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U.S. Department Of Labor Issues Notice Of Proposed Rulemaking on Rescinding “Persuader Rule”

6.19.2017

On June 12, 2017, the Labor Management Standards Office of the U.S. Department of Labor issued a “Notice of Proposed Rulemaking” to rescind a 2016 final rule (referred to as the “Persuader Rule”), passed under the Obama Administration, which would have required employers and labor management consultants to report to the DOL their “indirect persuader activities” with workers during union organizing campaigns. The 2016 rule marked a significant departure from the DOL’s prior, long-standing interpretation of the “advice” exemption found in Section 203(c) at the Labor Management Reporting and Disclosure Act (LMRDA). Pursuant to the agency rulemaking process, the DOL is now giving the public an opportunity to comment on the DOL’s Notice to rescind the 2016 rule. The question remains, however, what interpretation of the advice exemption may emerge as a result.

As explained in the DOL’s Notice, the LMRDA was enacted in 1959 to “protect the rights and interests of employees, labor organizations and the public generally as they relate the activities of labor organizations, employers, labor relations consultants, and their officers, employees, and representatives.” Section 203(a) of the LMRDA requires employers to report to the DOL “any agreement or arrangement with a labor relations consultant or other independent contractor or organization” which undertakes “to persuade employees to exercise or not to exercise” their right to bargain collectively and to be represented by a union. An important limitation to this reporting requirement is found in Section 203(c), referred to as the “advice” exemption, which provides that employers are not required to report to the government the services of a consultant which pertain to advice given to the employer about such matters. Similarly, Section 204 of the Act exempts employers from reporting their privileged communications with their attorneys.

On March 24, 2016, the DOL issued the Persuader Rule which significantly changed the prior interpretation of the advice exemption. Subject to that prior interpretation, the DOL took the position that an employer’s reporting requirement was only triggered when consultants had direct communication with employees regarding union organizing – but that any activity by the consultant not involving such direct communications fell within the advice exemption. Under the 2016 rule, however, the DOL rejected this position and instead extended an employer’s reporting requirement to any activity involving an consultant’s advice on matters such as how to communicate with employees regarding unionization and the development of policies designed to dissuade employees from joining a union. Such advice triggered a reporting requirement even if the advice was rendered by the employer’s attorney, thus encroaching upon the attorney-client privilege.

Significantly, the DOL’s 2016 Persuader Rule was blocked by a nationwide injunction issued by a federal district court last year. Since that time, the fate of the rule remained uncertain. Now, with the DOL’s announcement to rescind the rule and invite public comment, the question remains whether the DOL will return to its previous interpretation of the advice exemption, or if some new interpretation will develop. Employers should continue to monitor this situation as the DOL’s rulemaking process progresses. Pursuant to that process, the public now has an opportunity to comment on this matter by August 11, 2017.

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