DOL Mulls Return to Obama-Era “Persuader” Reporting Rule

Faegre Drinker Biddle & Reath LLP

Faegre Drinker Biddle & Reath LLP

In late April 2021, the Department of Labor’s (DOL) Office of Labor-Management Standards (OLMS) signaled its intent to revisit the “Persuader Rule” — an Obama-era regulation that imposes strict reporting requirements on employers facing organization. Although the Persuader Rule has not yet been reinstated, and will almost certainly face significant opposition, employers should be aware of the possible ramifications of the regulation.

What Is The Persuader Rule?

The Persuader Rule is a regulation that was first promulgated by the DOL during the Obama administration. The rule alters the DOL’s interpretation of the Labor Management Reporting and Disclosure Act of 1959 that requires employers and their labor consultants to report any activities “undertaken with an object, directly or indirectly, to persuade employees about how to exercise their rights to union representation and collective bargaining.” Since its inception, the Act has been interpreted to exempt “advice” from these reporting requirements. As long as a labor consultant did not have direct contact with employees, their guidance was considered “advice” and not subject to the reporting requirements. The Persuader Rule eliminates the “advice” exception, meaning that employers would have to report any assistance rendered by labor consultants, including attorneys, that is “undertaken with an object, directly or indirectly, to persuade employees about how to exercise their rights to union representation and collective bargaining.”

As we reported in April 2016, the Persuader Rule faced substantial opposition from national, state and local business groups culminating in three lawsuits seeking to enjoin enforcement of the rule. In June 2016, the U.S. District Court for the North District of Texas issued a temporary injunction blocking the Persuader Rule from taking effect. The District Court judge found that the business groups opposing the rule were likely to succeed on their claims that, among other things, the rule violated First Amendment rights of free speech and association and the due process clause Fifth Amendment due to its vagueness. Ultimately, the Persuader Rule was permanently blocked by the same District Court as discussed in our November 2016 alert. Following the election of Donald Trump as president, the federal government did not pursue an appeal of the November 2016 decision.

Why Is The DOL Revisiting The Persuader Rule?

As discussed in our November 2020 alert, the Biden administration is committed to effectuating a national labor policy that seeks to increase union membership. A major component of this policy is the Protecting the Right to Organize Act of 2019 (PRO Act). The PRO Act would codify the increased reporting requirements embodied in the Persuader Rule. Although the PRO Act passed the House of Representatives in February 2020, it faces an uphill battle in the Senate. In lieu of hoping the PRO Act passes the Senate, the Biden administration can implement certain components of the PRO Act via rule-making.

One example of such rule-making is the revisiting of the Persuader Rule. The Persuader Rule aids organizing efforts by imposing stricter reporting requirements on employers and labor consultants. In an organizing campaign, the Persuader Rule would require employers to report all third-party consultants who provide advice about the ongoing organization, including attorneys. This could give organizers advanced notice and early insight about employers’ efforts and strategies to avoid organization. The rule also presents a risk that communications traditionally protected by attorney-client privilege may be subject to reporting.

What Should Employers Do?

Although the OLMS announced that it plans to revisit the Persuader Rule, there is no timeline for its implementation. The rule will almost certainly face strong opposition like it did in 2016. In addition to opposition from national, state and local business organizations, the American Bar Association (ABA) recently criticized these reporting requirements as incorporated in the PRO Act for intruding upon attorney-client privilege. This is particularly significant because the ABA historically remains neutral in union-management disputes. Despite the strong opposition to the Persuader Rule and the PRO Act, employers should be aware of and prepared for the potential ramifications of increased reporting requirements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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