DOL Persuader Rule Revoked

July 18, 2018

On July 17, the U.S. Department of Labor (DOL) formally pulled back the so-called Persuader Rule, an Obama-era regulation that would have made businesses and the consultants they hire for advice on fighting union drives disclose these efforts.

In a notice in the Federal Register, DOL announced a wholesale repeal of the persuader rule, which sought to require more disclosure for union-busting activities. This concludes a contentious regulatory and litigation history that occupied much of the Obama Administration. The regulation issued in 2016 would have required employers to disclose information about when they hire attorneys or other third-party labor relations consultants to convince — or persuade — employees not to join labor unions. A Texas judge in 2016 issued a preliminary injunction blocking the rule from taking effect, a factor that influenced the current administration’s decision to change course.

“Pursuant to today’s final rule, the reporting requirements in effect are the requirements as they existed before the Persuader Rule,” the department states in its rescission. Ultimately, the new rule to reverse course means that the DOL now agrees with the plaintiffs in the litigation who argued that the original regulation would have led to violations of attorney-client privilege. In part, DOL said, the rule “impinged on attorney-client privilege by requiring confidential information to be part of disclosures.”

The proposed version of the rescission left open the possibility of a new interpretation of the advice exemption to the Labor-Management Reporting and Disclosure Act (LMRDA). But ultimately, the agency decided the “best course of action is to achieve finality at this time.”

The LMRDA requires employers and consultants to report detailed information, including fee arrangements, about some activities designed to persuade employees to reject unions or to refrain from union organizing. However, the law exempts advice from the reporting requirements.

The Obama DOL took the position that specified activities and communications were not advice and so not covered by the exemption if they went beyond merely sharing suggestions with the employer on how to persuade employees to reject or refrain from unionization. But the new administration now returns to a broader application of the exemption.

Supporters of the rule believed it would have helped level the playing field for workers by letting them know the source of the anti-union messages they receive during union drives. Opponents disliked the rule for many reasons—conflicting court interpretations of the issue, the need to conduct further analysis of the statute and assess the impact on firms and attorneys seeking legal assistance, and the “resource constraints” the DOL already faces when it comes to policing employers. The Obama-era Persuader Rule was opposed by many, including 17 states and the American Bar Association, because they believed it imperiled the attorney-client relationship and would make it harder for businesses to claim legal advice.

The repeal takes effect 30 days after publication in the Federal Register.

NSBA has long opposed the persuader rule, filing comments in 2013, citing that this rule is particularly detrimental to small businesses which rarely have attorneys or labor specialists on staff, forcing the owners to seek outside help to ensure their interests are represented in a union campaign. Eliminating the so-called “advice exemption” is a direct affront to small businesses ability to fully educate their workforce and have all the advantages a large corporation has in a union campaign.