The attorney-client privilege only precludes 
disclosure of communications between attorney and client and does 
not protect against disclosure of the facts underlying the 
communication.''
     ``[I]n general, the fact of legal consultation or 
employment, clients' identities, attorney's fees, and the scope and 
nature of employment are not deemed privileged.''
     ``[T]he amount of money paid or owed by a client to his 
attorney is not privileged except in exceptional circumstances [not 
present in the LMRDA context].''

Id. (italics in original). The court continued:

    We conclude that none of the information that LMRDA section 
203(b) requires to be reported runs counter to the common-law 
attorney-client privilege. Any other interpretation of the privilege 
created by section 204 would render section 203(b) nugatory as to 
persuader lawyers.

Id. at 1219. The conclusions reached by the Humphreys court are 
consistent with the earlier rulings in Wirtz v. Fowler, 372 F.2d 315, 
332 (5th Cir. 1966), overruled in part on other grounds, Price v. 
Wirtz, 412 F.2d 647 (1969) (en banc). There, the court considered the 
particular information required to be reported on the Form LM-21, in 
light of section 204, concluding:

     ``[A]ny such reports to be meaningful must include as a 
bare minimum the name of the client, the terms of the arrangements, 
and the fees.''
     ``[The consultant-attorneys] must report [the] names 
and the fees received for any persuader arrangements.''
     ``They must also describe the general nature of the 
activities they undertook pursuant to such arrangements.''
     ``The terms of the agreement or arrangement, without 
more, might well be considered a ``privileged communication'' from 
the client to the attorney. But where, as here, the agreement has 
been executed, partially or completely, the nature of the activities 
actually performed by the attorney can hardly be characterized as a 
``communication'' from his client.''

372 F.2d at 332. The court in Humphreys examined the legislative 
history of section 204 in reaching its conclusion. 755 F.2d at 1216-19. 
Tellingly, it discussed the rejection by Congress of the position that 
the ABA had taken on the proposed legislation:

    Resolved, That the American Bar Association urges that in any 
proposed legislation in the labor management field, the traditional 
confidential relationship between attorney and client be preserved, 
and that no such legislation should require report or disclosure, by 
either attorney or client, of any matter which has traditionally 
been considered as confidential between a client and his attorney, 
including but not limited to the existence of the relationship of 
attorney and client, the financial details thereof, and any advice 
or activities of the attorney on behalf of his client which fall 
within the scope of the legitimate practice of law. . . .

(emphasis added). The court explained that the version of section 204 
reported in the House bill contained an attorney-client exclusion 
almost identical to the ABA proposal, as quoted above. Id. at 1218. The 
court noted that the report accompanying H.R. 8342 stated ``[t]he 
purpose of this section is to protect the traditional confidential 
relationship between attorney and client from any infringement or 
encroachment under the reporting provisions of the committee bill.'' 
Id. (quoting H.R. Rep. No. 741, 86th Cong., 2d Sess. 37 (1959), U.S. 
Code Cong. & Admin. News 1959, 2459).
    The Court of Appeals found it significant that Congress ultimately 
rejected the broader House version,

[[Page 15994]]

which would have protected from disclosure such information as the 
existence of the attorney-client relationship, attorneys' fees, and the 
scope and nature of the representation. The Department finds 
significant that the ABA's comments about the Department's proposed 
interpretation reflect the same position, in essence, that was rejected 
in Humphreys.
    The commenters who were critical of the proposed rule did not 
present any argument or authority that would cause the Department to 
question the Humphreys court's construction of section 204. One law 
firm, though, found Humphreys to be inapposite with regard to the 
proposed rule's impact on the attorney-client privilege. The firm noted 
that Humphreys involved attorneys who had communicated directly with 
employees, in contrast to the Department's proposal that would also 
include indirect communications with employees. The commenter is 
mistaken. The distinction it makes ignores that the question before the 
court was not what triggers reporting under section 203, but rather, 
what information is protected from disclosure once reporting has 
already been triggered. Indeed, pursuant to this rule, the information 
required to be reported on a Form LM-20 for a consultant who drafts a 
persuasive speech and directly delivers it to employees is identical to 
that of the consultant who drafts such a speech and provides it to the 
employer or its representatives for dissemination to the employees.\89\
---------------------------------------------------------------------------

    \89\ Pursuant to the revised Form LM-20, the information 
required to be reported would be identical for both types of filers, 
the direct persuader and the indirect persuader. Concerning the 
checklist in Item 11.a, both filers would need to check the box 
indicating that they had drafted, revised, or provided a speech for 
presentation to employees. The direct persuader would also need to 
check the box indicating that he had planned or conducted the 
individual or group employee meeting in which it presented the 
speech, as would the indirect persuader, if it also planned such 
meeting.
---------------------------------------------------------------------------

    A legal trade association asserted that in virtually every other 
context, attorneys are not required to disclose to the public the 
identity of their clients and how much they are paid for what kinds of 
work performed. The association, though, disregards the fact that 
attorneys who engage in direct persuader activities pursuant to an 
agreement with an employer have, since the inception of the LMRDA, been 
compelled to report information concerning such agreements, as was the 
case in Humphreys. The association also overlooks that attorneys must 
file the Form LM-10 in certain circumstances where they make payments 
to unions and union officials. See Warshauer v. Solis, 577 F.3d 1330 
(11th Cir. 2009) (upholding application of section 203(a)(1) reporting, 
which requires designated legal counsel of certain labor organizations 
to report non-exempt payments to such unions and their officials). 
Similarly, the commenter overlooks that unions who file the Form LM-2 
Labor Organization Annual Report must report payments to law firms (as 
well as other vendors and service providers) of $5,000 or greater 
during a reporting year. See Form LM-2 Instructions, at pages 21-22; 
see also the 2003 final rule making revisions to the Form LM-2, 68 FR 
58388, which discussed such reporting of payments to law firms, and the 
non-privileged nature of such payments and related purpose. As stated 
in the 2003 Form LM-2 rule: ``The Department disagrees with the comment 
that a union's compelled disclosure of information relating to legal 
fees associated with an organizing campaign would improperly intrude 
upon the union's attorney-client privilege. This privilege does not 
generally extend to the fact of consultation or employment, including 
the payment and amount of fees. See McCormick on Evidence, Sec.  90, 
(5th ed. 1999, updated 2003).'' 68 FR at 58388. The Forms LM-2, LM-10, 
and LM-20 share the LMRDA's general purpose to add transparency to the 
national labor-management relations system, providing employees and the 
Government with information necessary for them to exercise their rights 
under the system. Although the specific purposes served by these forms 
may differ from each other (e.g., the Form LM-2 has its focus the 
overall financial affairs of the union, whereas the Forms LM-10 and LM-
20 focus on particular kinds of payments and agreements), it is notable 
that legal matters must be disclosed where necessary to achieve the 
purposes served by the forms.
    Other commenters who supported the Department's proposal described 
two analogous arenas where attorneys or consultants would have to 
disclose client information similar to that required by the proposal. A 
labor organization stated that the Lobbying Disclosure Act requires 
attorneys with a legislative practice to disclose much more information 
than what is mandated under this rule. The organization noted that the 
required content of a lobbying registration under 2 U.S.C. 1603(b) and 
a quarterly lobbying report under 2 U.S.C. 1604(b) includes not only 
the activities undertaken on behalf of a client, but also information 
about non-client parties and the legal or equitable interests these 
parties may hold in the client. Another commenter referenced the 
reporting and disclosure requirements in IRS Form 8300, noting that 
courts have rejected challenges that the Form 8300 violates the 
attorney-client privilege.
    A few commenters acknowledged the general rule that the underlying 
facts of an attorney-client communication, including the existence of 
the attorney-client relationship, the client's identity, fee 
arrangements, and the scope and nature of the agreement, are not 
protected by the federal common-law attorney-client privilege. 
Nonetheless, the commenters maintained that disclosure of this 
information might reveal the client's motive in seeking representation, 
the advice sought, or the specific nature of the services provided, all 
of which are privileged. For example, one law firm noted that, in 
practice, agreements between attorneys and clients often extend beyond 
persuader activities and may include privileged information. According 
to the commenter, disclosure of the reasons and purposes behind such 
legal engagements would make public business decisions, sensitive 
strategic planning information, and other private employer information. 
Similarly, another law firm provided hypothetical scenarios to 
illustrate how requiring an attorney to disclose the identity of 
clients would reveal not only the existence of the relationship, but 
also the client's motives or the advice sought, which the client may 
not want to disclose.
    Some commenters also asserted that it would be improper for law 
firms to disclose documents that would reveal clients' motives 
regarding legal representation or the legal advice sought because these 
documents would be privileged information under section 204. The 
Department agrees that such information, as distinct from other 
information in a document, ordinarily would be privileged but notes 
that this information is an exception to the general rule favoring 
disclosure. See, e.g., Humphreys, 755 F.2d at 1219 (``[T]he attorney-
client privilege does not protect the identity of a client except in 
very limited circumstances . . . [T]he amount of money paid or owed by 
a client to his attorney is not privileged except in exceptional 
circumstances not present in the instant case''); Avgoustis v. 
Shinseki, 639 F.3d 1340, 1345 (Fed. Cir. 2011) (``[R]equiring such 
disclosures does not violate the attorney-client privilege absent 
unusual circumstances''); and In re Grand Jury Subpoenas (Anderson),

[[Page 15995]]

906 F.2d 1485, 1488 (10th Cir. 1990) (``It is well recognized in every 
circuit, including our own, that the identity of an attorney's client 
and the source of payment for legal fees are not normally protected by 
the attorney client privilege'') (citations omitted). Further, as 
discussed below, only information pertinent to the persuader activities 
would be reportable and therefore information that is material to other 
motives for engaging a consultant's services is not reportable under 
the rule.\90\
---------------------------------------------------------------------------

    \90\ One commenter cited to a number of federal cases to support 
its contention that normally non-privileged information may be 
deemed to be privileged if its disclosure reveals a client's motives 
in seeking representation, advice sought, or the specific nature of 
the services provided. These cases, however, do not conflict with 
Humphreys nor do they diminish the Department's position with regard 
to the applicability of the attorney-client privilege recognized in 
section 204. These cases, instead, stand for the unremarkable 
proposition that the disclosure of particular documents, without 
appropriate redaction, would reveal privileged information.
---------------------------------------------------------------------------

    The final rule does not require the disclosure of any particular 
documents, apart from the persuader agreement. While receipt and 
disbursement information must be disclosed under the rule, the rule 
does not require that the billing, voucher, or other documents that 
includes this information be publicly disclosed. Further, the only 
other information that is to be reported identifies only the specific 
persuader activity or activities provided to the employer by the lawyer 
or other labor relations consultant, activities that must be reported 
under section 203 of the Act. The court in Humphreys recites the 
general rule that the existence of the attorney-client relationship, 
the client's identity, fee arrangements, and the scope and nature of 
the agreement are not protected by the federal common-law attorney-
client privilege. Indeed, even the cases cited by many of the 
commenters opposed to the rule recognize that the underlying facts of 
an attorney-client communication are not privileged. In issuing this 
final rule today, the Department maintains that the information 
required to be reported and disclosed on Form LM-20 is consistent with 
the weight of authority.
    At the same time, the Department acknowledges that there may be 
exceptional circumstances where the disclosure of some information 
would be privileged from disclosure. For this reason, in the NPRM, the 
Department stated that to the extent an attorney's report about his or 
her agreement or arrangement with an employer may disclose privileged 
communications, the privileged matters are protected from disclosure. 
76 FR 36192. If the written agreement that is required to be included 
as part of the Form LM-20 filing contains sensitive, privileged client 
information, wholly unrelated to the persuader activities, direct or 
indirect, such information may be redacted. Thus, information that may 
reveal client motives regarding exclusively legal advice or 
representation sought would generally be redactable, but information 
concerning client motives related to the persuasion of employees is not 
privileged and would remain reportable. The Department, however, 
disagrees with those commenters who simply recommend that the 
Department withdraw its proposed interpretation because of the 
possibility that, in certain limited circumstances, the information 
required to be disclosed might reveal employers' motivations, business 
strategies, the advice sought, or the specific nature of the legal 
services provided.\91\ For the Department to decline to issue this rule 
on that basis would be tantamount to allowing the rule's exception to 
consume the rule itself.
---------------------------------------------------------------------------

    \91\ The Department has not been persuaded that the limited 
reporting required under the rule will require a lawyer who becomes 
subject to the reporting requirement by engaging in a persuader 
activity to confront a true dilemma in considering whether reporting 
such information violates any ethical obligations to his or her 
client. If there are instances where such question arises, the 
consultant should seek compliance assistance from OLMS. The 
Department notes that it has taken this approach with Form LM-10 
filers. See, e.g., Form LM-10 FAQ 3(A) and 24 at www.dol.gov/olms/regs/compliance/LM10_FAQ.htm. Form LM-10 FAQ 24 states:
    There is no exemption for confidentiality clauses in the LMRDA. 
The only confidentiality recognized by the LMRDA is that of 
attorney-client privilege, contained in Section 204 of the LMRDA, 
which states that ``nothing contained in this Act shall be construed 
to require an attorney who is a member in good standing of the bar 
of any State, to include in any report required to be filed pursuant 
to the provisions of this Act any information which was lawfully 
communicated to such attorney by any of his clients in the course of 
a legitimate attorney-client relationship.'' 29 U.S.C. 434. If an 
employer believes that completing Form LM-10 will result in the 
disclosure of sensitive, confidential or proprietary information 
that could cause substantial harm to the employer's business 
interests, the issue should be discussed with OLMS prior to the 
filing of the report.
---------------------------------------------------------------------------

    Furthermore, the Department brings attention to three principles 
found in Humphreys and other cases cited by the commenters. First, as 
emphasized in Humphreys, 755 F.2d at 1219, the attorney-client 
privilege is `` `an exception carved from the rule requiring full 
disclosure, and as an exception, should not be extended to accomplish 
more than its purpose.' '' \92\ Accordingly, the attorney-client 
privilege, as embodied in section 204, should be narrowly construed. 
Id. Second, blanket assertions of the attorney-client privilege are 
disfavored by the courts. Instead, the privilege must be proven as to 
each item sought to be protected from disclosure. Clarke, 974 F.2d at 
129 (citing to In re Grand Jury Witness (Salas and Waxman), 695 F.2d 
359, 362 (9th Cir. 1982) and United States v. Hodgson, 492 F.2d 1175, 
1177 (10th Cir. 1974)). And finally, the burden of establishing that 
the attorney-client privilege applies to the specific documents or 
items in question rests with the party asserting the privilege. Id. 
These principles provide additional reasons for the Department to 
proceed with this final rule. By criticizing this rule because of the 
possibility that the required disclosures might infringe on the 
attorney-client privilege, the commenters would have the Department 
absolve them of their burden to establish that the privilege even 
applies. The Department, however, declines to do so.
---------------------------------------------------------------------------

    \92\ See the Restatement (Third) of the Law Governing Lawyers 
section 69, Attorney-Client Privilege--``Communication'' (comment):
    g. Client identity, the fact of consultation, fee payment, and 
similar matters. Courts have sometimes asserted that the attorney-
client privilege categorically does not apply to such matters as the 
following: The identity of a client; the fact that the client 
consulted the lawyer and the general subject matter of the 
consultation; the identity of a nonclient who retained or paid the 
lawyer to represent the client; the details of any retainer 
agreement; the amount of the agreed-upon fee; and the client's 
whereabouts. Testimony about such matters normally does not reveal 
the content of communications from the client. However, 
admissibility of such testimony should be based on the extent to 
which it reveals the content of a privileged communication. The 
privilege applies if the testimony directly or by reasonable 
inference would reveal the content of a confidential communication. 
But the privilege does not protect clients or lawyers against 
revealing a lawyer's knowledge about a client solely on the ground 
that doing so would incriminate the client or otherwise prejudice 
the client's interests.
    See also ABA Rule 1.6. (comment):
    [B]illing information and fee agreements are generally not 
protected by the evidentiary attorney-client privilege unless 
disclosure would reveal the substance of confidential communications 
between a lawyer and a client. See, e.g., Chaudry v. Gallerizzo, 174 
F.3d 394 (4th Cir. 1999) (bills that revealed identity of statutes 
researched were privileged); Clarke v. Am. Commerce Nat'l Bank, 974 
F.2d 127 (9th Cir. 1992) (privilege did not protect billing 
statements containing client identity and fee amount, but would 
protect ``correspondence, bills, ledgers, statements, and time 
records which also reveal the motive of client in seeking 
representation, litigation strategy, or the specific nature of the 
services provided, such as researching particular areas of law''); 
Mordesovitch v. Westfield Ins. Co., 244 F. Supp. 2d 636 (S.D.W.Va. 
2003) (fee information and engagement letters not protected by 
attorney-client privilege); Hewes v. Langston, 853 So. 2d 1237 
(Miss. 2003) (simple invoice normally not protected by attorney-
client privilege, but ``itemized legal bills necessarily reveal 
confidential information and thus fall within the privilege'').

---------------------------------------------------------------------------

[[Page 15996]]

    The Department also received a number of comments contending that 
specific items in Form LM-20 compel disclosure of privileged client 
information. For instance, one company asserted that the information 
required to be disclosed in proposed Item 10 ``Terms and conditions'' 
of Form LM-20 is protected by the attorney-client privilege. The 
company argued that this requires disclosure of the reason for the 
agreement or arrangement between employer and client, which is 
protected communications. The Department disagrees. With respect to 
---------------------------------------------------------------------------
Item 10, the proposed instructions state as follows:

    Provide a detailed explanation of the terms and conditions of 
the agreement or arrangement. . . . If any agreement or arrangement 
is in whole or in part contained in a written contract, memorandum, 
letter, or other written instrument, or has been wholly or partially 
reduced to writing, you must refer to that document and attach a 
copy of it to this report . . .

76 FR 36213. Thus, Item 10 requires the disclosure of the terms and 
conditions, typically reduced to writing in a contract, of an agreement 
or arrangement for the consultant to undertake persuader activities. As 
explained above, the terms of a fee agreement and the details regarding 
the scope and nature of the relationship between employer and 
consultant, required to be reported under this rule, are not subject to 
the attorney-client privilege. The Department, therefore, disagrees 
with the contention that Item 10 of Form LM-20 requires the disclosure 
of privileged attorney-client communications. Accordingly, the 
Department is adopting these proposed instructions to Item 10 in the 
final rule.
    Other commenters claimed that the level of detail required to be 
reported on the revised Form LM-20 would call for the disclosure of 
privileged information. A law firm contended that requiring attorneys 
to indicate whether they have engaged in communications with the 
purpose of persuading employees conflicts with case law, which, in its 
view, uphold the proposition that the ``motivation of the client in 
seeking representation'' and descriptions of the ``specific nature of 
the services provided'' are protected by the attorney-client privilege. 
Furthermore, the commenter objected to the requirement in Form LM-20 to 
identify any ``subject employees'' about whom the attorney 
``counseled'' the employer, arguing that such information is 
privileged. Another law firm identified the following checklist 
categories in Item 11.a as being too specific, in violation of the 
attorney-client privilege:
     Drafting, revising, or providing written materials [or 
speech] for presentation, dissemination, or distribution to employees
     Training supervisors or employer representatives to 
conduct individual or group employee meetings
     Developing personnel policies or practices.
    The Department disagrees that these checklist items or, generally, 
the level of detail required to be reported on Form LM-20 would result 
in the disclosure of privileged information. As explained above, the 
Department recognizes that, in certain limited circumstances, otherwise 
non-privileged information, such as the nature and scope of the 
attorney-client relationship, might be deemed privileged if it reveals 
the client's motivations or the specific nature of the services 
provided. The Department stresses, however, that in such cases the 
information that would be revealed relates to a client's motivations in 
seeking legal representation or the specific nature of the legal 
services provided. The reporting requirements in Form LM-20, including 
the details of the agreement or arrangement in Item 10 and the 
checklist categories in Item 11.a, are designed to identify the 
specific persuader activities undertaken, not the legal advice 
provided. In other words, if an employer retains a law firm with the 
purpose to persuade, directly or indirectly, its employees not to 
unionize, that retention is not privileged because it is not done with 
a purpose of obtaining a legal opinion, legal services, or assistance 
in a legal proceeding. The check-box items in Form LM-20 refer only to 
the persuader activities performed (e.g., the drafting or revising of 
speeches, the training of supervisors, and the development of personnel 
policies), regardless of whether an employer's motivation in retaining 
a law firm is for the firm to undertake both persuader activities and 
legal representation or other legal services. As the Sixth and Fourth 
Circuits concluded, Congress recognized that the ordinary practice of 
labor law does not encompass persuader activities. Humphreys, 755 F.2d 
at 1216 (citing to Douglas v. Wirtz, 353 F.2d 30, 33 (4th Cir. 1965)). 
Through the filing of a Form LM-20, the client's motivations in seeking 
legal representation remain privileged and undisclosed (e.g., 
compliance with NLRB regulations); only its persuader activities are 
disclosed. Likewise, while the Form LM-20 requires the filer in Item 10 
to identify the scope of the agreement or arrangement, the items in 
Form LM-20 do not reveal the specific nature of or any detail 
concerning the legal services provided. Instead, these items, notably 
the checklist in Item 11.a, are specific as to persuader activities 
only.
    Some observers may nevertheless argue that the items in Form LM-20 
reveal, by implication, the client's motivations in seeking legal 
representation or the specific nature of the legal advice provided. The 
Department is not persuaded by such an argument. The same argument can 
be made for many other disclosure laws. For example, in the tax 
context, one can argue that the filing of an IRS Form 8300 reveals, by 
implication, a client's motivation to ensure that it complies with tax 
laws or that the client had sought legal counsel because it received a 
single payment of cash in excess of $10,000. Similarly, in the context 
of lobbying disclosure, one can argue that disclosure reveals the 
motivation of the company or individual for whom the lobbying was 
provided. As discussed in the legal authorities cited above, a lawyer 
must be able to demonstrate more than the mere possibility that client 
motivations or the specific nature of the legal services provided might 
be revealed through inferences. See also comment to Annotated Model 
Rules of Professional Conduct, Seventh Edition Annotated Model Rules of 
Professional Conduct (7th ed. 2011), Rule 1.6(b)(6), Confidentiality of 
Information, available in Westlaw at ABA-AMRPC S 1.6 (Disclosure 
required by IRS Form 8300 ``has consistently been upheld against 
attacks based upon confidentiality and privilege'').
    The Department received numerous comments that apparently 
misconstrue the type of information that must be reported under both 
the prior interpretation and the proposed rule. For example, several 
commenters objected to the presumed requirement that they provide 
copies of any documents prepared by or reviewed by them in providing 
services to their client, including, for example, memoranda or other 
documents outlining campaign strategy, a speech to be delivered by the 
employer, or literature prepared for distribution to employees. 
According to the commenters, these consultant-prepared materials are 
privileged from disclosure even if the client ultimately presents the 
final versions to its employees. One commenter suggested that the 
training and directing of supervisors, and associated materials, 
necessarily involves privileged communications. As stated above, the 
Department has not required a consultant-attorney to disclose any 
particular documents or to otherwise reveal the details of any

[[Page 15997]]

services provided to clients (other than as may be shown by the 
persuader agreement, which itself, may be redacted where needed to 
protect truly privileged communications). It bears repeating that a 
consultant, by engaging in direct or indirect persuader activity, 
merely triggers the obligation to provide the limited information 
required by the LM-10 (by employers) and the LM-20 (by consultants). As 
explained above, the information required under these reports (e.g., 
the terms and conditions of agreements and the checklist activities) is 
not privileged.
    In a similar vein, a company submitted comments stating that the 
attorney-client privilege applies whenever legal advice is provided in 
confidence by an attorney to a client. The commenter emphasized that 
the privilege covers not only the legal advice in a privileged 
communication, but also any unprivileged statements that accompany it. 
Another commenter, a trade association, argued that the proposed rule's 
interpretation of ``advice'' conflicts with the common law definition 
of legal advice as applied to the attorney-client privilege. The 
association cited to a number of federal cases for the proposition that 
legal advice ``intertwined'' with persuader activity is still protected 
from disclosure under the attorney-client privilege. These commenters, 
too, have misconstrued what is required to be disclosed under the final 
rule. The revised Form LM-20 does not require the disclosure of any 
communication other than any written persuader agreement between the 
parties.
    Other commenters maintained that, once the rule becomes effective, 
any ensuing investigations conducted by the Department would lead to 
violations of the attorney-client privilege. One commenter theorized 
that the Department would be required to thoroughly investigate not 
only the attorney-client relationship, but also the attorney's 
communications with the client. The client or the attorney, according 
to the commenter, would likely be compelled to disclose otherwise 
privileged communications to prove the nature and object of the 
communications or in possible defense of criminal charges. Another 
commenter claimed that, at least in California, even in camera 
disclosures of attorney-client communications during investigatory 
enforcements of the final rule would result in violations of the 
attorney-client privilege.
    In this rulemaking, the Department declines to comment on the 
applicability of the attorney-client privilege to hypothetical 
questions concerning investigations of potential reporting violations. 
Issues pertaining to the interplay between the attorney-client 
privilege and any ensuing investigations under section 203 are more 
appropriately resolved upon enforcement of the final rule once it 
becomes effective. See, e.g., In re Grand Jury Subpoenas (Anderson) 
(drug charges); Holifield v. United States, 909 F.2d 201, 203-04 (7th 
Cir. 1990) (tax); and In re: Motion for Protective Order for Subpoena 
Issued to the Stein Law Firm, No. MC 05-0033 JB, 2006 WL 1305041 (D. N. 
Mex. Feb. 9, 2006) (SEC investigation). See also Marshall v. Stevens 
People and Friends for Freedom, 669 F.2d 171, 177 (4th Cir. 1981) 
(reviewing district court rulings concerning information sought by 
Department of Labor in investigating alleged LMRDA reporting 
violations). The Department, however, emphasizes that it will protect 
information relating to the attorney-client relationship to the full 
extent possible in its investigations.
2. Confidential Information and Attorneys' Ethical Obligations
    A few commenters acknowledged that the proposed rule, if 
implemented, would not infringe on the attorney-client privilege. 
Regardless of that fact, however, they and other commenters argued that 
the rule would result in the disclosure of confidential, even if not 
privileged, communications between attorney and client. While most of 
these commenters claimed that the disclosure of confidential 
information conflicts with attorneys' ethical obligations to maintain 
client confidences, a few argued that section 204 should be read to 
encompass even non-privileged, confidential information, such as a 
client's identity.
    In support of this contention, a trade organization commented that 
the word ``privilege'' does not appear in section 204, which, to the 
organization, suggests strongly that the provision provides a broad, 
over-arching protection from disclosure of both privileged and 
confidential information. In a similar vein, two commenters, a higher 
education association and a public-interest organization, stressed that 
section 204 is broadly worded such that it exempts ``any information'' 
that was lawfully communicated in the course of a legitimate attorney-
client relationship.
    In response to these assertions, the Department notes that the 
Sixth Circuit, in Humphreys, has already ruled on this very issue. 755 
F.2d at 1216. The appellants in that case, like the commenters here, 
contended that the privilege embodied in section 204 is broader than 
the traditional attorney-client privilege. The court, after a thorough 
review of the legislative history behind section 204, rejected the 
appellants' claim, concluding that in drafting section 204 Congress 
intended to accord the same protection as that provided by the federal 
common-law attorney-client privilege. Id. at 1219. See also Wirtz v. 
Fowler, 372 F.2d 315, 332-33 (5th Cir. 1966) (after finding that 
section 204 ``roughly parallel[s] the common-law attorney-client 
privilege,'' the court rejected the argument that information about the 
persuader agreement was protected from disclosure under section 204); 
Douglas v. Wirtz, 353 F.2d 30, 33 (4th Cir. 1966) (treating section 204 
as equivalent to the attorney-client privilege). One of the commenters 
disagreed with the Sixth Circuit's holding in Humphreys, reasoning that 
the court failed to give effect to the plain language of section 204. 
The Department, however, agrees with the reading of section 204, as 
analyzed in Humphreys, and rejects those commenters' contention that 
section 204 broadly protects from disclosure any information, 
confidential or otherwise, that is not covered by the traditional 
attorney-client privilege.
    According to other commenters, however, the disclosure of 
confidential client information would be a violation of attorneys' 
ethical obligations under various state bar rules. One law firm averred 
that many state bar associations have deemed certain types of client 
information, such as the identity of the client, the fact of 
representation, and the fees paid as part of that representation, to be 
confidential information prohibited from disclosure. Many of the 
commenters referenced Rule 1.6 of the ABA's Model Rules of Professional 
Conduct. As one law firm pointed out, 49 states and the District of 
Columbia have adopted some variation of Rule 1.6. In relevant part, ABA 
Model Rule 1.6, Confidentiality of Information, states as follow:

    (a) A lawyer shall not reveal information relating to the 
representation of a client unless the client gives informed consent, 
the disclosure is impliedly authorized in order to carry out the 
representation or the disclosure is permitted by paragraph (b).
    (b) A lawyer may reveal information relating to the 
representation of a client to the extent the lawyer reasonably 
believes necessary:
. . .
    (6) to comply with other law or a court order.

    The Department notes first, as discussed below, that section 204 of 
the LMRDA, as a federal law, controls over any conflicting state ethics 
rules modeled after ABA Rule 1.6.

[[Page 15998]]

Humphreys, 755 F.2d at 1219, n. 12. This issue has frequently arisen in 
tax reporting cases. For instance, in United States v. Goldberger & 
Dubin, P.C., 935 F.2d 501, 504-05 (2d Cir. 1991), a law firm returned 
incomplete 8300 Forms to the IRS. Instead of reporting the required 
information, it informed the IRS that disclosure of the required client 
information would violate the New York state law of attorney-client 
privileges. The Court of Appeals rejected the firm's position, stating 
that ``in actions such as the instant one, which involve violations of 
federal law, it is the federal common law of privilege that applies'' 
(citations omitted). In United States v. Blackman, 72 F.3d 1418, 1424 
(9th Cir. 1995), the attorney who resisted providing the information to 
the IRS argued that the issue was not just one of privilege, but also 
of duty. The attorney contended that Oregon's law on client 
confidentiality not only codifies the attorney-client privilege, but 
also imposes an affirmative duty upon the attorney to avoid disclosure 
of client confidences and secrets. The Ninth Circuit, however, found 
the argument to be ``specious.'' The court reasoned that the Oregon 
law's explicit spelling out of this duty did not create an exception to 
the federal common-law attorney-client privilege because such a duty is 
already implicit in the privilege. The court then concluded that 
``Congress cannot have intended to allow local rules of professional 
ethics to carve out fifty different privileged exemptions to the 
reporting requirements'' in IRS Form 8300. Id. (citing United States v. 
Sindel, 53 F.3d 874, 877 (8th Cir. 1995)). The Department finds these 
cases instructive. Contrary to some commenters' assertions, Rule 1.6 
and the various state ethics rules do not necessarily go beyond the 
traditional attorney-client privilege as recognized in section 204. 
Even if some commenters believe ethical conflicts will arise as a 
result of this final rule, the Department posits that sections 203 and 
204, as federal law, must prevail over any conflicting state rules 
governing legal ethics.
    In addition, as a few commenters noted, Rule 1.6(b)(6) allows for 
the disclosure of client information to comply with ``other law,'' 
which would include the LMRDA. Comment 12 to ABA Rule 1.6 states as 
follow: ``Other law may require that a lawyer disclose information 
about a client. Whether such a law supersedes Rule 1.6 is a question of 
law beyond the scope of these Rules. When disclosure of information 
relating to the representation appears to be required by other law, the 
lawyer must discuss the matter with the client to the extent required 
by Rule 1.4. If, however, the other law supersedes this Rule and 
requires disclosure, paragraph (b)(6) permits the lawyer to make such 
disclosures as are necessary to comply with the law.'' Annotated Model 
Rules of Professional Conduct (7th ed. 2011), Rule 1.6 Confidentiality 
of Information, available in Westlaw at ABA-AMRPC S 1.6. In this 
respect, the model rule and the corresponding state rules do not 
conflict with sections 203 and 204. As discussed in the preceding 
paragraph, even in the case of a conflict with a state ethics 
requirement, the Department believes that section 203 and this rule 
supersede Rule 1.6 and any particular state equivalent. The Department 
notes further that the employer-client is also required by law to 
report identical information as the attorney-persuader. One commenter 
even acknowledged that the rules of conduct allow for disclosure 
required by other law or a court order. The commenter, however, 
contended that the ``strong language'' in section 204 indicates that 
the LMRDA was never intended to be interpreted in such a sweeping 
manner. The Department disagrees. As explained above, the court in 
Humphreys, 755 F.2d at 1216, concluded that Congress intended for 
section 204 to reflect the traditional federal attorney-client 
privilege, which controls over state rules on client confidentiality.
    The ABA also acknowledged that a federal statute, such as the 
LMRDA, would constitute an exception to Rule 1.6, but it offered only a 
conclusory statement that ``nothing in the LMRDA expressly or 
implicitly requires lawyers to reveal client confidences to the 
government.'' Section 203(b), however, expressly requires that 
persuader consultants ``file a report with the Secretary . . . 
containing the name under which such person is engaged in doing 
business and the address of its principal office, and a detailed 
statement of the terms and conditions of such agreement or 
arrangement.'' 29 U.S.C. 433(b). Section 208 authorizes the Department 
to ``issue, amend, and rescind rules and regulations prescribing the 
form and publication of reports required to be filed under this 
title.'' 29 U.S.C. 438. Further, to ensure that sections 203 and 204 
are given full effect (with section 203 determining when and who must 
report, and section 204 limiting what must be reported), attorneys 
cannot be entirely excluded, as this would conflict with the statutory 
language, legislative intent, and history of section 203's application. 
Indeed, if attorneys engaging in direct persuasion must disclose 
information concerning the entire agreement or arrangement with the 
employer it logically follows that indirect persuaders, including 
attorneys, should disclose the same information.
    Several commenters, however, maintained that, should conflicts 
arise, attorneys may be faced with the untenable position of choosing 
between their ethical duties to their clients and their reporting 
obligations under the LMRDA. One of these commenters illustrated this 
conundrum by explaining that an attorney who discloses confidential 
information without client consent would risk professional discipline 
under state ethics rules. On the other hand, the commenter stated, the 
attorney risks imprisonment and a fine for willful failure to file if 
he or she decides not to file the appropriate LM form.
    As detailed above, however, the Department does not believe that 
the disclosure required by this rule poses a general or significant 
impediment for attorneys seeking to maintain client confidences, 
because the LMRDA constitutes ``other law,'' which under the ethical 
rules authorizes attorneys to disclose otherwise confidential client 
information. Thus, an ethical conflict would likely occur in only rare 
circumstances, such as where the disclosure of information would 
implicate the client in crimes or other illegal activities. Even there, 
however, it is by no means clear that the information should be 
withheld. As discussed above, courts have narrowly construed exceptions 
to disclosure of information required by federal law even in 
circumstances where there exists a reasonable argument that disclosure 
may entail some risk of criminal prosecution. The Department is not 
insensitive to such possibilities, but it does not believe those types 
of rare situations should dictate the decision to issue this final 
rule.\93\ Instead, the Department can address those concerns on a case-
by-case basis if and as they may arise.
---------------------------------------------------------------------------

    \93\ As discussed in the text, the Department disagrees with the 
suggestion that this rule will pose an ethical dilemma for 
attorneys. As with all aspects of legal practice, however, attorneys 
who have an ethical reservation about their obligations under the 
rule to report information about their clients always have the 
option to choose to decline to provide persuader services to clients 
who refuse to provide express consent to disclose the required 
information, and limit services to legal services, which do not 
trigger reporting in any event.
---------------------------------------------------------------------------

    Moreover, the Department recommends that labor relations attorneys 
and consultants who engage in direct or indirect persuader activity

[[Page 15999]]

make proactive efforts to minimize the possibility for conflicts before 
this rule becomes effective. The Department notes that, under ABA Rule 
1.6(a), attorneys are permitted to disclose confidential client 
information should the client give informed consent to do so after 
consultation. Accordingly, attorneys may want to inform their current 
and prospective clients about the disclosure provisions in section 203, 
which apply to both parties of the persuader agreement, the employer-
client and attorney-persuader. As stated, when disclosure of 
information relating to the representation appears to be required by 
other law, as is the case with section 203, the lawyer must discuss the 
matter with the client to the extent required by Rule 1.4. Attorneys 
who engage in persuasion of employees may also want to review their 
usual persuader agreements with clients, and consider modifying in the 
unusual circumstance that disclosure may inadvertently disclose 
privileged client information when they include these agreements as 
part of their LM-20 filings.
3. ``Chilling'' the Ability To Obtain Attorneys
    In addition to the issues surrounding the attorney-client privilege 
and confidentiality, many of the commenters alleged that the proposed 
rule would chill employers' ability to obtain competent attorneys. The 
ABA, for instance, argued that by requiring lawyers to file detailed 
reports containing confidential client information, the proposed rule 
would chill and seriously undermine the confidential client-lawyer 
relationship. Characterizing these requirements as ``unfair reporting 
burdens,'' the ABA believed the rule could discourage employers ``from 
seeking the expert legal representation that they need, thereby 
effectively denying them their fundamental right to counsel.'' Several 
commenters suggested that if the proposed rule were implemented, many 
law firms would cease to provide advice to employers due to the new 
disclosure requirements. According to one of the commenters, this would 
make it much more difficult for employers to obtain counsel during 
organizing campaigns. Another commenter, a law firm, contended that 
employers' ignorance of the law would more likely result in violations 
of complex rules about permissible and impermissible conduct in the 
union organizing and collective bargaining contexts. Similarly, a law 
firm commented that the rule could well cause employers to act without 
the guidance of counsel, thereby adding to the likelihood of unfair 
labor practices, re-run elections, and further instability in labor 
relations. A comment from a small business public policy association 
posed a scenario where employers, due to the chill on the ability to 
obtain counsel, would be forced to either ``go it alone'' or find a 
lawyer willing to overlook the ethical obligations involved with filing 
as a persuader. Other commenters theorized that employers would simply 
remain silent during organizing campaigns, effectively ``muzzling'' or 
``gagging'' themselves.
    The Department finds that these arguments, in essence, present the 
same concerns raised by other commenters regarding the rule's potential 
chilling effect on employer free speech, which is addressed in Section 
V.G. As explained in that section, these concerns are unfounded because 
neither the proposed rule nor this rule requires the reporting of 
services provided by a consultant-attorney unless he or she engages in 
persuader activities. Even then, only limited information is required 
to be reported. Further, as explained in Section V.G, this rule 
establishes a clear test for attorneys and others to know what 
activities will trigger reporting and thereby avoid such activities if 
their goal is to avoid even the limited reporting required under this 
rule. Thus, under a proper understanding of the requirements and limits 
of this rule, the asserted chill on the ability of employers to retain 
counsel seems nothing more than unsubstantiated speculation. As such, 
this argument provides no basis for rejecting the rule.
    In addition, as discussed above, the information required to be 
reported on the revised Form LM-20 is generally not protected by either 
the federal common law attorney-client privilege or prohibited from 
disclosure by state bar rules on client confidences. Because the final 
rule does not infringe on these protections, any corresponding chilling 
effect would come solely as a result of employers' or attorneys' choice 
to avoid reporting non-privileged, non-confidential information. In 
this respect, the Department is guided by the Ninth Circuit's 
observation in Tornay v. United States, 840 F.2d 1424, 1428-29 (9th 
Cir. 1988):

    We do not believe that clients, knowing that their attorneys may 
be compelled to testify about the amount, date, and form of fees 
paid, would be inhibited from disclosing fully information needed 
for an effective representation. Nor do we accept a generalization 
that clients feel less free to disclose once it becomes apparent 
that their attorney's testimony may cause adverse results. . . . 
Some prospective clients, arguably, may decide not to retain counsel 
for legal services if they could be implicated by expenditures for 
those services. This is not, however, a sufficient justification to 
invoke the [attorney-client] privilege.

     In a similar vein, the Department does not believe the attorney-
client privilege or state ethics rules should or can be used to shield 
employers and their attorneys from the LMRDA's reporting requirements 
once persuader activities are undertaken. The Department is not 
persuaded that employers, as a result of this rule, would be inhibited 
from seeking legal advice and sharing non-privileged, non-confidential 
information with their attorneys, nor will they be less able to retain 
attorneys, including persuader-attorneys, as a result of the rule.
4. Comments on Form LM-21 and Client Confidentiality
    The Department also received several comments, including those from 
the ABA, concerning the impact of this rule on consultants' reporting 
requirements on the Form LM-21, Receipts and Disbursements Report.\94\ 
These commenters expressed concern with the scope of information 
required to be reported because the Form LM-21 requires consultants to 
disclose receipts and disbursements from employers on account of any 
``labor relations advice or services,'' not just those receipts and 
disbursements related to persuader activities.
---------------------------------------------------------------------------

    \94\ The ABA made the following point: ``There is no reasonable 
nexus (no rational governmental purpose served by) between a 
lawyer's obligation to report persuader activities for a client and 
the resulting obligation under the rule that the lawyer report all 
receipts from and disbursements on behalf of any employer client for 
whom the lawyer provided labor relations advice or services.'' In 
making this point, the ABA relies on dicta in Donovan v. Rose Law 
Firm, 768 F.2d 964, 975 (8th Cir. 1985) (it is ``extraordinarily 
unlikely that Congress intended to require the content of reports by 
persuaders . . . to be so broad as to encompass dealings with 
employers who are not required to make any report whatsoever''). As 
discussed previously in the text, other courts have expressed a 
contrary view. See Humphreys; Master Printers Association; Price v. 
Wirtz; Douglas v. Wirtz.
---------------------------------------------------------------------------

    The Form LM-21 implements the reporting requirements prescribed by 
section 203(b). That section, in relevant part, requires every person 
who engaged in persuader activities to file annually a report with the 
Secretary containing a statement of ``its receipts of any kind from 
employers on account of labor relations advice or services, designating 
the sources thereof,'' and a statement of its disbursements of any 
kind, in connection with those services and their purposes. (Emphasis 
added). See also 29 CFR 406.3 (LM-21 requirements). Section 203(b) 
requires that the reports

[[Page 16000]]

are to be made ``with respect to each fiscal year during which payments 
were made as a result of such an agreement or arrangement.'' Thus, 
unlike the Forms LM-10 and LM-20, the Form LM-21 requires consultants 
who have engaged in persuader activities to report all receipts from 
employers in connection with labor relations advice or services 
regardless of the purpose of the advice or services. For this 
requirement, the filer must also report in the aggregate the total 
amount of the disbursements made from such receipts, with a breakdown 
by office and administrative expenses, publicity, fees for professional 
service, loans, and other disbursement categories. For persuader and 
information-supplying activities only, the filer must additionally 
itemize each disbursement, the recipient of the disbursement, and the 
purpose of the disbursement.
    The ABA, in particular, argued that the scope of this requirement 
compels the disclosure of a ``great deal'' of confidential client 
information that has ``no reasonable nexus'' to the persuader 
activities at issue in the NPRM and this rule. The ABA urged the 
Department to narrow the scope of the information that must be 
disclosed in Form LM-21 so that disclosure is required only for those 
receipts and disbursements pertaining to clients for whom persuader 
activities were undertaken.
    While some commenters did acknowledge the scope of the NPRM, the 
ABA and multiple other commenters failed to note that this rulemaking 
focuses exclusively on the Form LM-20, not the Form LM-21. In this 
rulemaking, the Department proposed no changes to nor invited public 
comment on any aspect of the LM-21 form. Therefore, issues arising from 
the reporting requirements of the LM-21 are not appropriate for 
consideration under this rule. The Department has expressed its intent 
to address issues surrounding the Form LM-21 in a separate rulemaking 
in the future.\95\
---------------------------------------------------------------------------

    \95\ See note 88.
---------------------------------------------------------------------------

VI. Regulatory Procedures

A. Executive Orders 13563 and 12866

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget (OMB).
    In the Paperwork Reduction Act (PRA) analysis below, the Department 
estimates that the rule will result in a total annual recurring burden 
on employers, labor relations consultants, and other persons required 
to file Form LM-20 and Form LM-10 reports of approximately 
$1,263,499.50. Additionally, in the Regulatory Flexibility Analysis 
(RFA) below, the Department estimates that the total first-year burden 
on non-filing entities affected by this rule is approximately 
$7,270,822, with a recurring, annual burden of $3,634,578. See Section 
VI.H.4 below. Thus, the burden is less than $100 million annually and 
is therefore not economically significant within the meaning of 
Executive Order 12866.
    The Department received comments that the proposed rule failed to 
assess all costs and benefits of available regulatory alternatives and 
that the rule would be significantly more burdensome than the current 
rule. An employer coalition argued that the proposed rule also violated 
the executive orders and should therefore be withdrawn, because it did 
not allow for adequate public participation, failed to promote 
predictability or reduce uncertainty, and was not written in plain 
language. Some commenters estimated that the total impact of the rule 
would easily exceed $100 million annually.
    The Department disagrees with these comments. First, the Department 
has fully considered alternatives to the approach proposed and is 
adopting the proposed rule with some modification based on these 
alternatives. See discussion in Section V of the preamble to this rule. 
Second, the Department has provided estimated costs associated with the 
reporting requirements, adjusted in response to comments received on 
the proposed rule, in a manner that fully comports with requirements 
prescribed for regulations that are not economically significant. 
Third, the public was provided a full opportunity to express their 
views on the approach proposed, as evinced both by the public 
stakeholder meeting that preceded the proposal and the large number of 
comments submitted on the proposal. Fourth, the rule is written in a 
straightforward, easy to understand manner, with examples and 
checklists that simplify reporting. In response to comments received on 
the proposal, the Department has addressed various concerns about 
particular requirements and added additional clarity where appropriate. 
The Department has also responded to specific comments on its burden 
estimates below in the PRA and RFA sections, discussed the basis for 
such estimates, and refuted the assertions that the rule would result 
in an annual economic impact of greater than $100 million. As stated, 
the rule provides an objective, clear basis to determine reportability 
and certainty, and the Department will provide compliance assistance to 
filers and prospective filers to reduce any additional uncertainty or 
burden. The Department has also demonstrated in the preamble the sound 
basis for the rule in the language of the statute, legislative history, 
and public policy.
    The following is a summary of the need for and objectives of the 
rule. A more complete discussion of various aspects of the rule is 
found elsewhere in the preamble to this rule and the NPRM.
    The LMRDA was enacted to protect the rights and interests of 
employees, labor organizations and their members, and the public 
generally as they relate to the activities of labor organizations, 
employers, labor relations consultants, and labor organization 
officers, employees, and representatives. Provisions of the LMRDA 
include financial reporting and disclosure requirements for labor 
organizations, employers, labor relations consultants, and others as 
set forth in Title II of the Act. See 29 U.S.C. 431-36, 441.
    The revised rule amends the form, instructions, and reporting 
requirements for the Form LM-10, Employer Report, and the Form LM-20, 
Agreements and Activities Report, both of which are filed pursuant to 
section 203 of the LMRDA, 29 U.S.C. 433. Section 203 establishes 
reporting and disclosure requirements for employers and persons, 
including labor relations consultants, who enter into any agreement or 
arrangement whereby the consultant (or other person) undertakes 
activities to persuade employees as to their rights to organize and 
bargain collectively or to obtain certain information concerning the 
activities of employees or a labor organization in connection with a 
labor dispute involving the employer. Each party must also disclose 
payments made pursuant to such agreement or arrangement. An employer, 
additionally, must disclose certain other

[[Page 16001]]

payments, including payments to its own employees, to persuade 
employees as to their bargaining rights and to obtain certain 
information in connection with a labor dispute. Employers report such 
information on the Form LM-10, which is an annual report due 90 days 
after the end of the employer's fiscal year. Consultants file the Form 
LM-20, which is due 30 days after entering into each agreement or 
arrangement with an employer to persuade.
    In this final rule, the Department has revised its interpretation 
of the ``advice'' exemption of section 203(c) of the LMRDA, which 
provides, in part, that employers and consultants are not required to 
file a report by reason of the consultant's giving or agreeing to give 
``advice'' to the employer. Under previous policy, as articulated in 
the LMRDA Interpretative Manual and in a Federal Register notice 
published on April 11, 2001 (66 FR 18864), this so-called ``advice'' 
exemption has been broadly interpreted to exclude from reporting any 
agreement under which a consultant engages in activities on behalf of 
the employer to persuade employees concerning their bargaining rights 
but has no direct contact with employees, even where the consultant is 
managing a campaign to defeat a union organizing effort.
    The Department proposed to narrow the scope of the advice exemption 
to more closely reflect the employer and consultant reporting intended 
by Congress in enacting the LMRDA, which includes disclosure of 
agreements involving direct and indirect persuasion by employees. 
Strong evidence indicates that since the enactment of the LMRDA in 
1959, the use of such consultants by employers to contest union 
organizing efforts has proliferated, with most employers hiring 
consultants to persuade employees through indirect methods. 
Nevertheless, since it began administering the statute in 1960 the 
Department has consistently received a small quantity of LM-20 reports 
relative to the greatly increased employer use of the labor relations 
consultant industry, which suggests substantial underreporting by 
employers and consultants. Moreover, evidence indicates that the 
Department's broad interpretation of the advice exemption has 
contributed to this underreporting.
    As discussed in the preambles to both the proposed and final rule, 
the Department's prior interpretation failed to advance Congressional 
objectives concerning labor-management transparency to promote worker 
rights and harmonious labor relations. Considerable evidence suggests 
that regulatory action to revise the advice exemption interpretation is 
needed to provide labor-management transparency for the public, and to 
provide workers with information critical to their effective 
participation in the workplace.
    Congress intended that employees would be timely informed of their 
employer's decision to engage the services of consultants in order to 
persuade them how to exercise their rights. Congress intended that this 
information, including ``a detailed statement of the terms and 
conditions'' of the agreement or arrangement would be publicly 
available no later than 30 days after the employer and consultant 
entered into such relationship. 29 U.S.C. 433(b)(2). With such 
information, employees are better able to assess the actions of the 
employer and the employer's message to them as they are considering 
whether or not to vote in favor of a union or exercise other aspects of 
their rights to engage in or refrain from engaging in collective 
bargaining.
    Where persuader activities are not reported, employees may be less 
able to effectively exercise their rights under Section 7 of the NLRA 
and, in some instances, the lack of information will affect their 
individual and collective choices on whether or not to select a union 
as the exclusive bargaining representative or how to vote in contract 
ratification or strike authorization votes. The public disclosure 
benefit to the employees and to the public at large cannot reasonably 
be ascertained due to the uncertainty in knowing whether employees 
would have participated or not in a representation election or cast 
their ballots differently if they had timely known of the consultant's 
persuader activities. The real value of the LMRDA public disclosure of 
information is in its availability to workers and the public in 
accordance with Congressional intent. Such information gives employees 
the knowledge of the underlying source of the information directed at 
them, aids them in evaluating its merit and motivation, and assists 
them in developing independent and well-informed conclusions regarding 
union representation.
    The Department also revises the Form LM-10, the Form LM-20, and the 
corresponding instructions. These changes include modifications of the 
layout of the forms and instructions to better outline the reporting 
requirements and improve the readability of the information. The 
revised forms also require greater detail about the activities 
conducted by consultants pursuant to agreements and arrangements with 
employers.
    Finally, this rule requires that Form LM-10 and LM-20 filers must 
submit reports electronically, but also has provided a process for a 
continuing hardship exemption, whereby filers may apply to submit 
hardcopy forms on a temporary basis. Currently, labor organizations 
that file the Form LM-2 Labor Organization Annual Report have been 
required by regulation since 2004 to file electronically, and there has 
been good compliance with this submission requirement. Employers and 
consultants likely have the information technology resources and 
capacity to file electronically, as well. Moreover, electronic Web-
based filing option is also planned for all LMRDA reports as part of an 
information technology enhancement, including for those forms that 
cannot now be electronically filed, such as the Form LM-10 and Form LM-
20. This addition should greatly reduce the burden on filers to 
electronically sign and submit their forms. No commenters challenged 
this proposed addition of mandatory electronic filing, and several 
comments explicitly offered support.
    Published at the end of this rule are the revised Forms LM-10 and 
LM-20 and instructions. The revised Forms LM-10 and LM-20 and 
instructions also will be made available via the Internet. The 
information collection requirements contained in this rule have been 
submitted to OMB for approval.

B. Unfunded Mandates Reform

    This rule will not include any Federal mandate that may result in 
increased expenditures by State, local, and tribal governments, in the 
aggregate, of $100 million or more annually, or in increased 
expenditures by the private sector of $100 million or more. As 
discussed throughout this part of the preamble, the compliance costs 
associated with this rule are far less than the above thresholds.

C. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100,000,000 or 
more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of the United States-based companies to 
compete with foreign-based companies in domestic and export markets.
    The Department received comments suggesting that it did not 
properly

[[Page 16002]]

justify this conclusion in the NPRM. In this regard, commenters 
primarily argued that the Department only focused on the burdens on 
Form LM-10 and LM-20 filers estimated in the PRA analysis, and not the 
broader impact on labor relations and the economy. In this regard, a 
commenter emphasized its view that the proposed rule would deny 
employers legal advice and lead to violations of labor law and 
therefore impose additional costs on employers. The Department 
explained in the preamble the objective nature of the test to determine 
reportability of employer-consultant agreements, and the minimal 
impact, if any, on the rights of employers and consultants. The rule 
has no impact on whether an employer can enter into an agreement. The 
Department also stated that consultants, who provided only legal 
services, or any other advisory services or representation in the 
enumerated areas, would have no reporting obligation. Thus, the 
Department does not believe that the rule will operate to deny 
employers advice, and, as a result, it is not persuaded that there 
would be increase in violations of the law.

D. Executive Order 13132 (Federalism)

    The Department has reviewed this rule in accordance with Executive 
Order 13132 regarding federalism and has determined that the rule does 
not have federalism implications. Because the economic effects under 
the rule will not be substantial for the reasons noted above and 
because the rule has no direct effect on states or their relationship 
to the federal government, the rule does not have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''

E. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    One commenter questioned why the NPRM did not, pursuant to Section 
5 of E.O. 13175, contain a tribal impact summary statement or indicate 
whether it had consulted with any tribes prior to issuing the NPRM. In 
response, the Department states that it provided the public, including 
Indian tribal governments, the opportunity to comment during the 
proposed rule's comment period. No Indian tribal government commented 
on the proposal. Further, the rule does not ``have substantial direct 
effects on one or more Indian tribes, on the relationship between the 
Federal Government and Indian tribes, or on the distribution of power 
and responsibilities between the Federal Government and Indian 
tribes.'' See E.O. 13175, Section 1.a. Indeed, the commenter identified 
no specific actual impact on any Indian tribe and, in the Department's 
view, it is not clear that the rule will have any direct effect on any 
Indian tribe. Should an issue arise concerning such effect, the 
Department will carefully and appropriately consider the status of the 
tribe and its relationship with the Federal Government in resolving the 
issue.

F. General Overview of Paperwork Reduction Act and Regulatory 
Flexibility Act Sections

    In order to meet the requirements of the Regulatory Flexibility Act 
(RFA), 5 U.S.C. 601 et seq., and the Paperwork Reduction Act (PRA), 44 
U.S.C. 3501 et seq., and the PRA's implementing regulations, 5 CFR part 
1320, the Department has undertaken an analysis of the financial 
burdens to covered employers, labor relations consultants, and others 
associated with complying with the requirements contained in this rule. 
The focus of the RFA is to ensure that agencies ``review rules to 
assess and take appropriate account of the potential impact on small 
businesses, small governmental jurisdictions, and small organizations, 
as provided by the [RFA].'' Executive Order 13272, Sec. 1. The more 
specific focus of the PRA is to reduce, minimize and control burdens 
and maximize the practical utility and public benefit of the 
information created, collected, disclosed, maintained, used, shared and 
disseminated by or for the Federal government. 5 CFR 1320.1.
    Compliance with the requirements of this rule involves information 
recordkeeping and information reporting tasks. Therefore, the overall 
impact to covered employers, labor relations consultants, and other 
persons, and in particular, to small employers and other organizations 
that are the focus of the RFA, is largely equivalent to the financial 
impact to such entities assessed for the purposes of the PRA. As a 
result, the Department's assessment of the compliance costs to covered 
entities for the purposes of the PRA is used as a basis for the 
analysis of the impact of those compliance costs to small entities 
addressed by the RFA. Additionally, in response to comments received, 
the Department has also addressed under the RFA the impact on those 
entities that must review the reporting requirements to determine that 
filing is not required. The Department's analysis of PRA costs, and the 
quantitative methods employed to reach conclusions regarding costs, are 
presented first. The conclusions regarding compliance costs in the PRA 
analysis regarding Form LM-10 and Form LM-20 files are then employed, 
along with estimated burden costs on non-filers, to assess the impact 
on small entities for the purposes of the RFA, which follows 
immediately after it.
    With the information newly provided as a result of this rule, 
employees will be better able to understand the role that labor 
relations consultants play in their employer's efforts to persuade them 
concerning how they should exercise their rights as employees to union 
representation and collective bargaining matters. Better informed 
employees will promote more stable and harmonious labor-management 
relations.
    This rule also requires that employers and consultants file Form 
LM-20 and Form LM-10 reports electronically. Electronic reporting 
contains error-checking and trapping functionality, as well as online, 
context-sensitive help, which improves the completeness of the 
reporting. Electronic filing is more efficient for reporting entities, 
results in more immediate availability of the reports on the agency's 
public disclosure Web site, and improves the efficiency of OLMS in 
processing the reports and in reviewing them for reporting compliance.

G. Paperwork Reduction Act

    This statement is prepared in accordance with the PRA, 44 U.S.C. 
3501. As discussed in the preamble, this rule would implement an 
information collection that meets the requirements of the PRA in that: 
(1) The information collection has practical utility to employees, 
employers, labor relations consultants, and other members of the 
public, and the Department; (2) the rule does not require the 
collection of information that is duplicative of other reasonably 
accessible information; (3) the provisions reduce to the extent 
practicable and appropriate the burden on employers, labor relations 
consultants, and other persons who must provide the information, 
including small entities; (4) the form, instructions, and explanatory 
information in the preamble are written in plain language that will be 
understandable by reporting entities; (5) the disclosure requirements 
are implemented in ways consistent and compatible, to the maximum 
extent practicable, with the existing reporting and recordkeeping 
practices of employers, labor relations consultants, and other persons 
who must comply with them; (6) this preamble informs reporting entities 
of the reasons that the information will be collected, the way

[[Page 16003]]

in which it will be used, the Department's estimate of the average 
burden of compliance, the fact that reporting is mandatory, the fact 
that all information collected will be made public, and the fact that 
they need not respond unless the form displays a currently valid OMB 
control number; (7) the Department has explained its plans for the 
efficient and effective management and use of the information to be 
collected, to enhance its utility to the Department and the public; (8) 
the Department has explained why the method of collecting information 
is ``appropriate to the purpose for which the information is to be 
collected''; and (9) the changes implemented by this rule make 
extensive, appropriate use of information technology ``to reduce burden 
and improve data quality, agency efficiency and responsiveness to the 
public.'' 5 CFR 1320.9; see also 44 U.S.C. 3506(c).
    This rule establishes revised Form LM-10 and LM-20 reporting forms, 
which constitute a ``collection of information'' within the meaning of 
the Paperwork Reduction Act of 1995 (PRA) [44 U.S.C. 3501-3520]. Under 
the PRA, an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid control number assigned by the Office of Management 
and Budget (OMB). The Department submitted an information collection 
request to OMB in association with this rule on February 25, 2016, 
after considering all public comments on the information collections in 
the proposed rule. That review is pending. The Department will publish 
an additional notice in the Federal Register to announce OMB's decision 
on the request.
    The Department is in the process of extending the OMB 
authorization, as part of its effort to require mandatory electronic 
filing for labor organizations that file the Form LM-3 and LM-4 Labor 
Organization Annual Report. See the related Notice published in the 
Federal Register on May 20, 2015 (80 FR 29096).
    In the analysis that follows, the Department estimates the 
recordkeeping and reporting costs of the rule on labor relations 
consultants and employers. To arrive at these estimates, the Department 
made the following assumptions:
     NLRB and NMB representation elections are a proxy for 
organizing campaigns. A mean consultant utilization rate of 78% by 
employers during organizing campaigns is used to arrive at the number 
of Form LM-20 reports and filers;
     An employer will hire only one consultant when faced with 
an organizing drive, as opposed to multiple consultants;
     The total number of Form LM-20 reports consists of reports 
for union avoidance seminars as well as targeted activities (non-
seminar reports);
     The total of number of Form LM-20 filers are based on 
existing reporting data (only applied for non-seminar reports) and 
includes all consultants, including law firms;
     For the number of seminar reports, each ``business 
association'' entity (NAICS 813910, which includes trade associations 
and chambers of commerce) that operates year-round with 20 or more 
employees is estimated to sponsor a seminar annually and to contract 
with a consultant firm to conduct the seminar. The consultants hired to 
conduct these seminars will also independently hold an equal number of 
seminars. The consultants will file all seminar reports (half sponsored 
by business associations and half independently held by them).
     The total number of Form LM-10 reports is based off of the 
estimated number of non-seminar Form LM-20 reports, plus the existing 
reporting data on non-persuader Form LM-10 reports. The Department 
assumes that each Form LM-10 report submitted will involve either 
persuader or non-persuader activity, although in practice there may be 
some overlap. For the cost estimates, however, it is assumed that a 
filer will complete all parts of the Form LM-10, for both persuader and 
non-persuader transactions;
     Estimates for the recordkeeping and reporting hours derive 
largely from the Form LM-30 Labor Organization Officer and Employee 
Report final rule from October 2011 (see 76 FR 66441);
     Consultants and employers already keep business records 
necessary for reporting, such as agreements and seminar attendance 
sheets;
     Attorneys will file reports on behalf of consultants and 
employers. The estimated recordkeeping and reporting costs are based on 
BLS data of the average hourly wage of an attorney, including benefits;
     Non-filing entities are estimated to spend one hour total 
reading instructions (10 minutes) and determining that the rule does 
not apply to them or their clients (50 minutes). Non-filing entities 
are comprised of those labor and employment law firms, human resource 
consultant firms, and business associations that are not otherwise 
estimated to be filing. Not every employer, human resources firm, or 
law firm is impacted, only those that enter into labor relations 
agreements.
     No ``initial familiarization'' costs. Employers and 
consultants are unique filers each year, and costs associated with 
``familiarization'' are therefore included within the estimated costs, 
as is the case with Form LM-30 filers;
     For the RFA analysis, all affected entities are assumed to 
be small business entities.
1. Overview and Response to Comments Received
    In the notice of proposed rulemaking (NPRM), the Department 
estimated an annual total of 2,601 Form LM-20 filers and 3,414 Form LM-
10 filers resulting from the proposed rule. 76 FR 36198-200. To 
estimate the number of Form LM-20 filers, the Department first 
identified the average number of representation elections. 
Representation elections permit employees to vote whether they wish to 
be represented by a particular labor union. Representation elections 
may be contested by employers who spend resources and hire management 
consulting firms to defeat unions at the ballot box. Id. at 36185. The 
Department calculated the representation cases filed with National 
Mediation Board during fiscal years 2005-2009 (which equaled 38.8 
annually) and added that figure to the average number of National Labor 
Relations Board representation cases filed during the same period 
(which equaled 3,429.2), for an annual total of 3,468 representation 
elections. Next, the Department reviewed the research literature and 
determined that the median utilization rate of consultants by employers 
was approximately 75%. As a result, the Department concluded that there 
would be 2,601 (3,468 x .75 = 2,601) elections in which employers would 
hire consultants to persuade employees with regard to their right to 
organize and bargain collectively, triggering thereby the requirements 
that employers file Form LM-10 and consultants file Form LM-20 reports.
    To determine the increase in filing caused by the proposed rule, as 
compared to the existing rule, the number of estimated new Form LM-20 
reports (2,601) was reduced by the average number of reports already 
being filed (191), resulting in an expected increase of 2,410 (2,601 - 
191 = 2,410) Form LM-20 reports. Although the numbers could be 
increased by assuming that an employer might enter into multiple 
agreements during a single union organizing campaign or consultants may 
hire subcontractors, the Department made no such assumptions,

[[Page 16004]]

instead seeking comment on this issue. 76 FR 36199-200.
    Having derived an estimate for Form LM-20 submissions, the 
Department then calculated the annual number of expected Form LM-10 
filings. See 76 FR 36199. It estimated 3,414 Form LM-10 filers. This 
constituted an estimated increase of 2,484 over the existing average of 
930 Form LM-10 reports. The analysis began with the 2,601 NLRB and NMB 
elections, discussed above, where 75% of involved employers were 
projected to hire consultants to persuade employees with regard to 
their right to organize and bargain collectively (3,468 x .75 = 2,601). 
The existing Form LM-10 reporting history was reviewed, revealing an 
annual average of 930 Form LM-10 reports filed, consisting of 117 
reports of activities to persuade employees about their rights to 
organize and bargain collectively and about 813 reporting conduct 
unrelated to such activities. The 2,601 agreements to persuade were 
added to the average number (813) of Form LM-10 non-persuader reports. 
This resulted in a total of 3,414 annual Form LM-10 reports (2,601 
persuader reports and 813 reports of financial activity unrelated to 
persuading) (2,601 + 813 = 3,414). Under the Form LM-10, and unlike the 
Form LM-20, multiple agreements and subcontracts are not relevant as 
they do not require additional reports.
    In this rule, the Department estimates that it will receive 
approximately 4,194 Form LM-20 reports. Of this figure, 2,104 are 
associated with representation elections. The difference between the 
2,601 reports arising from representation election projected in the 
NPRM and the 2,104 projected here is the use of current data (as 
explained below, the NRPM relied on NLRB and NMB data from FYs 2005-09, 
while the final rule uses data from FYs 2009-13 for NLRB data and data 
from FYs 2010-2014 for NMB data). Reports arising from union avoidance 
seminars account for an additional 2,090 Form LM-20 reports not 
projected in the NPRM. As further explained below, the Department 
assumes that 358 unique entities will file these reports. This is the 
number of estimated consultants, including law firms, which will be 
filing LM-20 reports.
    This rule does not alter the method of calculating Form LM-10 
reports. The Department estimates 2,777 Form LM-10 reports, which 
represents a decrease from the 3,414 estimate in the NPRM. The 
adjustment is the result of updated data made available by the NLRB and 
NMB, as well as accessible from the OLMS reporting records. The 
increase in Form LM-20's as a result of the union seminar rules will 
not increase the number of Form LM-10 reports because under the rule 
employers are not required to report their attendance at union 
avoidance seminars.
    The Department received multiple comments in response to its PRA 
analysis and estimated burden numbers. These comments focused upon 
three areas: The number of filers and reports; the hours per filer; and 
the cost per filer.
    Many of the comments focused on the number of potential reports. 
One business association criticized the Department's estimates, but 
noted that the NPRM's analysis ``does a better job than most'' in 
presenting its cost analysis. One employer association challenged the 
estimate of the number of submitted reports for the revised forms as 
too low, since the estimate focused only on organizing efforts thus 
ignoring the burdens associated with reporting activities related to 
``positive workplace polices'' and matters such as voluntary 
recognition and corporate campaigns. Other commenters presented similar 
concerns, although none provided data or data sources to quantify such 
activities. Further, the Department's estimate, in the employer 
association's view, did not take into account the large number of 
seminars held for management or the broad scope of the term ``protected 
concerted activities,'' which would also trigger reporting if there was 
an object to persuade employees. Other commenters expressed similar 
concerns, with one consultant firm indicating that such seminars are 
offered by HR firms, chambers of commerce, trade associations, and law 
firms, with tens of thousands of attendees annually. This firm also 
estimated that employee opinion surveys would trigger hundreds of 
thousands of reports. One trade association asserted that the 
Department only provided an estimate for the number of employers 
required to file the forms (2,601) but not law firms or consultant 
firms.\96\ A public policy organization argued that the Department's 
estimate incorrectly assumed that a Form LM-20 filer would submit a 
single report, while the Department's database suggests that Form LM-20 
filers often submit multiple reports. A consultant firm also argued 
that consultants would enter into multiple reportable agreements 
annually.\97\
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    \96\ This commenter was incorrect. The estimate of 2,601 was the 
number of Form LM-20 reports that the Department would receive as a 
result of the proposed rule, while the Department estimated 3,414 
Form LM-10 filers.
    \97\ Some commenters argued that they would have been able to 
provide better estimates of the burden associated with the proposed 
rule if the comment period on the proposal had been extended. In the 
Department's view, the 90-day comment period provided adequate time 
for commenters to respond to the Department's estimates, as well as 
the rest of its proposal. This view is supported by the breadth of 
comments received on the Department's estimated burden and other 
aspects of the proposal. The Department also extended the initial 
60-day comment period to 90 days, in response to comments received. 
See 76 FR 45480. The Department responded separately to these 
requests for an extension of the comment period.
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    The Department believes that the basic approach to estimate the 
number of reports utilized in the Department's initial analysis is 
sound, and we replicate it here. As the commenters recognized, and as 
the Department noted both in the proposed and final rule, the 
Department has used NLRB and NMB election activities as a proxy for 
estimating the number of reports that will be filed under the rule. The 
Department again has calculated a five-year average of representation 
petitions from NLRB and NMB data, and then employed the mean rate (78%) 
of employer utilization of consultants to manage an anti-union campaign 
when faced with an organizing effort.\98\ Please note that the 
Department previously used the median utilization rate, but is now 
using the mean for a more consistent statistical analysis. While many 
reports will be triggered by persuader activities related to the filing 
of representation petitions, others will result from activities related 
to collective bargaining and other union avoidance efforts outside of 
representation petitions, such as organizing efforts that do not result 
in the filing of a representation petition. Yet, as noted by the 
Department in the NPRM and in the comments received, there is no 
reliable basis for the Department to estimate reports received in many 
areas outside of representation petitions.\99\ 76 FR 36199.
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    \98\ As also explained within the PRA analysis, the Department 
has updated this estimate based on more recent data from the NLRB 
and NMB: Data from FYs 2009-13 for NLRB data and data from FYs 2010-
2014 for NMB data rather than FYs 2005-09 relied upon in the NPRM.
    \99\ An employer association noted that it is not aware of any 
``reliable database'' to determine the number of such agreements 
concerning persuader activity that occurs outside of an NLRB or NMB 
representation petitions or otherwise outside of a labor dispute, 
including card check recognition or corporate campaigns, beyond the 
estimates provided. The Department concurs with this observation. 
While the Department's estimate is therefore necessarily imprecise, 
it is supported by the record and comments, and little substantiated 
or quantified data was proffered to contradict it. In applying to 
OMB for a continuation of the information request, the Department 
will update its estimate based upon the reporting experience under 
the rule.

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[[Page 16005]]

    In one respect, the comments have persuaded the Department to 
refine its analysis in estimating the total number of LM-20 reports 
that will be filed under the rule. As discussed below, in addition to 
the number of persuader agreements connected with representation 
petitions, the Department has provided an estimate of the number of 
reports that will be filed in connection with union avoidance seminars. 
This activity was not specifically considered in the initial burden 
analysis. Its inclusion substantially increases the overall estimate of 
Form LM-20 reports. To summarize, the Department has estimated that it 
will receive 4,194 Form LM-20 reports pursuant to this rule, with 2,104 
associated with representation elections and 2,090 with union avoidance 
seminars.
    Additionally, the Department concurs with the commenter that 
asserted the Department should provide an estimate for the number of 
Form LM-20 filers, separately from the number of reports. In response 
to comments received, the Department provides an estimate of the number 
of Form LM-20 filers: 358.\100\ This revision takes into account, as 
noted by some commenters, that Form LM-20 ``filers'' or ``respondents'' 
may submit multiple ``responses'' or reports under the rule.
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    \100\ The Department assumes that these 358 filers are 
consultants, including law firms, because the rulemaking record 
indicates that these entities manage counter-organizing efforts in 
connection with representation elections, as well as conduct union 
avoidance seminars. Additionally, in practice, other ``persons'' may 
enter into persuader agreements and business associations may engage 
in other reportable persuader activities, but no quantifiable data 
was provided on these persons or their activities. The Department 
also assumes that these 358 entities will file the estimated 2,104 
non-seminar reports (as adjusted from the NPRM as a result of more 
recent OLMS, NLRB, and NMB data), as well as the additional 2,090 
seminar reports estimated in this rule.
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    The Department estimates from its existing data of submitted Form 
LM-20 reports that consultants, including law firms, file an annual 
average of approximately 5.875 reports a year. We assume this ratio 
will continue under this final rule for non-seminar reports. 
Accordingly, as we have estimated 2,104 reports will arise from 
representation elections, and that 5.875 of each will be submitted by a 
single filer, there will be approximately 358 unique filing entities 
(2,104/5.875 = 358). Because we conclude that the pool of consultants 
who engage in persuader activities during representation elections are 
the same group who engage in persuader activities in the context of 
union avoidance seminars, we do not estimate any further increase in 
filers when estimating the number of union avoidance seminar reports. 
Instead, the Department assumes that these 358 filers will conduct each 
of the union avoidance seminars covered by this rule.
    Regarding the estimate for union avoidance seminars, in the absence 
of any data reflecting a precise number of seminars or conferences that 
would trigger reporting, to estimate the number of reportable seminars 
the Department begins with the number of business associations that 
appear most likely to organize such seminars (1,045). How the 
Department arrived at this number is discussed below.
    To determine the number of Form LM-20 reports submitted by reason 
of consultants conducting union avoidance seminars, the Department 
utilized the reporting data for ``business associations'' from the U.S. 
Census Bureau's North American Industry Classification System Codes 
(NAICS), NAICS 813910, which includes trade associations and chambers 
of commerce.\101\ Of the 15,808 total entities in this category, the 
Department assumes that each of the 1,045 business associations that 
operate year round and have 20 or more employees will sponsor, on 
average, one union avoidance seminar for employers.\102\ The Department 
assumes that each association, on average, will offer one such seminar 
annually, most likely at the association's annual, general conference.
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    \101\ See U.S. Census Bureau, Statistics of U.S. Businesses: 
2012: Number of Firms, Number of Establishments, Employment, and 
Annual Payroll by Enterprise Employment Size for the United States, 
NAICS 813910--Business Associations, United States, released on 1/
23/15, accessed at: https://www.census.gov/econ/susb/.
    \102\ The Department has used 20 employees as a threshold due to 
the logistics of planning a seminar. In particular, an organizer 
must plan the agenda, recruit and arrange persuaders to present, 
engage in public relations and event management, and arrange event 
space, meals, lodging, and audio/visual technology. The assumption 
that each entity with 20 or more employees organizes a persuader 
seminar is likely an overestimate, as not every entity capable of 
organizing a seminar will do so in practice.
---------------------------------------------------------------------------

    Additionally, the Department assumes, for purposes of estimating 
burden, that all of the 1,045 identified business associations will 
contract with a law or consultant firm to conduct that seminar, because 
these firms have expertise in the union avoidance area and will 
generally be willing to provide such service as a means to generate new 
clients. Further, the Department assumes that such seminars will be 
conducted by firms within the estimated group of 358 consultant firms, 
including law firms (that file the non-seminar Form LM-20 reports).
    Furthermore, while the Department assumes that such firms will, as 
a matter of mutual benefit, generally utilize the existing seminar 
arrangements offered by the trade associations (given the potential 
savings of time and resources in recruitment, event planning and 
related expenses, which are typically absorbed by the trade association 
and given the potential exposure to members of that association which 
these firms might not otherwise have), the Department also considers it 
likely that many of the estimated 358 consultants, including law firms 
will also hold their own, independently facilitated union avoidance 
seminars. While the Department is not aware of any authoritative or 
comprehensive source that could provide accurate data concerning the 
number of such seminars that consultants would independently provide, 
and the comments are silent on this point, the Department assumes that 
such firms, in the aggregate, will offer at least as many annual 
seminars independently as would trade associations. Thus, for purposes 
of the instant analysis, the Department estimates that annually a total 
of 2,090 Form LM-20 reports will be filed in connection with union 
avoidance seminars. Half of these seminars (1,045) will be sponsored by 
a business association and half (1,045) will be unsponsored (1,045 + 
1,045 = 2,090).
    The Department assumes that, on average, each of the 358 estimated 
law/consultant firms will present and therefore report for each of 
these seminars. As a result, the Department estimates that such firms 
will present a total of approximately six seminars per year (2,090/358 
is 5.838). This does not mean that each reporting consultant will file 
six Form LM-20 seminar reports per year; we expect there will be 
considerable variation in filing for union avoidance seminars around 
this average, as would be expected in a normal distribution. Some 
consultants may not have conducted a seminar, so they accordingly will 
not file a seminar-related Form LM-20 at all. Other consultants, for 
example, may only conduct one seminar annually while others may conduct 
one per month (or 12 annually). Thus, the Department believes that an 
average of approximately six is reasonable. These 2,090 seminar reports 
are in addition to the estimated 2,104 non-seminars reports, for a 
total of 4,194 Form LM-20 reports. Although, as discussed in note 102, 
there may be other entities required to submit reports, the

[[Page 16006]]

comments suggest that number to be small relative to the estimated 358 
entities.
    The Department has not otherwise revised its estimates concerning 
the use by employers of consultants to persuade in circumstances in 
which employees are not currently seeking a union. First, the 
Department clarified, in Section IV.B of the preamble, that the 
consultant's development of personnel policies does not trigger 
reporting merely because they may subtly influence employee decisions. 
Rather, reporting is triggered only if they are undertaken with an 
object to persuade employees. Personnel policies are unlikely therefore 
to trigger a report, at least in circumstances other than what the 
Department has based its estimates (representation elections and union 
avoidance seminars). Second, the Department has removed the term 
``protected concerted activities'' from the reporting obligation, which 
is now limited to persuader activities affecting the representation and 
collective bargaining rights of employees. Third, the final rule 
removes employee attitude surveys and vulnerability assessments from 
the list of persuader activities. Furthermore, the Department has 
revised its estimate, in response to comments received, to account for 
union avoidance seminars. Indeed, the rulemaking record does not 
suggest any further basis to estimate additional persuader 
reports.\103\
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    \103\ The Department has updated its estimate of Form LM-10 
reports to account for more recent data made available by the NLRB 
and NMB, as well as that data accessible from the OLMS reporting 
records. The Department, however, has not otherwise modified its 
Form LM-10 estimates. Under the final rule, employers are not 
required to report their attendance at union avoidance seminars on 
the Form LM-10. See Section IV.B of the preamble. A consultant that 
conducts a union avoidance seminar identifies the employer attendees 
in a single report. Id.
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    As the Department explained in the NPRM and in this preamble, the 
Department's past experience regarding the number of Form LM-10 
(insofar as they may reflect persuader activities) and Form LM-20 
filings provides limited utility in estimating the number of 
anticipated filings under the proposed or final rule. As discussed 
above, the Department's LMRDA reporting forms must be reviewed by the 
Department and approved by OMB at least every three years. Filing 
experience under the final rule will enable the Department to more 
accurately estimate the number of filers and burden associated with the 
rule and this experience will guide the Department in its future 
submissions to OMB justifying recertification of this information 
collection.
    Several commenters criticized the Department's estimates concerning 
the hours required to complete the forms and the hourly wage rate used 
to calculate the total cost. No commenters provided any specific 
alternative methodologies, data sources, or estimates for reporting and 
recordkeeping burden, besides general statements criticizing the NPRM's 
estimates as too low and references to the purported ``vagueness'' of 
the proposed rule.\104\
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    \104\ Commenters also mentioned the increased burden associated 
with the Form LM-21 Receipts and Disbursements Report. The 
Department has separately addressed the burden associated with this 
report in the Information Collection Request to OMB accompanying 
this rule.
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    In terms of burden hours required to read the Forms LM-10 and LM-20 
instructions, an employer association contended that the 20-minute Form 
LM-10 estimate and 10-minute Form LM-20 estimate for reading each set 
of instructions, respectively, was ``arbitrary'' as it is not based 
upon any empirical study, and does not include time needed to read the 
preamble to the rule. A business association argued that the estimates 
to read the instructions were too low, and that employers would need to 
familiarize themselves with the LMRDA, its regulations, Department-
issued guidance, as well as the forms, and then collect the information 
necessary to complete the form. Similarly, a law firm stated that 
underestimated numbers derive from the Department's lack of recognition 
of the broad scope of its new interpretation of persuader activities, 
particularly concerning personnel policies, which would require 
employers to analyze each of their employees' actions for evidence of a 
``persuader act.'' A trade association argued that the estimates for 
the Form LM-10 were inaccurate, as they failed to take into account the 
complexities of various organizations, with ``unrealistic and seemingly 
arbitrary assumptions,'' and would ``clearly'' require more than two 
hours to complete. The employer association also stated that the NPRM 
did not take into account communication needed between the employer and 
consultant; the consultant's need to ``guess'' at the employer's 
intent; the need to institute new contracts, business practices, and 
records systems; and to monitor activities to ensure compliance. A 
consultant firm stated that the total burden must take into account the 
``new, subjective definition of `persuasion,' '' to determine if 
reporting is even required. Doing so would result in the employer 
spending many hours per year monitoring activities (such as conference 
or trade association meetings, training sessions or employee committee 
meetings, communications with outside attorneys, and development of 
employee opinion surveys) for persuader content, which would lead to 
over $100 million in total reporting.
    Concerning other reporting and recordkeeping burden estimates, an 
employer association argued that the Department incorrectly relied on 
estimates used in the recently published Form LM-30 final rule, as that 
report is filed by individuals, not organizations that are more 
complex. See 76 FR 66485-89.\105\ The employer association asserted 
that the filers do not regularly keep the required records, although it 
acknowledged that they ``may have appropriate records,'' but the NPRM 
did not take into account the need to review them. The commenter 
specifically mentioned records concerning seminars, as the employer may 
not keep track at all, nor would a lawyer who does not know the 
attendees.
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    \105\ A public policy organization suggested that the Department 
in this rulemaking imposes a substantial burden on filers, whereas 
in 2011 the Department revised its LM-30 reporting requirements in 
order to reduce by five minutes the burden on union officials and to 
avoid overwhelming the public with unnecessary reports. In both 
rulemakings, the Department has been sensitive to concerns about 
imposing undue burden on filers, ensuring that burden brings with it 
meaningful benefits to employees, this Department, and the public. 
In the Form LM-30 rulemaking, the Department was concerned with the 
substantial time required by union officials to report union leave 
(payments from employers to union officials, who are current or 
former employees of the employer, for union work) under the previous 
rule (saving 120 minutes for those required to file the report and a 
substantial, although uncalculated, burden on non-filers, who needed 
to read the form and instructions and keep track of the number of 
union leave hours received). See 76 FR 66454.
    In the Form LM-30 final rule, the Department determined that 
union leave reporting, as well as the reporting of certain bona fide 
loan payments to union officials, did not present actual or 
potential conflicts of interest, and therefore should be eliminated 
from reporting to prevent unnecessary burden on union officials and 
the receipt of superfluous reports that do not demonstrate conflicts 
of interest. See 76 FR 66451-54, 57. Similarly, the Department in 
this rule protects employers and consultants by focusing on employer 
retention of third parties to persuade employees, not in-house 
management officials. Further, for example, this rule exempts 
reporting for vulnerability assessments; personnel polices developed 
by the consultant without an object to persuade; and by exempting 
reporting for employer retention of attorneys for strictly legal 
services as well as other third parties for providing exclusively 
advice or certain representative services. The reporting of these 
services is not necessary for workers to evaluate the information 
presented to them by their employer, and reporting would burden 
employers and consultants and overwhelm the public with unnecessary 
information.

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[[Page 16007]]

    Further, a trade association disagreed with the estimated two 
minutes for ``signature and verification'' for the president and 
treasurer, which it considered too low due to the difficulty in 
ensuring each of these officers of a complex organization to sign any 
document. A law firm contended that the Department underestimated the 
time needed to identify the subject employees who are to be persuaded 
in Form LM-20 Item 12(a) and Form LM-10 Item 14(e), which, it argued, 
involved greater detail than the prior form, which only required the 
filer to provide the ``identity of the subject employees.''
    The Department largely disagrees with these comments. The 
Department's estimates are not arbitrary, but rather derive from the 
similar Form LM-30 report. The Department views the use of Form LM-30 
data is an appropriate benchmark, because each must be filed only upon 
a triggering event, and not merely by virtue of an entity's existence, 
as with the annual labor organization reports. The Form LM-30 also has 
many similar data requests to the Forms LM-10 and LM-20. The fact that 
Form LM-30 filers are individuals rather than organizations generally 
has no bearing on the type of information requested or the manner in 
which it is reported. Indeed, employers and consultant firms are more 
likely to employ attorneys to complete the reports, and likely have 
greater background in completing such reporting forms or in retaining 
the types of records required to be maintained, than labor organization 
officers and employees. In contrast, organizations such as employers 
and consultants regularly employ and retain hourly billing, financial, 
and other records and likely have systems in place to retrieve them.
    Furthermore, as explained in the preamble, the Department asserts 
that the definition of ``persuasion'' has not changed and is an 
objective test. The preamble also clarifies that the reporting 
requirements are triggered by the consultant's object in undertaking 
the activities, including the development of personnel policies, as 
evidenced by the agreement and communications and personnel policies 
prepared and disseminated to employees. Thus, employers and consultants 
already have access to identical information, and neither party would 
be required to create any additional documents as a result of this 
rule. The parties also do not need to monitor activities undertaken, 
because reporting is triggered upon entering into the agreement. Thus, 
the parties would generally need to analyze the agreement itself, with 
a review of communications or policies only if the agreement did not 
make clear the intended consultant activities. In such cases, the 
employer and consultant would both likely have access to the 
consultant-created communications or personnel policies disseminated to 
employees, or employer-created material reviewed by the consultant who 
directed or coordinated the activities of the employer's 
representatives, and would therefore be able to review them. Concerning 
union avoidance seminars, the Department has exempted employers from 
reporting these agreements, and the Department is not convinced that 
the organizers of such events would fail to keep records of attendees. 
The organizers would likely maintain such business records both to 
ensure proper payment for attendance and to recruit participants for 
future conferences and/or consulting opportunities. The organizers, 
too, would have possession of the materials used at the seminar, if for 
no other reason than to use the same or very similar materials in 
future seminars or to provide additional copies of materials to 
participants or even non-participants that might request them. Any 
presenter at the event could obtain this information from the 
organizer, and it likely does so for purposes of identifying 
prospective clients. Additionally, as stated, the final rule removes, 
generally, employee attitude surveys and vulnerability assessments from 
reporting, unless there is evidence that the surveys are ``push-
surveys'' or they otherwise evidence an object to persuade for the 
consultant.\106\
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    \106\ The Department notes that the consultant firm that 
estimated that the total burden of the proposed rule amounted to at 
least 1.4 million hours per year based its calculation on an 
incorrect assumption about the total of filers, which it stated 
would be in the hundreds of thousands. The commenter grounded this 
estimate of total filers in incorrect assumptions and estimates, as 
explained, made about seminars and opinion surveys. Thus, the 
Department dismisses the highly exaggerated estimate of total burden 
hours. The Department's revised estimates on total burden hours and 
costs, including more specific response to comments received, are 
detailed within this section.
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    The Department concurs with the business association that the 
estimated 20 minutes to read and apply the Form LM-10 instructions and 
10 minutes to read and apply the Form LM-20 instructions are too low. 
Since both parties will also need to apply the instructions to the 
agreement and related activities to determine reporting, and these 
estimates are significantly lower than the 30 minutes provided for the 
Form LM-30 instructions, the Department has increased both estimates to 
account for the total time needed to review and apply the instructions. 
Thus, the Department estimates that Form LM-10 filers will require 25 
minutes to read and apply the instructions, and Form LM-20 filers 20 
minutes to do so. This is a five and ten-minute increase over the 
revised rule for the two forms, respectively. While the Department 
estimates that Form LM-30 filers will require 30 minutes, see 76 FR 
66487, the Forms LM-10 and LM-20 are completed by organizations, often 
with the assistance of attorneys, thus justifying the reduced time. The 
estimate for the Form LM-10 is greater than the Form LM-20, because the 
form and instructions have provisions that are not in the Form LM-20.
    The Department does not agree that it must include the time needed 
to read other aspects of the LMRDA or its implementing regulations or 
any guidance issued by the Department concerning the Form LM-10 and LM-
20 in the preamble to this rule or subsequent to its publication. Such 
further guidance will simply assist filers in applying the form and 
instructions, and thus the filer is not required to read such material. 
Further, no such time is given union officials in the case of the Form 
LM-30 or for that matter, for union officials who must complete the 
Form LM-2 or other annual financial reports. The time needed to gather 
records, upon reading the instructions, is a separately identified 
recordkeeping burden.
    The Department also concurs that several other burden estimates 
should be increased. As a result of the determination to allow Form LM-
20 filers to consolidate information concerning union avoidance seminar 
attendees on one form, the Department has increased the time required 
to complete Form LM-20 Item 6 from four minutes to ten minutes. This 
item requires the filer to identify the employer with which it entered 
into the agreement. The Department does not believe that, for example, 
Item 6 will require four minutes for each employer attendee, as the 
information for all attendees of the seminar will likely be located in 
one document and will be readily available. Additionally, the 
presenters of such seminars likely already receive this information 
from the seminar organizers, as explained. Furthermore, the Department 
will allow filers to import this data into the electronic form. 
However, the Department has increased the total estimate of time for 
these items because of the volume of employer attendees that certain 
seminar filers will need to record on the form.

[[Page 16008]]

    The Department has also increased the estimated time required to 
identify the subject employees who are to be persuaded in Form LM-20 
Item 12(a) and Form LM-10 Item 14(e), from one minute to five minutes. 
The Department agrees that the information required, although readily 
available, will require more than one minute to compile and record on 
the form. The information will either be readily available in the 
agreement itself or in the communications or policies prepared for 
employees. In certain cases, the consultant may have targeted its 
persuasion to all the employer's employees, or large groups of the 
employees, in which case the information will also be easily obtained.
    Further, the Department has increased the estimated time for 
completing Form LM-20 Items 13 and 14, and Form LM-10 Items 18 and 19, 
the ``Signature and Verification'' items. The Department concurs that 
the president and treasurer of Forms LM-10 and LM-20 filers are not 
similar enough to Form LM-30 filers, in this respect, to justify the 
identical burden estimate for this aspect of the form. Rather, the 
president and secretary-treasurer of large labor organizations are more 
identical in this respect. In the 2003 Form LM-2 final rule, the 
Department estimated that it would take union officers two hours each 
to obtain an electronic signature and one hour to read and sign the 
report, upon its full implementation. See 68 FR 58438. However, the 
two-hour estimate to acquire the electronic signature no longer 
applies, as the Department has eliminated the costly and burdensome 
digital signature and has adopted a free and easy-to-obtain PIN and 
password approach, the same system that will be used by Form LM-10 and 
Form LM-20 filers. Further, the Forms LM-10 and LM-20 estimates do not 
exactly mirror the more detailed and time-consuming Form LM-2 report. 
Thus, the Department estimates that the signature and verification 
process will require a total of 20 minutes, 18 more than proposed. This 
estimate is identical to that of the recently rescinded Form T-1 Trust 
Annual Report. See 73 FR 57441.\107\
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    \107\ The Department notes that the Form T-1 estimate was also 
based on the prior digital signature, not the easily-obtained EFS 
electronic signature. Thus, the 20-minute estimate may overstate the 
actual burden. Furthermore, the Department also notes that the 
rescission of the Form T-1 was not based upon errors in the PRA 
analysis. Indeed, the Department utilized some of the estimates and 
underlying assumptions in the PRA analysis establishing the Form T-1 
in order to estimate the burden for subsidiary organization 
reporting on the Form LM-2. See 73 FR 74952.
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    In response to the Department's cost estimates, the employer 
association rejected the Department's use of the average hourly 
compensation for lawyers of $87.59, pursuant to data from the Bureau of 
Labor Statistics (BLS), and instead supported the use of average hourly 
compensation for chief executive officers (CEOs) of $108.34. A trade 
association also criticized the per-hour compensation figure, as it may 
be ``realistic'' for some ``in-house lawyers'' but not for lawyers in 
law firms. The Department rejects the employer association's 
suggestion, and retains the use of the total compensation figure for 
attorneys, as this conforms to the Department's historical practice, 
and the rulemaking record does not support the inference that the Form 
LM-10 or Form LM-20 is completed by CEOs rather than lawyers.\108\ The 
Department also notes, as explained in more detail below, that it has 
updated its adjustment for total compensation from 41.2% (as used in 
the NPRM, see 76 FR 36203) to approximately 44.5% as a result of the 
availability new data from BLS, resulting in a revised average hourly 
compensation for lawyers of $92.53. The Department also rejects the 
lower 30% provided by the commenter. Further, the Department retains 
the BLS estimate for the hourly wage of lawyers (updated with more 
recent data), as the figure represents an average for all lawyers, and 
neither the trade association nor any other commenter provided an 
alternative estimate for the hourly wage for lawyers.
---------------------------------------------------------------------------

    \108\ The Department acknowledges that the employer officials 
signing and verifying the Form LM-10 reports may be CEOs rather than 
attorneys. However, the Department estimates that attorneys would 
still complete the overwhelming majority of the report, with the 
employer officials spending the estimated 20 minutes signing and 
verifying the forms, which is only a fraction of the total estimate 
of 147 minutes (approximately 13.6%) for the form. This difference, 
along with the relatively small difference in total compensation 
between the CEO and attorney categories, does not warrant a separate 
calculation, and the use of the average total attorney compensation 
provides a reasonable estimate for the Form LM-10.
---------------------------------------------------------------------------

    Additionally, a business association contended that affected 
employers would seek advice regarding LMRDA reporting compliance from 
outside counsel, and the Department did not take this into account. The 
Department emphasizes that the burden estimates to complete and submit 
the Form LM-10 are burdens impacting the employer, but this does not 
prevent the employer from seeking assistance from another party to 
complete the form. Indeed, in such a case the estimates are of time 
undertaken by the third party, although charged to the employer. In 
many cases, the consultant that entered into the agreement with the 
employer may assist the employer in completing the employer's report as 
well as its own. This third-party assistance is appropriate, as long as 
the employer's president and treasurer verifies and signs the report.
    Finally, the Department in the preamble responded to comments that 
suggested that the revised forms established a ``subjective'' test, 
replacing a ``bright-line'' test, without adequate justification in the 
statute, legislative history, or public policy. The Department also 
responded to assertions that the proposed rule would chill employer 
speech, restrict access to attorneys and thereby increase labor law 
violations, and discourage positive personnel policies. In response, as 
explained elsewhere in the preamble, the Department clarified the 
objective nature of the test to determine reportability of employer-
consultant agreements, the strong support for such test in the text of 
the statute and its legislative history, and the benefits concerning 
such transparency to employee rights to organize and bargain 
collectively, as well as to stable and peaceful labor-management 
relations. In particular, the Department explained that reporting is 
not triggered merely because the consultant developed a personnel 
policy that improves employee wages, benefits, or working conditions. 
Rather, the consultant must have an object to persuade employees.
    Except as noted above or within, the analysis below is identical to 
that of the NPRM. Any differences are explained in this section.
2. Overview of the Revised Forms LM-20, LM-10, and Instructions
a. Revised Form LM-20 and Instructions
    The Revised Form LM-20 and Instructions (see Appendix A) are 
described in Section IV.D, and this discussion is incorporated here by 
reference.
b. Revised Form LM-10 and Instructions
    The Revised Form LM-10 and Instructions (see Appendix B) are 
described in Section IV.D, above, and this discussion is incorporated 
here by reference.
3. Methodology for the Burden Estimates
    The Department first estimated the number of Form LM-10 and Form 
LM-20 filers that will submit the revised form, as well as the increase 
in submissions that result from the rule. Then, the estimated number of 
minutes that each filer will need to meet the

[[Page 16009]]

reporting and recordkeeping burden of the revised forms was calculated, 
as was the total burden hours. The Department then estimated the cost 
to each filer for meeting those burden hours, as well as the total cost 
to all filers. Federal costs associated with the rule were also 
estimated. Additionally, the Department notes that the burden figures 
provided below are intended to be reasonable estimates, for the average 
filer, and not precise statements of the number of filers and hour and 
cost burden for every filer.
a. Number of Revised Form LM-20 and Form LM-10 Filers
    The Department estimates 4,194 Form LM-20 reports and 2,777 Form 
LM-10 reports under this rule (the first number is increased from the 
2,601 estimate in the NPRM; the second figure represents a decrease 
from the 3,414 estimate in the NPRM). The Form LM-20 total represents 
an increase of 3,807 Form LM-20 reports over the total of 191 reports 
estimated in the Department's most recent Information Collection 
Request (ICR) submission to the Office of Management and Budget (OMB). 
The Form LM-10 total represents a 1,820 increase over the average of 
957 Form LM-10 reports received annually between FY 2010 and 2014.\109\
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    \109\ In the NPRM, the Department did not utilize the Form LM-10 
reports estimate from its recent ICR submission to OMB, because this 
total did not break the reports out pursuant to subsection of 
section 203(a), as did the FY 2007 and FY 2008 study referenced in 
the NPRM, and the total of 930 reports used in the NPRM is almost 
identical to the 938 Form LM-10 reports estimated in the prior ICR 
submission.
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(i). Form LM-20 Total Filer Estimate
    The Department estimates 4,187 revised Form LM-20 reports. To 
estimate the total number of revised Form LM-20 reports, the Department 
first estimated the number of individual persuader agreements between 
one employer and one consultant firm. Second, in response to comments 
received concerning seminar reporting, the Department estimated the 
number of Form LM-20 reports received for union avoidance seminars from 
consultant firms (including law firms).
    First, the Department employed the mean rate (78%) of employer 
utilization of consultants to manage an anti-union campaign when faced 
with an organizing effort. See Section III.B.3. The Department views 
this rate as providing the best method at estimating non-seminar 
persuader reporting, as it is aware of no data set that will reflect 
all instances in which a labor relations consultant will engage in 
reportable persuader activity. Further, there is no ready proxy for 
estimating the use of consultants in contexts other than in election 
cases (with the exception of union avoidance seminars, as explained 
below), such as employer efforts to persuade employees during 
collective bargaining, a strike, or other labor dispute. The Department 
believes, however, that the number of representation and 
decertification elections supervised by the National Labor Relations 
Board (NLRB) and the National Mediation Board (NMB), the agencies that 
enforce private sector labor-management relations statutes, provides a 
reasonable benchmark for estimating the number of reports that will be 
filed under the rule.
    The Department applied the 78% employer utilization rate of 
consultants to data from the NLRB and NMB. As shown above in Section 
III.B.3, and as updated from the NPRM to account for the most recent 
fiscal years available, the NLRB received an annual average of 2,658 
representation cases during the fiscal years 2009-2013.\110\ The NMB 
handled an annual average of 40 representation cases during the fiscal 
years 2010-2014.\111\ Applying the 78% figure to 2,698 (the 
approximate, combined NLRB and NMB average representation case total 
per year) results in approximately 2,104 Form LM-20 reports.
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    \110\ The number of NLRB petitions include those filed in 
certification and decertification (RC, RD, and RM) cases. See 2010 
and 2012 NLRB Summary of Operations (which include FYs 09 and 11) at 
https://www.nlrb.gov/reports-guidance/reports/summary-operations, as 
well as Number of Petitions Filed in FY13: https://www.nlrb.gov/news-outreach/graphs-data/petitions-and-elections/number-petitions-filed-fy13. Does not include unit deauthorization, unit amendment and unit 
clarification (UD, AC and UC) cases.
    \111\ See 2014 NMB Annual Report, Table 1 (CASES RECEIVED AND 
CLOSED), at the ``new'' cases line, https://storage.googleapis.com/dakota-dev-content/2014annual-report/.
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    Second, in response to comments received concerning persuader 
seminars and other persuader activities conducted outside the context 
of NLRB and NMB election process, and as explained above, the 
Department also assumes that reports will be filed in the context of 
union avoidance seminars (calculated independently from the NLRB and 
NMB election-based estimates). The Department estimated the number of 
Form LM-20 reports filed by consultants for such seminars by 
distinguishing between those seminars organized by a trade or 
businesses association but presented by a consultant who subcontracts 
with the association, and those seminars organized and presented by a 
consultant itself (or a trade or business association itself). The 
Department utilized data concerning the 15,808 ``business 
associations'' from the NAICS.\112\ This category includes trade 
associations and chambers of commerce. The Department does not consider 
it likely that business associations with less than 20 employees will 
organize seminars for employers. Rather, the Department assumes that 
each of the 1,045 business associations that operate year round and 
have 20 or more employees will, on average, organize annually one 
persuader seminar. The Department does not believe it is likely that 
these associations would conduct such seminars themselves, but, rather, 
will contract to a consultant or law firm, as described. Additionally, 
to provide a more comprehensive picture of seminar reporting, the 
Department estimates that the combined 358 individual filers (law firms 
or other consultants), in addition to presenting the 1,045 seminars for 
business associations, would also conduct or present an additional 
1,045 seminars conducted annually. Thus, the Department estimates that 
it will receive 2,090 (1,045 + 1,045) revised Form LM-20 reports 
annually as a result of union avoidance seminars, which corresponds to 
an average of approximately six seminar reports per filer. While the 
rulemaking record on this point is limited, it suggests that such 
seminars are relatively common and certain firms will conduct directly 
or present for business associations multiple seminars annually. 
However, the record does not suggest that all or the majority of firms 
will do so; the Department assumes that some will conduct no seminars, 
some only annually, and others perhaps as often as once per month. The 
Department therefore considers it reasonable to estimate that 
consultants, including law firms, will, on average, conduct or present 
approximately six such seminars annually.
---------------------------------------------------------------------------

    \112\ See 2012 Economic Census, U.S. Census Bureau: NAICS 
813910--Business Associations, United States, accessed at: https://www.census.gov/econ/susb/.
---------------------------------------------------------------------------

    The Department therefore estimates that the revised Form LM-20 will 
generate 4,194 (2,090 + 2,104) reports, which is an increase of 3,807 
over the previous estimate of 387 (in the Department's most recent ICR 
submission to the OMB).\113\ Additionally, the Department estimated the 
number of filers for those 4,194 reports. The Department reviewed the 
2,726 Form LM-20 reports it registered from FY 10-14, and determined 
that

[[Page 16010]]

these reports came from a total of 464 consultants, which averages to 
approximately 5.875 reports per consultant. Applying this ratio to the 
estimated 2,104 revised Form LM-20 reports received for non-seminar 
agreements results in an average of approximately 358 (2,104/5.875) 
consultant firms (including law firms) filing reports.\114\
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    \113\ As stated, these figures represent an increase over the 
NPRM's estimate. The estimate of 4,194 reports received is 1,593 
greater than the 2,601 estimated in the NPRM. See 76 FR 36198.
    \114\ The Department notes that, pursuant to the terms of the 
statute and the instructions to the form, other persons who enter 
into agreements to aid the consultant in its efforts to persuade the 
employer's employees, are also required to submit Form LM-20 
reports. Furthermore, it is possible that an employer could enter 
into reportable agreements with multiple consultants during an anti-
union organizing effort. However, the Department did not receive any 
further information on these points in response to the NPRM. The 
Department therefore assumes in its estimates that most employers 
will hire one consultant for each persuader agreement. Moreover, as 
discussed, we assume that insofar as union avoidance seminars are 
concerned, in most instances, a law or consultant firm, as the 
presenter, will undertake the reporting.
    Additionally, the Department notes that the estimated 358 filers 
will file approximately 12 reports each (4,194/358=11.71).
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(ii). Form LM-10 Total Filer Estimate
    The Department estimates 2,777 revised Form LM-10 filers, for a 
total increase of 1,820 over the average of 957 Form LM-10 reports 
estimated in the Department's most recent ICR renewal. The Form LM-10 
analysis follows only the first portion of the above analysis, as 
employers are not required to file Form LM-10 reports for participation 
at union avoidance seminars, and an employer files one Form LM-10 
report per fiscal year, regardless of the number of persuader 
agreements entered. This contrasts with consultants, who file one Form 
LM-20 per agreement.
    Additionally, the Form LM-10 has other aspects that are not 
affected by this rule. Specifically, an employer must report certain 
payments to unions and union officials pursuant to section 203(a)(1), 
as well as persuader and information gathering related payments 
pursuant to section 203(a)(2) and 202(a)(3). For these portions of the 
Form LM-10, the Department utilized data obtained from a review of the 
OLMS e.LORS system, which revealed an average of non-persuader Form LM-
10 reports registered annually from FY 2010-2014.
    The Department assumes for this calculation that each Form LM-10 
report submitted will involve just one of the above statutory 
provisions, although in practice there may be some overlap. Thus, the 
Department combines the estimated 2,104 non-seminar persuader 
agreements between employers and law firms or other consultant firms, 
calculated for the Form LM-20, with 672.6 (the annual average number of 
Form LM-10 reports registered from FY 10-14, indicating that the forms 
were submitted pursuant to sections 203(a)(1)-(3), the non-consultant 
agreement or arrangement provisions). This yields a total estimate of 
approximately 2,777 revised Form LM-10 reports (2,104 + 672.6 = 
2,776.6), which represents an increase of 1,820 reports over the 
average of 957 Form LM-10 reports registered annually from FY 10-14.
b. Hours To Complete and File the Revised Form LM-20 and Form LM-10
    The Department has estimated the number of minutes that each Form 
LM-20 and Form LM-10 filer will need for completing and filing the 
revised forms (reporting burden), as well as the minutes needed to 
track and maintain records necessary to complete the forms 
(recordkeeping burden). The estimates for the Form LM-20 are included 
in Tables 1 and 2, and the estimates for the Form LM-10 are included in 
Tables 3 and 4. The tables describe the information sought by the 
revised forms and instructions, where on each form the particular 
information is to be reported, if applicable, and the amount of time 
estimated for completion of each item of information. The estimates for 
the reporting burden associated with completing certain items of the 
forms and reading the instructions, as well as the related 
recordkeeping requirements, are based on similar estimates utilized in 
the recent Form LM-30 Labor Organization Officer and Employee Report 
rulemaking, pursuant to section 202 of the LMRDA. While the information 
required to be reported in that form differs from the Forms LM-10 and 
LM-20, and union officers differ from attorneys who complete the 
employer and consultant forms, the Forms LM-10 and LM-20 contain 
primarily informational items such as contact names, many of which are 
very similar to that requested on the Form LM-30. Thus, the 
similarities in the forms and length of the instructions provide a 
reasonable basis for these estimates.
    Further, the estimates include the time associated with gathering 
documentation and any work needed to complete the forms. For example, 
the estimates include reading the instructions, gathering relevant 
documentation and information, and checking the appropriate persuader 
or information-supplying activities boxes. The Department also notes 
that there are no calculations required for the Form LM-20, as it does 
not require the reporting of financial transactions (although Item 10, 
Terms and Conditions, requires reporting of aspects related to rate of 
consultant pay). The aspect of the Form LM-10 affected by this 
rulemaking, concerning the details of persuader agreements, requires 
the reporting disbursements made to the consultant, without any 
calculations.
    Additionally, the estimates below are for all filers, including 
first-time filers and subsequent filers. While the Department 
considered separately estimating burdens for first-time and subsequent 
filers, the nature of Form LM-20 and Form LM-10 reporting militates 
against such a decision. Employers, labor relations consultants, and 
others may not be required to file reports for multiple fiscal years. 
In those cases in which the Department has reduced burden estimates for 
subsequent-year filings, it generally did so with regard to annual 
reports, specifically labor organization annual reports, Forms LM-2, 
LM-3, and LM-4. In contrast, the Form LM-20 and Form LM-10, like the 
Form LM-30, is only required for employers, labor relations 
consultants, and other filers in years that they engage in reportable 
transactions. As such, the burden estimates assume that the filer has 
never before filed a Form LM-20 or Form LM-10. See Form LM-30 Final 
Rule at 76 FR 66487.
(i). Recordkeeping Burden Hours To Complete the Form LM-20
    The recordkeeping estimate of 15 minutes per filer represents a 13-
minute increase from the 2-minute estimate for the prior Form LM-20, as 
prepared for the Department's most recent information collection 
request for OMB # 1245-0003. See also the prior Form LM-20 and 
instructions. This estimate reflects the Department's reevaluation of 
the effort needed to document the nature of the agreement or 
arrangement with an employer, as well as the types of activities 
engaged in pursuant to such agreement or arrangement. Additionally, the 
Department assumes that consultants retain most of the records needed 
to complete the form in the normal course of their business. Finally, 
the 15 minutes accounts for the 5-year retention period required by 
statute. See section 206, 29 U.S.C. 436.
(ii). Reporting Burden Hours for the Form LM-20
    The reporting burden of 83 minutes per filer represents a 63-minute 
increase from the 20-minute estimate for the prior Form LM-20, as 
prepared for the Department's most recent information collection 
request for OMB # 1215-0188. See also the prior Form LM-20

[[Page 16011]]

and instructions. (As explained below, this is also a 38-minute 
increase over the proposed Form LM-20 reporting burden estimate in the 
NPRM.) This estimate reflects the Department's reevaluation of the 
effort needed to record the nature of the agreement or arrangement with 
an employer, as well as the types of activities engaged in pursuant to 
such agreement or arrangement. It also includes the time required to 
read the Form LM-20 instructions to discover whether or not a report is 
owed and determine the correct manner to report the necessary 
information. The Department estimates that the average filer will need 
20 minutes to read the instructions, which includes the time needed to 
apply the Department's revised interpretation of the advice 
exemption.\115\ (This is a ten-minute increase over the NPRM's 
estimate.)
---------------------------------------------------------------------------

    \115\ Additionally, the Department estimates that those persons 
who are not required to file the Form LM-20 will spend ten minutes 
reading the instructions. As explained further in the RFA section, 
these entities will spend an estimated 50 minutes applying the 
instructions to all of their clients to determine that reporting is 
not required, for a total burden of 60 minutes (or one hour) for 
these non-filers. This burden is not included in the total reporting 
burden, since these persons do not file and are thus not 
respondents.
---------------------------------------------------------------------------

    The Department views the simple data entries required by Items 1.a 
through 1.c, 4, 5, 7, and 11b-c as only requiring 30 seconds each. 
These items only require simple data entry regarding dates or file 
numbers, checking boxes, or, in the case of 11.c, a simple answer 
regarding the extent or performance for the activities undertaken 
pursuant to the agreement or arrangement. Additionally, Item 9 includes 
two boxes to check identifying generally the nature of the activities 
performed, so the Department estimates that this item will require one 
minute to complete. The Department estimates that a filer will be able 
to enter its own contact information in only two minutes, including its 
Employer Identification Number (EIN), if applicable, in Item 2, as well 
as two minutes for any additional contact information in Item 3. 
Further, the filer will require two minutes to record in Item 8(a) or 
Item 8(b) the names of the employer's representatives or officials of 
the prime consultant with whom the filer entered into the agreement or 
arrangement, as well as two minutes to identify in Item 11.d the 
individuals who carried out the activities for the employer. The filer 
will need ten minutes; however, to enter the information for the 
employer in Item 6, including the EIN, for non-seminar reports, as this 
information may not be as readily available as the filer's own. (This 
is a six-minute increase over the NPRM.)
    The Department estimates that it will take filers five minutes to 
describe in Item 10 in narrative form the nature of the agreement or 
arrangement, as well as attach the written agreement (if applicable), 
and five minutes to complete the checklist in Item 11.a, which 
illustrates the nature of the activities undertaken pursuant to the 
agreement or arrangement. It will also take five minutes for Item 12.a 
(which represents a four-minute increase over the NPRM) and one minute 
for Item 12.b, in order to identify the subject group of employee(s) 
and organization(s).
    Finally, the Department estimates that a Form LM-20 filer will 
utilize five minutes to check responses and review the completed 
report, and will require ten minutes per official to sign and verify 
the report in Items 13 and 14 (for 20 minutes total for these two 
items, which is an 18-minute increase over the NPRM). The Department 
introduced in calendar year 2010 a cost-free and simple electronic 
filing and signing protocol, the electronic form system or EFS, which 
will reduce burden on filers.
    As a result, the Department estimates that a filer of the revised 
Form LM-20 will incur 98 minutes in reporting and recordkeeping burden 
to file a complete form (this is a 38-minute increase over the 60 
minutes estimated in the NPRM). This 98-minute total compares with the 
22 minutes per Form LM-20 filer in the currently approved information 
collection request. See Table 1 below.
---------------------------------------------------------------------------

    \116\ The Department includes this item and an estimated time of 
completion in an effort to provide a thorough burden analysis. 
However, the Department does not consider it likely that this item 
will need to be completed, so it has not been included in the total 
below.
    \117\ The Department includes this item and an estimated time of 
completion in an effort to provide a thorough burden analysis. 
However, the Department does not consider it likely that the average 
filer will need to complete this item, so it has not been included 
in the total below.

      Table 1--Form LM-20 Filer Recordkeeping and Reporting Burden
                              [In minutes]
------------------------------------------------------------------------
                                  Section of
      Burden description         revised form     Recurring burden hours
------------------------------------------------------------------------
Maintaining and gathering      Recordkeeping     15 minutes.
 records.                       Burden.
Reading the instructions to    Reporting Burden  20 minutes.
 determine applicability of
 the form and how to complete
 it.
Reporting LM-20 file number..  Item 1.a........  30 seconds.
Identifying if report filed    Item 1.b........  30 seconds.\116\
 under a Hardship Exemption.
Identifying if report is       Item 1.c........  30 seconds.\117\
 amended.
Reporting filer's contact      Item 2..........  2 minutes.
 information.
Identifying Other Address      Item 3..........  2 minutes.
 Where Records Are Kept.
Date Fiscal Year Ends........  Item 4..........  30 seconds.
Type of Person...............  Item 5..........  30 seconds.
Full Name and Address of       Item 6..........  10 minutes.
 Employer.
Date of Agreement or           Item 7..........  30 seconds.
 Arrangement.
Person(s) Through Whom         Items 8(a) and    2 minutes.
 Agreement or Arrangement       (b).
 Made.
Object of Activities.........  Item 9..........  1 minute.
Terms and Conditions.........  Item 10.........  5 minutes.
Nature of Activities.........  Item 11.a.......  5 minutes.
Period During Which Activity   Item 11.b.......  30 seconds.
 Performed.
Extent of Performance........  Item 11.c.......  30 seconds.
Name and Address of Person     Item 11.d.......  2 minutes.
 Through Whom Performed.
Identify the Subject Group of  Item 12.a.......  5 minutes.
 Employee(s).
Identify the Subject Labor     Item 12.b.......  1 minute.
 Organization(s).
Checking Responses...........  N/A.............  5 minutes.

[[Page 16012]]

 
Signature and verification...  Items 13-14.....  20 minutes.
                              ------------------------------------------
    Total Recordkeeping        ................  15 minutes.
     Burden Hour Estimate Per
     Form LM-20 Filer.
    Total Reporting Burden     ................  83 minutes.
     Hour Estimate Per Form
     LM-20 Filer.
                              ------------------------------------------
        Total Burden Estimate  ................  98 minutes.
         Per Form LM-20 Filer.
------------------------------------------------------------------------

(iii). Total Form LM-20 Reporting and Recordkeeping Burden
    As stated, the Department estimates that the burden of maintaining 
and gathering records is 15 minutes and that it will receive 4,194 
revised Form LM-20 reports. Thus, the estimated recordkeeping burden 
for all reports is 62,916.6 minutes (15 x 4,194.44 = 62,916.60 minutes) 
or approximately 1,048.61 hours (62,916.6/60 = 1,048.61). The remaining 
times (83 minutes) represents the burden involved with reviewing the 
instructions and reporting the data. The total estimated reporting 
burden for all LM-20 reports is 348,138.52 minutes (83 x 4,194.44 = 
348,138.52 minutes) or approximately 5,802 hours (348,138.52/60 = 
5,802.3 hours). The total estimated burden for all LM-20 reports is, 
therefore, 411,055 minutes or approximately 6,851 hours (1,048.61 + 
5,802.3 = 6,850.9).\118\ See Table 2 below.\119\
---------------------------------------------------------------------------

    \118\ As discussed earlier in the text, the Department has 
estimated that a total of 4,194 LM-20 reports will be filed 
annually. Based on the estimated number of unique filers (358), the 
Department estimates that on average each of these filers will file 
11.71 reports annually (4,194.44/358.2). (The Department has 
elsewhere rounded the average number of reports to 12). The 
estimated total recordkeeping burden per filer for the estimated 358 
labor relations consultant firms is approximately 176 minutes (15 
minutes x 11.71) or approximately 2.93 hours, and the estimated 
total reporting burden per such filer is 972 minutes (83 x 11.71) or 
approximately 16.2 hours. Thus, the estimated total burden per such 
filer is approximately 1,148 minutes (176 + 972) or approximately 19 
hours.
    \119\ As explained, while the recordkeeping burden of 15 minutes 
is identical to the NPRM, these other totals represent increases 
over the estimates in the NPRM. The total recordkeeping burden of 
62,916.6 minutes or 1,048.61 hours is a 23,901.6-minute increase (or 
398.36 hours) over the NPRM estimate of 39,015 minutes (or 650.25 
hours). The reporting burden of 83 minutes is a 38-minute increase 
over the NPRM's estimate of 45 minutes, with a total of 348,138.52 
minutes or 5,802.3 hours, for a total increase of 231,093.52 minutes 
(or approximately 3,852 hours) over the NPRM's estimate of 117,045 
minutes (or 1,950.75 hours). The total Form LM-20 burden in this 
final rule is a 254,995-minute (or approximately 4,250 hour) 
increase over the 156,060 minutes (or 2,601 hours). See 76 FR 36201.
---------------------------------------------------------------------------

    The total recordkeeping burden of approximately 1,049 hours 
represents an approximately 952-hour increase over the 96.8 hours Form 
LM-20 recordkeeping estimate presented in the Department's most recent 
ICR submission to OMB, and the total reporting burden of approximately 
5,802 hours represents an approximately 5,268-hour increase over the 
534 hours Form LM-20 reporting burden estimate presented in the ICR 
submission. The total burden of approximately 6,851 hours is an 
approximately 6,220-hour increase over the estimated 631 hours Form LM-
20 burden total in the most recent ICR submission.
---------------------------------------------------------------------------

    \120\ The estimates in this table have all been rounded to the 
nearest whole number.

   Table 2--Total Reporting and Recordkeeping Burden for the Estimated
                        4,194 Form LM-20 Reports
                            [In hours] \120\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total Recordkeeping Burden..............................           1,049
Total Reporting Burden..................................           5,802
Total Burden............................................           6,851
------------------------------------------------------------------------

(iv). Recordkeeping Burden Hours To Complete the Form LM-10
    The recordkeeping estimate of 25 minutes per filer represents a 20-
minute increase from the 5-minute estimate for the prior Form LM-10, as 
prepared for the Department's most recent information collection 
request for OMB # 1245-0003. See also the prior Form LM-10 and 
instructions. This estimate reflects the Department's reevaluation of 
the effort needed to document the nature of the agreement or 
arrangement with an employer, as well as the types of activities 
engaged in pursuant to such agreement or arrangement. The Department 
assumes that employers retain most of the records needed to complete 
the form in the ordinary course of their business. Furthermore, the 15 
minutes accounts for the 5-year retention period required by statute. 
See section 206, 29 U.S.C. 436. Finally, the Department notes that the 
estimate for the Form LM-10 recordkeeping burden is ten minutes longer 
than that for the Form LM-20, which reflects the greater amount of 
information reported on the Form LM-10.
(v). Reporting Burden Hours To Complete the Form LM-10
    In proposing these estimates, the Department is aware that not all 
employers required to file the Form LM-10 will need to complete each 
Part of the form. However, for purposes of assessing an average burden 
per filer, the Department assumes that the Form LM-10 filer engages in 
reportable transactions, agreements, or arrangements in all four of the 
revised parts.
    The reporting burden of 147 minutes per filer represents an 112-
minute increase from the 35-minute estimate for the prior Form LM-10, 
as prepared for the Department's most recent information collection 
request for OMB # 1245-0003. (This estimate is 27 minutes greater than 
estimated in the NPRM.) See also the prior Form LM-10 and instructions. 
This estimate reflects the Department's reevaluation of the effort 
needed to record the nature of the agreement or arrangement with a 
consultant and the types of activities engaged in pursuant to such 
agreement or arrangement, as well as record and enter each reportable 
payment or expenditure. It also includes the time required to read the 
Form LM-10 instructions to discover whether or not a report is owed and 
determine the correct manner to report the necessary information. The 
Department estimates that the average filer will need 25 minutes to 
read the instructions (a five-minute increase over the NPRM), which 
includes the time needed to apply the Department's revised 
interpretation of the ``advice'' exemption.\121\ This estimate is five 
minutes greater than for the Form LM-20 instructions, as the Form LM-10 
is a more complex report.
---------------------------------------------------------------------------

    \121\ Additionally, the Department estimates that those persons 
who are not required to file the Form LM-10 will spend ten minutes 
reading the instructions. This burden is not included in the total 
reporting burden, since these persons do not file and are thus not 
respondents.

---------------------------------------------------------------------------

[[Page 16013]]

    The Department estimates, as with the Form LM-20, that it will take 
30 seconds to complete each item that calls for entering dates, 
checking appropriate boxes, as well as entering the amount of a payment 
or expenditure and its type (see Items 1.a, 1.b, 1.c, 2, 6, 7, 9.a, 
9.b, 9.c, 11.a, 11.b, 11.c, 13.a, 14.b, 15.a, 15.b, 15.c, 17.a, 17.b, 
and 17.c). Additionally, Parts C and D call for checking multiple 
boxes, which the Department also estimates will take 30 seconds each, 
or one minute for Part C and Part D, respectively.
    The Department also estimated that it would take one minute to 
identify the labor organization target of persuader activities, as well 
as indicating the extent to which the activities have been performed 
(see Items 14.c and 14.f, respectively), while it will take 5 minutes 
to identify the employees being persuaded in Item 14.e (which is a 
four-minute increase over the NPRM).
    Further, the Department estimates, as with the Form LM-20, that it 
will take two minutes for the employer to complete items calling for 
its own identifying information (see Items 3-5 and 14.d), including its 
EIN, if applicable and four minutes for items calling for another's 
identifying information, including EIN, if applicable (see Items 8, 10, 
12, 14.d, and 16). The Department also estimates that it will take five 
minutes to detail the circumstances of each payment or expenditure, 
terms and conditions of any agreement or arrangement, and any 
activities pursuant to such agreement or arrangement (see Items 9.d, 
11.d, 13.b, 14.a, 15.d, and 17.d).
    Finally, the Department estimates that a Form LM-10 filer will 
utilize five minutes to check responses and review the completed 
report, and will require ten minutes per official to sign and verify 
the report in Items 18 and 19 (for 20 minutes total for these two 
items, which is an 18-minute increase over the NPRM). The Department 
introduced in calendar year 2010 a cost-free and simple electronic 
filing and signing protocol, which will reduce burden on filers.
    As a result, the Department estimates that a filer of the revised 
Form LM-10 will incur 147 minutes in reporting and recordkeeping burden 
to file a complete form. This compares with the 35 minutes per filer in 
the currently approved information collection request. See Table 3 
below.

      TAble 3--Form LM-10 Filer Recordkeeping and Reporting Burden
                              [In minutes]
------------------------------------------------------------------------
                                  Section of
      Burden description         revised form     Recurring burden hours
------------------------------------------------------------------------
Maintaining and gathering      Recordkeeping     25 minutes.
 records.                       Burden.
Reading the instructions to    Reporting Burden  25 minutes.
 determine applicability of
 the form and how to complete
 it.
Reporting LM-10 file number..  Item 1.a........  30 seconds.
Identifying if report filed    Item 1.b........  30 seconds.\122\
 under a Hardship Exemption.
Identifying if report is       Item 1.c........  30 seconds.\123\
 amended.
Fiscal Year Covered..........  Item 2..........  30 seconds.
Reporting employer's contact   Item 3..........  2 minutes.
 information.
Reporting president's contact  Item 4..........  2 minutes.
 information if different
 than 3.
Identifying Other Address      Item 5..........  2 minutes.
 Where Records Are Kept.
Identifying where records are  Item 6..........  30 seconds.
 kept.
Type of Organization.........  Item 7..........  30 seconds.
Reporting union or union       Item 8..........  4 minutes.
 official's contact
 information (Part A).
Date of Part A payments......  Item 9.a........  30 seconds.
Amount of Part A payments....  Item 9.b........  30 seconds.
Kind of Part A payments......  Item 9.c........  30 seconds.
Explaining Part A payments...  Item 9.d........  5 minutes.
Identifying recipient's name   Item 10.........  4 minutes.
 and contact information.
Date of Part B payments......  Item 11.a.......  30 seconds.
Amount of Part B payments....  Item 11.b.......  30 seconds.
Kind of Part B payments......  Item 11.c.......  30 seconds.
Explaining Part B payments...  Item 11.d.......  5 minutes.
Part C: Identifying object(s)  Part C..........  1 minute.
 of the agreement or
 arrangement.
Identifying name and contact   Item 12.........  4 minutes.
 information for individual
 with whom agreement or
 arrangement was made.
Indicating the date of the     Item 13.a.......  30 seconds.
 agreement or arrangement.
Detailing the terms and        Item 13.b.......  5 minutes.
 conditions of agreement or
 arrangement.
Identifying specific           Item 14.a.......  5 minutes.
 activities to be performed.
Identifying period during      Item 14.b.......  30 seconds.
 which performed.
Identifying the extent         Item 14.c.......  1 minute.
 performed.
Identifying name of person(s)  Item 14.d.......  2 minutes.
 through whom activities were
 performed.
Identify the Subject Group of  Item 14.e.......  5 minutes.
 Employee(s).
Identify the Subject Labor     Item 14.f.......  1 minute.
 Organization(s).
Indicating the date of each    Item 15.a.......  30 seconds.
 payment pursuant to
 agreement or arrangement.
Indicating the amount of each  Item 15.b.......  30 seconds.
 payment.
Indicating the kind of         Item 15.c.......  30 seconds.
 payment.
Explanation for the            Item 15.d.......  5 minutes.
 circumstances surrounding
 the payment(s).
Part D: Identifying purpose    Part D..........  1 minute.
 of expenditure(s).
Part D: Identifying            Item 16.........  4 minutes.
 recipient's name and contact
 information.
Date of Part D payments......  Item 17.a.......  30 seconds.
Amount of Part D payments....  Item 17.b.......  30 seconds.
Kind of Part D payments......  Item 17.c.......  30 seconds.
Explaining Part D payments...  Item 17.d.......  5 minutes.
Checking Responses...........  N/A.............  5 minutes.
Signature and verification...  Items 18-19.....  20 minutes.
                              ------------------------------------------

[[Page 16014]]

 
    Total Recordkeeping        ................  25 minutes.
     Burden Hour Estimate Per
     Form LM-10 Filer
    Total Reporting Burden     ................  122 minutes.
     Hour Estimate Per Form
     LM-10 Filer
                              ------------------------------------------
        Total Burden Estimate  ................  147 minutes.
         Per Form LM-10 Filer
------------------------------------------------------------------------

(vi). Total Form LM-10 Reporting and Recordkeeping Burden
---------------------------------------------------------------------------

    \122\ The Department includes this item and an estimated time of 
completion in an effort to provide a thorough burden analysis. 
However, the Department does not consider it likely that this item 
will need to be completed, so it has not been included in the total 
below.
    \123\ The Department includes this item and an estimated time of 
completion in an effort to provide a thorough burden analysis. 
However, the Department does not consider it likely that the average 
filer will need to complete this item, so it has not been included 
in the total below.
---------------------------------------------------------------------------

    As stated, the Department estimates that it will receive 2,777 
revised Form LM-10 reports. Thus, the estimated recordkeeping burden 
for all Form LM-10 filers is 69,426 minutes (25 x 2,777.04 = 69,426 
minutes) or approximately 1,157.1 hours (69,426/60 = 1,157.1). The 
total estimated reporting burden for all Form LM-10 filers is 
338,798.88 minutes (122 x 2,777.04 = 338,798.88 minutes) or 
approximately 5,647 hours (338,798.88/60 = 5,646.648. hours).
    The total estimated burden for all Form LM-10 filers is, therefore, 
approximately 408,225 minutes (69,426 + 338,798.88 = 408,224.88) or 
approximately 6,804 hours (1,157.1 + 5,646.648 = 6,803.748). See Table 
4 below.\124\ The total recordkeeping burden of 1,157.1 hours 
represents a 755.2-hour increase over the 401.9-hour Form LM-10 
recordkeeping estimate presented in the Department's most recent ICR 
submission to OMB, and the total reporting burden of 5,646.648 hours 
represents a 3,703.948-hour increase over the 1,942.7 hour Form LM-10 
reporting burden estimate presented in the ICR request. The total 
burden of approximately 6,804 hours is an approximately 4,459-hour 
increase over the 2,344.6-hour Form LM-10 burden hour total in the most 
recent ICR submission.
---------------------------------------------------------------------------

    \124\ The total recordkeeping burden of 69,426 minutes is 15,924 
less than the 85,350 minutes estimated in the NPRM (and the 1,157 
hours is 266 hours less than the 1,423 hours estimated in the NPRM). 
The total reporting burden, however, is approximately 14,469 minutes 
over the estimated 324,330 minutes in the NPRM, or approximately 241 
hours over the estimated 5,406 hours in the NPRM. The Form LM-10 
total burden estimate is a decrease of 1,455 minutes (or 24.25 
hours) over the 409,680 minutes (or 6,828 hours) in the NPRM. See 76 
FR 36203.
    \125\ The estimates in this table have all been rounded to the 
nearest whole number.

   Table 4--Total Reporting and Recordkeeping Burden for the Estimated
                        2,777 Form LM-10 Reports
                            [In Hours] \125\
------------------------------------------------------------------------
                                                               Hours
------------------------------------------------------------------------
Total Recordkeeping Burden..............................           1,157
Total Reporting Burden..................................           5,647
Total Burden............................................           6,804
------------------------------------------------------------------------

c. Cost of Submitting the Form LM-20 and Form LM-10
    The total cost imposed by the rule on Form LM-20 and Form LM-10 
filers is $1,263,499.50. See Table 5 below. This is a $993,746.50 
increase over the $269,753 estimated for the two forms in the most 
recent ICR submission. (This is also an increase of $437,613.39 over 
the estimated total cost of $825,886.11 in the NPRM. See 76 FR 36203).
(i). Form LM-20
    To determine the cost per filer to submit the Form LM-20, the 
Department assumed that each filer would utilize the services of an 
attorney to complete the form. This is consistent with past 
calculations of costs per filer for the Form LM-20, and the assumption 
also corresponds to the analysis above in which the Department notes 
that the consultant industry consists in large part of practicing 
attorneys. The Department also considers non-attorney consultant firms 
as likely utilizing the services of attorneys to complete the form.
    To determine the hourly compensation for attorneys for the purposes 
of this analysis, the Department first identified the average hourly 
salary for lawyers, $64.17, as derived from the Occupational Employment 
and Wages Survey for May 2014 (released on 3/25/15), Table 1 on page 
12, from the Bureau of Labor Statistics (BLS) at www.bls.gov/news.release/pdf/ocwage.pdf. Next, the Department increased these 
figures by approximately 44.2% to account for total compensation.\126\ 
For the purposes of this analysis, this yields an average hourly 
compensation for attorneys of approximately $92.53. ($64.17 plus 
$28.36).
---------------------------------------------------------------------------

    \126\ See Employer Costs for Employee Compensation Summary, from 
the BLS, December 2014 (released on 3/11/15) at www.bls.gov/news.release/ecec.nr0.htm. The Department increased the average 
hourly wage rate for employees ($21.72 in 2014) by the percentage 
total of the average hourly compensation figure ($9.60 in 2014) over 
the average hourly wage ($9.60/$21.72). Note: The Department has 
updated its estimates here from the NPRM, which was based upon 2009 
BLS data.
---------------------------------------------------------------------------

    Applying this hourly total compensation to the estimated 98-minute 
reporting and recordkeeping burden yields an estimated cost of 
approximately $151.14 ($92.5324 x (98/60)) per Form LM-20 report.\127\ 
This is $3.36 greater than the $147.7752 estimate in the most recent 
ICR submission. The total cost for the estimated 4,194.44 Form LM-20 
reports is therefore approximately $633,932.16 (4,194.44 x 
($92.53(rounded) x 98/60) [ap] $633,932), which is $576,743.16 greater 
than the $57,189 total burden estimate for the Form LM-20 in the most 
recent ICR submission.\128\
---------------------------------------------------------------------------

    \127\ The Department also estimated the total costs per Form LM-
20 filer. The estimated total cost per filer for the estimated 358 
labor relations consultant firms, including law firms, is 
approximately $1,769.76, which the Department derived by multiplying 
the exact cost per form ($92.5324 x 98/60) by the exact number of 
forms per filer 11.7097. The Department derived the number of forms 
per filer by dividing the total estimate for Form LM-20 reports 
(4,194.44) by 358.2026 filers, and then rounding up to 12.
    \128\ The cost per Form LM-20 report is an increase of $63.55 
over the $87.59 estimate in the NPRM. The total Form LM-20 estimated 
cost is $406,110.57 greater than the estimated $227,821.59 in the 
NPRM. See 76 FR 36203.
---------------------------------------------------------------------------

(ii). Form LM-10
    As with the Form LM-20 calculation above, the Department assumed 
that each filer would utilize the services of an attorney to complete 
the form. This is consistent with past calculations of costs per filer 
for the Form LM-10. The Department also considers that consultant firms 
are likely utilizing the

[[Page 16015]]

services of attorneys to complete the form.
    Applying this hourly total compensation to the estimated 147-minute 
reporting and recordkeeping burden yields an estimated cost of 
approximately $226.70 ($92.53 x (147/60) = $226.6985) per report/filer. 
This is $4.59 greater than the estimated $222.11 Form LM-10 burden 
presented in the most recent ICR submission. The total cost for the 
estimated 2,777 Form LM-10 reports/filers is therefore approximately 
$629,567.34 (2,777.04 x $226.70(rounded) [ap] $629,567), which is 
$417,003.34 greater than the $212,564 estimated for the most recent ICR 
submission.\129\
---------------------------------------------------------------------------

    \129\ The cost per Form LM-10 report is an increase of $51.52 
over the $175.18 estimate in the NPRM. The total Form LM-10 
estimated cost is $31,502.82 greater than the estimated $598,064.52 
in the NPRM. See 76 FR 36203.
---------------------------------------------------------------------------

(iii). Federal Costs
    In its recent submission for revision of OMB #1245-0003, which 
contains all LMRDA forms, the Department estimates that its costs 
associated with the LMRDA forms are $1,825,935 for the OLMS national 
office and $3,279,173 for the OLMS field offices, for a total Federal 
cost of $5,105,108. Federal estimated costs include costs for 
contractors and operational expenses such as equipment, overhead, and 
printing as well as salaries and benefits for the OLMS staff in the 
National Office and field offices who are involved with reporting and 
disclosure activities. These estimates include time devoted to: (a) 
Receipt and processing of reports; (b) disclosing reports to the 
public; (c) obtaining delinquent reports; (d) reviewing reports; (e) 
obtaining amended reports if reports are determined to be deficient; 
and (f) providing compliance assistance training on recordkeeping and 
reporting requirements.
---------------------------------------------------------------------------

    \130\ The estimates in this table have all been rounded to the 
nearest whole number.
    \131\ The cost estimates provided in the table may not multiply 
exactly due to rounding. The PRA section of the final rule explains 
more precisely how the Department derived these figures.
    \132\ This is an approximate per hour figure derived from the 
estimated reporting burden of 83 minutes divided by 60 minutes in an 
hour.
    \133\ This is an approximate per hour figure derived from the 
estimated reporting burden of 122 minutes divided by 60 minutes in 
an hour.
    \134\ This is an approximate per hour figure derived from the 
estimated recordkeeping burden of 25 minutes divided by 60 minutes 
in an hour.

                             Table 5--Reporting and Recordkeeping Burden Hours and Costs for Form LM-20 and Form LM-10 \130\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Reporting       Total      Recordkeeping       Total       Total burden     Total      Average
         Number of reports              hours per     reporting      hours per     recordkeeping     hours per      burden     cost per     Total cost
                                         report         hours         report           hours          report        hours       report         \131\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form LM-20: 4,194..................      \132\ 1.38        5,802            0.25           1,049            1.63      6,851      $151.14     $633,932.16
Form LM-10: 2,777..................      \133\ 2.03        5,647      \134\ 0.42           1,157            2.45      6,804       226.70      629,567.34
    Total..........................  ..............  ...........  ..............  ..............  ..............  .........  ...........    1,263,499.50
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The total burden for the Labor Organization and Auxiliary Reports 
information collection, including those not changed by this rulemaking 
action, is summarized as follows:
    Agency: DOL-OLMS.
    Title of Collection: Labor Organization and Auxiliary Reports.
    OMB Control Number: 1245-0003.
    Affected Public: Private Sector--businesses or other for-profits, 
farms, not-for-profit institutions, and individuals or households.
    Total Estimated Number of Responses: 37,414.
    Total Estimated Annual Burden Hours: 4,593,235.
    Total Estimated Annual Other Costs Burden: $0.

H. Regulatory Flexibility Analysis and Executive Order 13272

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
requires agencies to consider the impact of their regulatory proposals 
on small entities, analyze effective alternatives that minimize small 
entity impacts, and make initial analyses available for public comment. 
5 U.S.C. 603, 604. If an agency determines that its rule will not have 
a significant economic impact on a substantial number of small 
entities, it must certify that conclusion to the Small Business 
Administration (SBA). 5 U.S.C. 605(b). The Department provided that 
certification in the NPRM. 76 FR 36206. Executive Order 13272 concerns 
implementation of the RFA, and generally reinforces the RFA provisions. 
The Department has considered the impact of this rule on small 
businesses and small organizations as prescribed by this Executive 
Order. Although the Executive Order, at section 3(c), allows the Chief 
Counsel for Advocacy of the Small Business Administration to submit 
comments on a proposed rule, none have been submitted in this 
rulemaking.
    The Department has modified its RFA analysis for this final rule in 
response to comments. In the analysis that follows, the Department 
considers the economic impact of the rule not only on small entity 
consultants and employers required to file reports, as discussed in the 
NPRM, but also on those small consultants and employers that may need 
to review the reporting requirements even if they ultimately are not 
required to file reports. The analysis shows that the estimated cost of 
the rule per affected small entity is not significant when compared to 
gross revenue. The Department therefore certifies that this rule does 
not have a significant economic impact on a substantial number of small 
entities. A full RFA analysis is thus not required.
1. Statement of the Need for, and Objectives of, the Rule
    The discussion concerning Executive Orders 13563 and 12866 is 
hereby incorporated by reference.
2. Legal Basis for Rule
    The legal authority for this rule is provided in sections 203 and 
208 of the LMRDA. 29 U.S.C. 433, 438. Section 208 provides that the 
Secretary of Labor shall have authority to issue, amend, and rescind 
rules and regulations prescribing the form and publication of reports 
required to be filed under Title II of the Act, and such other 
reasonable rules and regulations as she may find necessary to prevent 
the circumvention or evasion of the reporting requirements. 29 U.S.C. 
438.
3. Number of Small Entities Covered Under the Final Rule
    As explained below, the Department estimates that there are 
approximately 358 small consultants affected by the Form LM-20 portion 
of the rule as filing entities and 2,777 employers affected by the Form 
LM-10 portion as filing entities, for a total of 3,135 small entities 
affected by the rule as filing entities. Additionally, in response to 
comments received, the Department, as also explained below, has 
estimated the number of entities that will need to review the rule in 
order to determine

[[Page 16016]]

that they have not incurred a filing obligation: 39,298 non-filing 
consultants and 185,060 non-filing employers (for a total of 224,358 
non-filing entities) affected by the rule.
Filing Consultants and Employers
    As explained in the PRA analysis above, the Department estimates 
that there are 358 unique consultant firms that will file the expected 
2,104 non-seminar Form LM-20 reports. Next, the Department analyzed 
data from the U.S. Census Bureau's North American Industry 
Classification System Codes (NAICS) for ``Human Resources Consulting 
Services,'' which includes ``Labor Relations Consulting Services.'' 
\135\ Additionally, the Department utilized the Small Business 
Administration's (``SBA'') ``small business'' standard of $15 million 
in average annual receipts for ``Human Resources Consulting Services,'' 
NAICS code 541612.\136\
---------------------------------------------------------------------------

    \135\ See U.S. Census Bureau, Statistics of U.S. Businesses: 
2012: Number of Firms, Number of Establishments, Employment and 
Annual Payroll by Enterprise Employment Size for the United States, 
NAICS 541612--Human resources & executive search consulting 
services, United States, accessed at: www.census.gov/econ/susb/.
    \136\ See U.S. Small Business Administration's Table of Small 
Business Size Standards Matched to the North American Industry 
Classification System Codes, at 42, accessed at: www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Note: The $15 million 
standard replaces the prior standard for NAICS 541612 used in the 
NPRM, as the SBA updated its data subsequent to the publication of 
the NPRM.
---------------------------------------------------------------------------

    A review of the above data reveals that there are 6,461 firms 
within the ``Human Resources Consulting Services'' NAICS category, with 
nearly all of them (6,337, approximately 98% of the total) with less 
than $15 million in average annual receipts. See Statistics of U.S. 
Businesses: 2012: NAICS 541612. As a result, based on the best 
available data, the Department assumes for the purposes of the RFA 
certification that all 358 Form LM-20 filing entities are small 
entities affected by the Form LM-20 portion of the rule.
    To determine the number of filing employers that can be classified 
as small entities, pursuant to the Form LM-10 portion of the rule, the 
Department notes that the SBA considers 99.7 percent of all employer 
firms to qualify as small entities.\137\ Further, the rule affects all 
private sector employers. As a result, for the purposes of the RFA 
certification, the Department concludes that all 2,777 employers that 
the Department estimates will file under this rule (the derivation of 
the 2,777 estimate is explained in the PRA analysis) constitute small 
entities.
---------------------------------------------------------------------------

    \137\ See https://www.sba.gov/sites/default/files/FAQ_March_2014_0.pdf.
---------------------------------------------------------------------------

    Therefore, the total number of small entities required to file 
reports under this rule is estimated to be 3,135 entities (358 
consultants and 2,777 employers).
Non-Filing Consultants and Employers
    Additionally, the Department has estimated the number of entities 
that, although not required to file reports by this rule, are affected 
by the rule because they must review the reporting requirements to 
determine that reporting is not required. The NPRM did not include such 
estimate. To estimate the number of affected non-filing consultant 
firms, the Department reviewed all law firms within the ``Offices of 
Lawyers'' category of NAICS Code 541110, human resources consultant 
firms within NAICS code 541612, and all business associations within 
NAICS Code 813910. First, concerning law firms, while there are 165,435 
entities within NAICS Code 541110,\138\ not all such firms will need to 
review the reporting requirements; rather, only those involved in the 
practice of labor and employment law will need to conduct that review. 
Indeed, only 17,387 firms in the United States fall into such 
category.\139\ Second, as stated, there are 6,461 consultant firms 
within NAICS Code 541612. See Statistics of U.S. Businesses: 2012: 
NAICS 541612. Third, there are 15,808 business associations in the 
United States. See Statistics of U.S. Businesses: 2012: NAICS 813910. 
As a result, and subtracting out the 358 filing law and consultant 
firms, there are 39,298 non-filing, consultant small entities affected 
by this rule. The Department assumes that each of these entities is a 
small entity.
---------------------------------------------------------------------------

    \138\ See U.S. Census Bureau, Statistics of U.S. Businesses: 
2012: Number of Firms, Number of Establishments, Employment and 
Annual Payroll by Enterprise Employment Size for the United States, 
NAICS 541110--Offices of Lawyers, United States, accessed at: 
www.census.gov/econ/susb/.
    \139\ See Martindale law firm search engine at https://www.martindale.com/Find-Lawyers-and-Law-Firms.aspx. Search conducted 
on 5/18/15 for all United States law firms that focus on labor and 
employment law.
---------------------------------------------------------------------------

    The Department found no empirical data upon which to estimate the 
universe of small employers that, although not required to file, may 
otherwise be affected by the rule. Not every private sector employer, 
large or small, will be impacted and required to review the new 
reporting requirements. However, many small businesses and small 
business representatives commented that some small businesses--out of 
the more than 2 million small business employers with over five 
employees--should be counted as affected small entities. These small 
businesses, they contend, could potentially be contacted about an 
organizing drive or other labor relations matter and will therefore 
hire labor relations consultants, even though the consultants 
ultimately do not undertake any reportable persuader activities on 
their behalf.
    The Department agrees that these non-filing small businesses will 
potentially be affected by this rule because of their need to review 
the revised Form LM-10 instructions before determining that they are 
not required to file. However, the Department has found no reliable 
data or information that identifies the number of employers, large or 
small, that hire labor relations consultants. The NLRB compiles 
statistics on the number of representation petitions and elections, 
which the Department used to estimate the number of filing entities, 
but this data does not capture the total number of employers that have 
hired consultants, especially outside of the election context. In the 
absence of empirical data on this subset of employers, the Department 
assumes that the universe of non-filing employers utilize consultants 
at the same rate as the universe of filing employers. In other words, 
the Department assumes for this purpose that the rate of employer-
consultant agreements resulting in reportable persuader activities is 
the same as the rate of employer-consultant agreements that do not lead 
to persuader activities. As explained previously, the Department 
estimates that there will be 2,777 filing employers and 358 filing 
consultants. Thus, the ratio of filing employers to filing consultants 
is about 7.76 (2,777 / 358).
    Using these assumptions, the Department estimates the universe of 
affected non-filing employers by applying the 7.76 rate to the number 
of non-filing consultants reasonably expected to be hired for 
organizing or collective bargaining purposes. Like with employers 
(discussed above), there is a lack of empirical data on the aggregate 
number of consultants that are hired but do not engage in persuader 
activities. Therefore, to make a conservative estimate, the Department 
assumes that every labor relations consultant (except for trade or 
business associations) will have employer clients that hire the 
consultant for a purpose requiring the employer-client to review the 
rule. As discussed above, the Department estimates that there are 
17,387 labor and employment law firms and 6,461 human resources 
consultant firms that might be affected by the rule.

[[Page 16017]]

This data adds up to 23,848 non-filing consultant firms that small 
businesses will likely hire.\140\ Applying the 7.76 ratio to the 23,848 
non-filing consultant firms results in approximately 185,060 (7.76 x 
23,848) small employers that will be affected by the rule but not 
required to file. This number likely overestimates the universe of 
affected non-filing small businesses because the Department believes it 
unlikely every consultant will be hired in any given year for services 
related to organizing or collective bargaining.
---------------------------------------------------------------------------

    \140\ This number does not include trade or business 
associations (NAICS 813910) because such associations are unlikely 
to be hired to perform organizing or collective bargaining services.
---------------------------------------------------------------------------

    Nonetheless, The Department estimates that the total number of non-
filing small entities that will be affected by the rule is comprised of 
39,298 consultants and 185,060 employers. The total number of affected 
small entities is outlined in Table 6.

               Table 6--Number of Affected Small Entities
------------------------------------------------------------------------
                        Category                              Number
------------------------------------------------------------------------
Filing consultants......................................             358
Filing employers........................................           2,777
Non-filing consultants..................................          39,298
Non-filing employers....................................         185,060
Total consultants.......................................          39,656
Total employers.........................................         187,837
Total of all entities...................................         227,493
------------------------------------------------------------------------

4. Costs of Reporting, Recording, and Other Compliance Requirements of 
the Rule on Small Entities
    The rule is not expected to have a significant economic impact on a 
substantial number of small entities. The LMRDA is primarily a 
reporting and disclosure statute. The LMRDA establishes various 
reporting requirements for employers, labor relations consultants, and 
others, pursuant to Title II of the Act. Accordingly, the primary 
economic impact of the rule will be the cost to reporting entities of 
compiling, recording, and reporting required information or determining 
that such reporting is not required.
    The Regulatory Flexibility Act does not define either ``significant 
economic impact'' or ``substantial'' as it relates to the number of 
regulated entities. 5 U.S.C. 601. In the absence of specific 
definitions, ``what is `significant' or `substantial' will vary 
depending on the problem that needs to be addressed, the rule's 
requirements, and the preliminary assessment of the rule's impact.'' 
See SBA's Office of Advocacy, A Guide for Government Agencies: How to 
Comply with the Regulatory Flexibility Act at 17.\141\ As to economic 
impact, one important indicator is the cost of compliance in relation 
to revenue of the entity. Id.
---------------------------------------------------------------------------

    \141\ The Guide may be accessed at https://www.sba.gov/sites/default/files/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

    This rule has an impact on a certain number of small entities that 
belong to two discrete categories of small entities: the consultant 
industry and all other small employers. For the consultant category, 
the Department estimates that the average annual revenue of a small 
entity consultant in the consultant industry is $734,058. To arrive at 
this figure, the Department took the total estimated receipts of small 
entities (those entities with less than $15 million in receipts) 
belonging to NAICS codes 541110 (attorneys), 541612 (human resources 
consultants), and 813810 (business associations) and divided the total 
receipts by the total number of firms within those codes. The 
Department found that there are an estimated 185,612 small consultant 
firms generating $136,250,030,000 in total receipts, resulting in an 
average of $734,058 in gross revenue per consultant firm. The 
Department assumed for this calculation that labor and employment law 
firms generate, on average, the same receipts as other law firms.
    For all other small employers, the Department estimates that the 
average annual revenue for a small entity is $965,774. This figure is 
derived from taking the total estimated annual receipts of all entities 
in the United States with less than $15 million in receipts, excluding 
the receipts from the consultant industry, and then dividing the total 
receipts by the total number of firms with less than $15 million in 
receipts, excluding consultant firms. The Department found that there 
are an estimated 5,403,528 small firms, excluding consultants, 
generating $5,218,588,269,000 in total receipts, resulting in an 
average of $965,774 in gross revenue per firm.\142\
---------------------------------------------------------------------------

    \142\ See U.S. Small Business Administration, Statistics of U.S. 
Businesses, Table 2--Number of firms, establishments, receipts, 
employment, and payroll by firm size (in receipts) and industry, 
available at https://www.sba.gov/advocacy/firm-size-data (last 
accessed March 1, 2016).
---------------------------------------------------------------------------

Costs on Filing Small Entities
    As explained above, the Department estimates that there are 358 
labor relations consultants and other small entities required to file 
the revised Form LM-20. Further, the Department estimates that there 
are 2,777 employer small entities required to file the revised Form LM-
10, for a total of 3,135 small entities affected by the rule as filers. 
In the PRA analysis, above, the Department estimates that a Form LM-20 
filer will spend $151.14 completing the form. The Department also noted 
that each of the 358 consultants will, on average, file about 11.71 
Form LM-20 reports, resulting in 4,194 reports every year. The total 
cost for the estimated 4,194 Form LM-20 reports is therefore 
approximately $633,932.16 annually.
    The Department estimates in the PRA analysis that it will cost an 
employer approximately $226.70 to complete the Form LM-10. The total 
cost for the estimated 2,777 Form LM-10 reports is therefore 
approximately $629,567.34 annually.
    The combined cost for both Form LM-20 and Form LM-10 filers is 
$1,263,499.50 ($633,932.16 + $629,567.34).
Costs on Non-Filing Small Entities
    As discussed above, the Department estimates that there are 39,298 
non-filing consultants and 185,060 non-filing employers that will be 
affected by the rule, for a total of 224,358 non-filing entities.
    The Department estimates that each of the 39,298 non-filing 
consultants will spend one hour reviewing the Form LM-20 instructions 
to determine that they do not have any reporting obligations. For the 
purposes of this analysis, the Department uses the average hourly 
compensation for attorneys of $92.53 because, as stated previously, the 
consultant industry consists in large part of practicing attorneys. 
Accordingly, the total cost of the rule on non-filing consultants is 
approximately $3,636,244 (39,298 consultants x 1 hour x $92.53/hr). 
This amount is a one-time cost to non-filing consultants.
    The Department estimates that each of the 185,060 non-filing 
employers affected by the rule will spend 30 minutes reviewing the Form 
LM-10 instructions and applying them to the agreement with the 
consultant in order to determine that no report is owed. This cost is 
calculated as 30 minutes at the hourly wage of a Human Resources 
Specialist. The median hourly wage of a Human Resources Specialist is 
$27.23 plus 44.2 percent in fringe benefits. See note 126. This results 
in a total hourly rate of $39.27 (($27.23 x 0.442) + $27.23).\143\ The 
cost to an employer for its own review will therefore be $19.64 ($39.27 
x 0.5 hour). The total cost for all

[[Page 16018]]

non-filing employers is approximately $3,634,578 ($19.64 x 185,060).
---------------------------------------------------------------------------

    \143\ See BLS Occupational Employment Statistics, Occupational 
Employment and Wages, May 2013, https://www.bls.gov/oes/current/oes131071.htm.
---------------------------------------------------------------------------

    The combined cost for both non-filing consultants and non-filing 
employers is $7,270,822 ($3,636,244 + $3,634,578).
Economic Impact on Small Entities
    The Department estimates that this rule will have a one-time cost 
on all small entity consultants of approximately $4,270,176. This 
amount represents the cost on filing consultants of $633,932 plus the 
cost on non-filing consultants of $3,636,244. Therefore, the total one-
time cost per small entity consultant is $107.68 ($4,270,176 / (358 
filing consultants + 39,298 non-filing consultants)). This cost per 
consultant is not significant in comparison to the average annual gross 
revenue of a small entity consultant, which the Department calculated 
above to be $734,058. The $107.68 one-time cost per consultant 
represents only a 0.015% share of a consultant's average revenue 
($107.68 / $734,058).
    Additionally, the rule will impose a recurring annual cost of 
$1,771 per filing consultant ($633,932 / 358 filing consultants). This 
annual cost per consultant is not significant because it represents 
only a 0.24% share of a consultant's average annual gross revenue 
($1,771 / $734,058).
    For employers, the Department estimates that the rule will have an 
annual cost on all small entity employers, excluding consultants, of 
$4,264,145. This amount represents the cost on filing employers of 
$629,567 plus the cost on non-filing employers of $3,634,578. 
Therefore, the annual cost per small entity employer, excluding 
consultants, is $22.70 ($4,264,145 / (2,777 filing employers + 185,060 
non-filing employers)). This cost per employer is not significant in 
comparison to the average annual gross revenue of a small entity 
employer, which the Department calculated above to be $965,774. The 
$22.70 annual cost per employer represents only a 0.002% share of a 
small employer's average gross revenue ($22.70 / $965,774).
    The above estimates show that the cost of the rule on small 
entities is not a significant cost. These costs are summarized in Table 
7 and Table 8. Therefore, under 5 U.S.C. 605, the Department certifies 
to the Chief Counsel for Advocacy that the rule will not have a 
significant economic impact on a substantial number of small entities.

                                     Table 7--Cost and Impact on Consultants
----------------------------------------------------------------------------------------------------------------
                                                                                                     Cost per
                                                                     Cost per      Average gross    compared to
            Category                  Number        Total cost      consultant        revenue      gross revenue
                                                                                                     (percent)
----------------------------------------------------------------------------------------------------------------
Filing consultants..............             358        $633,932          $1,771        $734,058           0.024
Non-filing consultants..........          39,298       3,636,244           92.53         734,058           0.013
                                 -------------------------------------------------------------------------------
    Total.......................          39,656       4,270,176          107.68         734,058           0.015
----------------------------------------------------------------------------------------------------------------


                               Table 8--Annual Cost and Impact on Other Employers
----------------------------------------------------------------------------------------------------------------
                                                                                                     Cost per
                                                                     Cost per      Average gross    compared to
            Category                  Number        Total cost    other employer      revenue      gross revenue
                                                                                                     (percent)
----------------------------------------------------------------------------------------------------------------
Filing employers................           2,777        $629,567         $226.70        $965,774           0.023
Non-filing employers............         185,060       3,634,578           19.63         965,774           0.002
                                 -------------------------------------------------------------------------------
    Total.......................         187,837       4,264,145           22.70         965,774           0.002
----------------------------------------------------------------------------------------------------------------

5. Relevant Federal Requirements Duplicating, Overlapping, or 
Conflicting With the Rule
    The Department is not aware of any other Federal requirements 
requiring reporting of the activities, agreements, and arrangements 
covered by this rule.
6. Differing Compliance or Reporting Requirements for Small Entities
    Under the rule, the Form LM-20 reporting and recordkeeping 
requirements apply equally to all persons required to file a Form LM-
20, and the Form LM-10 reporting and recordkeeping requirements apply 
equally to all employers covered under the LMRDA. However, to reduce 
burden, the Department has exempted employers from filing Form LM-10 
reports concerning agreements with consultants to participate in union 
avoidance seminars. For example, pursuant to the NPRM, if a reportable 
seminar was attended by 50 different employers, each of the 50 would 
have to file a separate Form LM-10 report. Under this rule, none are 
required to file in this instance. Further, only the entity that 
presented the seminar is required to file a Form LM-20 report, not the 
organizer of the event.
7. Clarification, Consolidation, and Simplification of Compliance and 
Reporting Requirements for Small Entities
    The revised format of the Form LM-10, which organizes the material 
in a more user-friendly manner, will simplify filing by small entity 
employers. Furthermore, the addition of instructions regarding the 
``advice'' exemption into the Form LM-20 and Form LM-10 instructions 
will improve the ease of filing.
    OLMS will provide compliance assistance for any questions or 
difficulties that may arise from using the OLMS Electronic Forms System 
(EFS). A toll-free help desk is staffed during normal business hours 
and can be reached by telephone at (866) 401-1109. Additionally, the 
public can contact the OLMS Division of Interpretations and Standards 
directly at (202) 693-0123.
8. Steps Taken To Reduce Burden
    The Department proposed that Form LM-10 and LM-20 filers submit 
reports electronically. Currently, labor organizations that file the 
Form LM-2 Labor Organization Annual Report are required by regulation 
to file electronically, and there has been good compliance with these 
requirements. The Department reasonably expects that

[[Page 16019]]

employers and consultants will have the information technology 
resources and capacity to file electronically as well.
    The use of electronic forms helps reduce burden by making it 
possible to download information from previously filed reports directly 
into the form; enables most schedule information to be imported into 
the form; makes it easier to enter information; and automatically 
performs calculations and checks for typographical and mathematical 
errors and other discrepancies, which assists reporting compliance and 
reduces the likelihood that the filer will have to file an amended 
report. The error summaries provided by the electronic system, combined 
with the speed and ease of electronic filing, also make it easier for 
both the reporting organization and OLMS to identify errors in both 
current and previously filed reports and to file amended reports to 
correct them.
    Moreover, a simplified electronic filing option is also planned for 
all LMRDA reports as part of an information technology enhancement, 
including for those forms that cannot currently be filed 
electronically, such as the Form LM-10 and Form LM-20. This addition 
should greatly reduce the burden on filers to electronically sign and 
submit their forms. Further, for those filers unable to submit 
electronically, without undue burden or expense, they will be permitted 
to apply for a continuing hardship exemption that permits filers to 
submit hardcopy forms.
9. Electronic Filing of Forms and Availability of Collected Data
    Appropriate information technology is used to reduce burden and 
improve efficiency and responsiveness. The Form LM-20 and Form LM-10 
reports now in use can be accessed and completed at the OLMS Web site. 
OLMS has implemented a system enabling such filers to submit forms 
electronically with electronic signatures.
    The OLMS Online Disclosure Web site at www.unionreports.gov is 
available for public use. The Web site contains a copy of each Form LM-
20 and Form LM-10 report for reporting years 2000 and thereafter, as 
well as an indexed computer database of the information in each report 
that is searchable through the Internet.
    Information about this system can be obtained on the OLMS Web site 
at www.olms.dol.gov.
10. Response to Comments Received
    The Department received several comments that addressed aspects of 
the RFA certification in the NPRM. These commenters argued that the 
Department should have included an analysis of the impact of the 
proposed rule on small entities, analyzed effective alternatives that 
minimized burden, and made them available for public input. An employer 
association contended that the certification was incorrect, as it only 
analyzed the burden on small entities required to file reports under 
the proposed rule, as described in the PRA analysis, and not those 
entities that must review the form and instructions to determine filing 
is not required. The employer association asserted that each employer 
in the United States with greater than five employees would be impacted 
by the proposed rule, along with every law firm and human relations 
consultant firm. The association also provided estimates for ``initial 
familiarization cost'' and ``annual compliance review cost.'' The 
association assumed that all of the nearly 6 million employers in the 
United States would need to review the Form LM-10 instructions, 
although its analysis limited this number to the 2.5 million employers 
with five or more employees. With these 2.5 million employees, 
multiplying by the $175.18 average cost for employer as noted in the 
NPRM, the commenter estimated a total cost on employers by the proposed 
rule of $444 million. Further, the commenter stated that initial 
familiarization for consultants would cost between four and 16 hours, 
corresponding to between $74.6 and $298.3 million, and two to four 
hours for employers, corresponding to between $549.6 million to $1.11 
billion. The ``annual review'' costs were estimated, for consultants, 
at $385.5 million per year and for employers $408 million. The total 
costs in the first year were between $910.1 million and $2.2 billion 
and in subsequent years between $285.9 million and $793.1 million.
    The association further argued that the Department did not factor 
into its estimates the increased burden created, in its view, by the 
``new, subjective'' test; the need to communicate between employers and 
consultants concerning potential reporting; the need for parties to 
protect themselves against possible investigations and enforcement 
actions; and the potential negative impact on industry. Other 
commenters stated that the Department should also have considered the 
burden resulting from the ``continuous review'' that would be 
necessary, in its opinion, to ensure compliance, particularly because 
of the ``new'' and ``subjective'' nature of the test, and the reporting 
triggered by the development of personnel policies, conducting of 
seminars, and administrating employee attitude surveys. One employer 
coalition stressed the potential negative impact of the proposed rule 
on labor relations, as employers would be unable to obtain advice from 
lawyers and other third parties and would therefore be more likely to 
violate labor laws. The commenter urged the Department to take these 
factors into account as well, not just the PRA burden separately 
calculated for Form LM-10 and LM-20 filers.
    As an initial matter, as stated at length in the preamble, the 
Department disagrees with the suggestion that the rule provides a 
subjective test that adds complexity and concomitant costs on filers or 
will have a negative and costly impact on labor relations. The 
Department also disagrees with the contention by the employer 
association that every employer and law firm in the United States must 
review the instructions, and therefore rejects the commenter's burden 
estimates as highly inflated. Rather, only those employers that retain 
third parties to provide labor relations services, and only those law 
firms involved in labor and employment law, must review the reporting 
requirements. Further, such a review is not of every activity engaged 
in by the employer's representatives, but only of each agreement 
entered into and the activities engaged upon by consultants pursuant to 
such an agreement. While the Department cannot reasonably provide an 
estimate for the number of employers retaining third parties for such 
services, the PRA analysis demonstrates that an insubstantial number of 
small business employers will be Form LM-10 respondents (2,777 Form LM-
10 filers out of 2,182,169 employer firms in the United States with 
five or more employees).\144\ Moreover, although the Department 
acknowledges that a larger number of small business employers must 
review the Form LM-10 instructions than merely those who must file, 
only an insubstantial number of total employer firms with five or more 
employees (2,777/2,182,169 = 0.1273%) must file the Form LM-10 (less 
than 0.13%), and the burden on filers and non-filers alike is not 
significant. Moreover, as explained in the RFA analysis above, the 
number of law firms engaged in labor and employment law is a fraction 
of the total figure, and the burden on

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such labor and employment law firms is not significant.
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    \144\ See U.S. Census Bureau, Statistics of U.S. Businesses, 
2012: United States & states, totals. See https://www.census.gov/econ/susb/.
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    Furthermore, the Department rejects the suggestion that it must 
provide an estimate for ``initial familiarization'' for each filing 
entity. Form LM-10 and LM-20 filers, similar to union officials who 
file the Form LM-30 conflict-of-interest report, are ``special 
reports'' not required to be filed each year, in contrast to labor 
organizations who must file the Forms LM-2, LM-3, or LM-4 Labor 
Organization Annual Report, disclosing financial information. Thus, the 
Department assumes that employers and consultants are unique filers 
each year, and costs associated with ``familiarization'' are therefore 
included within the estimated costs. This is particularly appropriate 
for employers, who are unlikely to enter into reportable persuader 
agreements with different firms in different years. This is also 
consistent with the Department's position regarding union officials, as 
stated in the recently published Form LM-30 final rule, which is also a 
special report that is only required upon the receipt of certain 
payments. See 76 FR 66487. Indeed, this is a conservative assumption, 
because, for law and consultant firms that do file multiple Form LM-20 
reports over many years, the compliance costs estimated in this rule 
will decrease with familiarity. Moreover, Form LM-10 and LM-20 filers 
are not required to change any practices or create any new documents or 
procedures in order to comply with this rule.\145\
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    \145\ To the extent that attorneys, to ensure compliance with 
their ethical obligations, communicate with their clients concerning 
the reporting requirements, attorneys will likely engage in such 
communication for each agreement, even in subsequent years. Further, 
any such communication between the law firm and client is included 
in the time required to review and apply the reporting instructions 
for reportable agreements, and is part of the one hour estimated 
annual compliance review for non-reportable agreements.
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    Finally, in the preamble the Department responded to comments that 
suggested that the revised forms established a subjective test that 
could establish burdens negatively impacting employer free speech and 
the attorney-client relationship, thus preventing employers from 
getting needed advice. In response, the Department explained the 
objective nature of the test to determine reportability of employer-
consultant agreements, and the minimal impact, if any, on the rights of 
employers and consultants. Thus, the Department is not persuaded that 
employers could not obtain advice, and, as a result, there would be 
increase in violations of the law.
    The Department, however, agrees with the suggestion that it should 
consider the impact of the rule on certain entities that may be 
affected by the rule, even though they may not be required to file Form 
LM-10 or LM-20 reports, such as employers, law firms, consultant firms, 
and business associations. Some of these entities will need to read and 
apply the Form LM-10 and LM-20 instructions to ensure LMRDA 
compliance.\146\ Thus, the Department, utilizing the PRA estimate for 
non-filers of 10 minutes to read the Form LM-20 Instructions (as 
explained in the NPRM), also estimates in this rule that these entities 
will spend an additional estimated 50 minutes applying the instructions 
to all of their clients to determine that reporting is not required. 
Therefore, the Department has increased this estimate to a total of 60 
minutes (or one hour) for consultants to read and apply the same 
instructions to each of their non-reportable agreements. The Department 
has estimated in the PRA analysis that it would take ten minutes to 
read the instructions, with an additional ten minutes to apply to a 
persuader agreement, with the entire reporting and submission process 
taking 98 and 147 minutes, respectively, for the Forms LM-20 and LM-10. 
The Department considers it reasonable to estimate that the process for 
non-filers to read the instructions and apply to each of their non-
reportable agreements (and determine non-reportability) to take on 
average one hour less than the time to complete and submit the 
forms.\147\ As explained in more detail in the RFA analysis above, the 
cost on all small entities, employer and consultant, is still not 
significant within the meaning of the RFA. Further, this would be the 
case even using the lower-end, four-hour annual compliance cost 
estimate provided by the commenter. See note 146, instead of the one-
hour estimate.
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    \146\ The Department, however, rejects the varying estimates 
provided by an employer association for ``annual compliance review'' 
of 1.5 to 28 hours for these employer firms to engage in annual 
compliance review, and four to 20 hours for law firms and 16-40 
hours for HR consultant firms. The Department also rejects another 
commenter's estimate of 12 hours per year for employers to conduct a 
continual compliance review. These estimates appear highly 
overstated.
    \147\ The Department rejects the commenters' estimates for 
``annual compliance review'' for employers, in addition to 
consultants, as this approach double-counts the annual burden for 
non-filers, as an employer and a consultant will have identical 
review time in situations where no report is required from either 
party. The consultant or law firm can review the agreement and 
advise the employer that no reporting is required. Thus, the review 
time would be simultaneously undertaken by the consultant on behalf 
of both parties. (Further, employers are exempt from reporting union 
avoidance seminars.)
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    Further, in terms of hourly wage data that is multiplied by total 
hours used to determine total costs, the Department rejects the 
employer association's suggestion to use the chief executive officer 
category, and instead has employed the attorney category that it used 
in the NPRM and in the PRA analysis for this rule. The Department has 
utilized this category in the past for Form LM-10 and LM-20 burden 
analyses, and it is reasonable to assume that employer firms will 
utilize the services of the law or consultant firm, connected with the 
agreement in question, to determine the large majority of the 
reportability decisions.

List of Subjects

29 CFR Part 405

    Labor management relations, Reporting and recordkeeping 
requirements.

29 CFR Part 406

    Labor management relations, Reporting and recordkeeping 
requirements.

Text of Rule

    Accordingly, for the reasons provided above, the Department amends 
parts 405 and 406 of title 29, chapter IV of the Code of Federal 
Regulations as set forth below:

PART 405--EMPLOYER REPORTS

0
1. The authority citation for part 405 continues to read as follows:

    Authority: Secs. 203, 207, 208, 73 Stat. 526, 529 (29 U.S.C. 
433, 437, 438); Secretary's Order No. 03-2012, 77 FR 69376, November 
16, 2012.


Sec.  405.5  [Amended]

0
2. Amend Sec.  405.5 by removing the phrase ``the second paragraph 
under the instructions for Question 8A of Form LM-10'' and adding in 
its place ``the instructions for Part A of the Form LM-10''.


Sec.  405.7  [Amended]

0
3. Amend Sec.  405.7 by removing the phrase ``Question 8C of Form LM-
10'' and adding in its place ``Part D of the Form LM-10.''

PART 406--REPORTING BY LABOR RELATIONS CONSULTANTS AND OTHER 
PERSONS, CERTAIN AGREEMENTS WITH EMPLOYERS

0
4. The authority citation for part 406 continues to read as follows:


[[Page 16021]]


    Authority: Secs. 203, 207, 208, 73 Stat. 526, 529 (29 U.S.C. 
433, 437, 438); Secretary's Order No. 03-2012, 77 FR 69376, November 
16, 2012.

0
5. Amend Sec.  406.2(a) by revising the last two sentences of the 
paragraph to read as follows:


Sec.  406.2  Agreement and activities report.

    (a) * * * The report shall be filed within 30 days after entering 
into an agreement or arrangement of the type described in this section, 
except that an agreement or arrangement to present a union avoidance 
seminar shall be filed within 30 days after the date of the seminar. If 
there is any change in the information reported (other than that 
required by Item 11.c, of the Form), it must be filed in a report 
clearly marked ``Amended Report'' within 30 days of the change.
* * * * *

    Signed in Washington, DC, this 16th day of March, 2016.
Michael Hayes,
Director, Office of Labor-Management Standards.

    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendices: Revised Forms and Instructions

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[FR Doc. 2016-06296 Filed 3-23-16; 8:45 am]
 BILLING CODE 4510-CP-P