The Biden administration issued a final rule changing disclosure requirements for companies using labor relations consultants. While the rule does not change any disclosure requirements related to persuader activity itself, employers will now have to identify in the form whether they are a federal contractor.
Background: Employers are generally required to file LM-10 forms with the Department of Labor disclosing their use of labor relations consultants and payments to those consultants. Federal contractors are prohibited from using federal funds to pay for such consulting. The Obama administration attempted to expand disclosure requirements with its “Persuader Rule;” that rule was later nixed in federal court and eventually rescinded by the Trump administration.
What’s in the new rule? Unlike the Obama-era “Persuader Rule,” the Biden administration’s final rule does not expand any disclosure requirements as it relates to persuader activity itself. Instead, the new rule simply requires that LM-10 form filers also disclose whether they are a federal contractor or subcontractor and their applicable Unique Entity Identifier.
Impact: While the new rule does not create any new significant disclosure burden on employers, requiring disclosure of federal contractor status could carry meaningful implications for filers. Procurement officials will now be able to identify which potential contractors have used union avoidance consultants, and to what extent the contractors have used the consultants, which may influence the decision in awarding contracts. The result may be a chilling effect on usage of labor relations consultants by contractors and subcontractors – a result that is undoubtedly one of the primary purposes of the rule.
Outlook: While checking an additional box is hardly a major change for employers, the implications of disclosing federal contractor status may carry negative consequences for future contracting.
