Persuader Rule Effective Date

As you may know, the U.S. Department of Labor (DOL) finalized and issued its persuader rule on March 24, 2016. A key legislative priority for CFA, the rule greatly increases the disclosure requirements for employers, attorneys and consultants (“persuaders”) when discussing labor issues, substantially interfering with both an employers’ access to legal advice and attorney-client privilege.

The final persuader regulation states, “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” (emphasis added). DOL recently clarified this to mean that, the rule is only applicable to arrangements and agreements made on or after July 1, 2016, and to payments made pursuant to arrangements and agreements entered into on or after July 1, 2016.

Per the U.S. Chamber of Commerce,

It appears that agreements entered into prior to July 1, 2016, are not reportable, even if activities undertaken (and payments made) pursuant to such an agreement occur after July 1 (this applies to indirect persuader activity only; direct persuading will always require reporting). Thus, one could interpret this to mean that indirect persuading activities that occur after July 1, 2016 (even months or years after) are not reportable if they are made pursuant to an open-ended or multi-year agreement entered into prior to July 1, 2016.

This means that employers may have until July 1 to finalize agreements with labor counsel or consultants regarding labor services, as actions taken arising out of these contracts may not be reportable under the new persuader rule. Note that this should not be interpreted as legal advice, and you should check with competent legal counsel before making any final decisions.

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