DOL Rescinds "Persuader" Rule

Regulation | July 11, 2017 | by Jennifer Hilliard

In a final rule to be published in the Federal Register on July 18, the U.S. Department of Labor (DOL), Office of Labor-Management Standards rescinded a 2016 final rule that re-interpreted the long-standing “advice exemption” in Section 203(c) of the Labor-Management Reporting and Disclosure Act (LMRDA). The move comes after a U.S. District Court in Texas issued a nationwide permanent injunction against enforcement of the so-called “persuader rule” on November 16, 2016, which led to a proposed rule last year that sought to effectuate the rescrission..

The LMRDA, enacted in 1959, generally reflects the obligation of both unions and employers to conduct labor-management relations in a manner that protects the rights of employees to exercise their right to choose whether to be represented by a union for purposes of collective bargaining. Section 203(a) of the LMRDA requires employers to report to DOL ‘‘any agreement or arrangement with a labor relations consultant or other independent contractor or organization’’ under which such person ‘‘undertakes activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise,’’ or how to exercise, their rights to union representation and collective bargaining. Section 203(b) imposes a similar reporting requirement on labor relations consultants and other persons. All such information must be submitted on an ‘‘Agreement and Activities Report’’ within 30 days of entering into the reportable agreement or arrangement. Other filings must be made within 90 days of the close of the labor relations consultant’s fiscal year. Section 203(c) of LMRDA ensures that sections 203(a) and 203(b) are not construed to require reporting ‘‘by reason of [the consultant] giving or agreeing to give advice.’’

The 2016 final rule revised a long-standing broad interpretation of the exemption by requiring employers and their consultants to report not only agreements or arrangements pursuant to which a consultant directly contacts employees, but also in situations in which a consultant engages in activities ‘‘behind the scenes,’’ where an object is to persuade employees concerning their rights to organize and bargain collectively. In broadening the scope of reportable ‘‘persuader’’ conduct, DOL abandoned its position that only direct communication between a consultant and employees triggered the reporting requirement, and that any other activity was exempt ‘‘advice.’’

Critics claimed that the 2016 rule would have caused undue disclosure of confidences that are at the heart of the attorney-client relationship, whereas the 2016 DOL and proponents of the rule maintained that the use of outside consultants to contest union organizing efforts had proliferated yet the number of disclosure reports had remained consistently small, leading the 2016 DOL to conclude that the exemption was overly broad.