Days Seem to be Numbered for DOL’s Persuader Rule

In recent weeks, the United States Department of Labor has taken firm steps towards rescinding the “Persuader Rule,” which is a regulation issued by the Office of Labor-Management Standards (“OLMS”) of the Department of Labor during the Obama Administration. The Persuader Rule would have required employers to report arrangements made with third parties for the purpose of influencing employees in matters of union organizing, collective bargaining, and other labor relations matters.

The Persuader Rule, in effect, sought to broaden the Labor-Management Reporting and Disclosure Act’s “advice exemption” requiring employers to disclose “persuader activities” undertaken by third party consultants to include “indirect persuasion activities” which have the “direct or indirect object” of influencing employees in exercising their union organizing rights. The practical effect would have been that employers would have had to disclose any third-party involvement in providing advice that might have some persuasive impact on organizing efforts, regardless of whether there was any actual direct contact between the advisor and employees.

The Persuader Rule had been promulgated during the last year of the Obama Administration, and was immediately met with strong opposition from employers, who argued that it would threaten the confidential nature of communications between an employer and its outside counsel related to labor issues. Ten different states, along with some industry groups, filed suit in the United States Court for the Northern District of Texas, alleging that the Persuader Rule violated the First and Fifth Amendments, the Administrative Procedure Act (“APA”), and the LMRDA.

In June of 2016, the Court granted a preliminary injunction enjoining the DOL from enforcing the Persuader Rule. Subsequently, on November 16, 2016, the Court granted summary judgment in favor of the Plaintiffs, and made the injunction permanent. The DOL appealed the decision to the United States Court of Appeals for the Fifth Circuit. After the new Administration took office, the DOL asked for an extension in the briefing schedule. It has not prosecuted the appeal since. As a result of this litigation, the Persuader Rule has never been enforced.

The appointment of Alexander Acosta as the Trump Administration’s Labor Secretary seemed to signify that the rescission of the Persuader Rule was all but certain, given that Mr. Acosta had expressed his opposition to the Persuader Rule in a column he wrote for The Wall Street Journal.

Indeed, on May 22, 2017, the Department of Labor forwarded a proposed rulemaking that would rescind the Persuader Rule to the Office of Management and Budget’s Office of Information and Regulatory Transparency (“OIRA”) for review. If OIRA were to approve the proposed rulemaking, the DOL would then publish it in the Federal Register, for public review and comment, and subsequently consider and evaluate the comments it receives.

Employers should assume that the Persuader Rule will never see the light of day. The objectives promoted by the Rule are simply inconsistent with the new Administration’s view of outside counsel’s role in the labor relations setting. However, were there to be any unforeseen changes in the Rule’s outlook, we will update you promptly.

This article is a publication of MWH Law Group LLP and is intended to provide general information regarding legal issues and developments to our clients and other friends. It should not be construed as legal advice or a legal opinion on any specific facts or situations. For further information on your own situation, we encourage you to contact the author of the article or any other member of the firm.

© MWH Law Group LLP 2017. All rights reserved.