Proposed Rule Seeks To Finish Off Obama Administration’s “Persuader Rule” For Good

by Constangy, Brooks, Smith & Prophete, LLP
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Constangy, Brooks, Smith & Prophete, LLP

The U.S. Department of Labor has issued a Notice of Proposed Rulemaking to rescind the Obama Administration’s version of the “Persuader Rule.” The Obama Rule never actually became applicable because it was enjoined by a federal judge in Texas, but the DOL’s latest action is the first step toward undoing the Rule entirely.

The Labor-Management Reporting and Disclosure Act requires certain public reporting by labor “persuaders,” including labor lawyers and labor consultants. However, under a longstanding interpretation of this requirement, the reporting requirements did not apply as long as the lawyers and consultants merely advised employers and did not communicate directly with employees. This was known as the “advice exemption.”

On March 24, 2016, the DOL under President Obama issued new regulations that reinterpreted this requirement. Most significantly, the 2016 rule generally no longer exempted labor lawyers and consultants who did not communicate directly with employees – meaning that these advisors were going to be required to publicly disclose certain confidential information, including, arguably, information that was attorney-client privileged. Employers and right-to-work advocates contended that the 2016 rule had the purpose and effect of preventing employers, particularly smaller employers, from seeking legal advice when faced with union organizing campaigns. Because labor relations law is fraught with minefields for employers trying to navigate it without counsel or other experienced advice, many commentators predicted that the new regulations would aid union organizing, cause more employers to commit unfair labor practices, and potentially result in more bargaining orders issued by the National Labor Relations Board. Even the American Bar Association weighed in against the 2016 rule (a few years earlier, when it was initially proposed), opposing what it saw as an impediment to employers’ using legal counsel.

Employer groups, employers, and some attorneys sued to enjoin the DOL’s enforcement of the 2016 rule. In one lawsuit, a federal district court in Texas issued a nationwide injunction blocking enforcement of the rule in November 2016. Two other federal court cases were thereafter stayed pending final outcome of the Texas case on appeal.

Now, with Secretary Alexander Acosta in place and with the leadership at the DOL taking shape after some delay in nominations and appointments by the Trump Administration, the DOL is taking steps to reverse what many in the labor law area view as one of the Obama years’ boldest examples of regulatory overreach. In the proposed rulemaking, the DOL seeks comment from the public on a proposed rescission of the 2016 rule, which the DOL says will give it time to consider the appropriate interpretation of the LMRDA, concerns expressed by reviewing courts, and the impact of shifting priorities and resource constraints. The DOL indicates that it believes that a fair and balanced regulatory regime must consider the interests of labor relations consultants, employers, labor organizations, their members, and the public, and that proposals for change should consider burdens and costs associated with the change. Comments from the public are being accepted through August 11.

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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