The building blocks of the Obama regulatory reform continue to fall as the Department of Labor (DOL) has just announced their intention to revoke the much maligned “persuader rule” that hampers employers seeking legal advice during union election campaigns.
What the Rule is All About
As we reported in New Persuader Rule Hampers Employers, the DOL angered many employers, their legal counsel, and the American Bar Association in early 2016 when they sought to expand reporting requirements imposed on “persuader activities” under Section 203(a) of the Labor-Management Reporting and Disclosure Act. Persuader activities include those services performed by consultants and attorneys the object of which “is 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.”
Under the “old” rule, reports to the DOL were required on an employer’s arrangement with the “persuader” and the cost/fees incurred for those services but only if the provider was engaged in direct persuasion with the employees. The rule exempted attorneys providing legal advice and excluded any reporting by legal counsel working indirectly with an employer to manage strategy and communications related to union avoidance.
The DOL’s proposed change expanded the scope of the rule to cover indirect activities such as planning, directing or coordinating with employers engaged in a union election campaign, and/or providing scripts and campaign materials to employers for use in such a campaign. Lawyers are often called-upon to provide this guidance to make sure that the employer stays on the correct side of the complex and ever-changing legal framework for union election campaigns. Thus, the rule intruded extensively into the privilege of confidentiality that exists between lawyers and their clients.
What Happens Next?
In November, 2016, as we wrote at the time, a federal judge in Texas granted a permanent injunction staying enforcement of the new persuader rule. An appeal of that decision by the DOL is pending before the 5th Circuit Court of Appeals, and the DOL under the new administration has been evaluating their options regarding the rule and the pending appeal.
With their evaluation apparently completed, the DOL will start by publishing a Notice of Proposed Rulemaking to rescind the rule. The public will now have the opportunity to comment on the proposed revocation of the rule, and you can be sure the employer community and their legal advisors will not be shy in expressing their desire to see the rule revoked.
Our prediction is that the new persuader rule manufactured during the Obama presidency is dead in the water and that the more traditional interpretation of persuader activities – which does not include legal advice offered by attorneys – will remain in place.