The U.S. Department of Labor (DOL) has rescinded its “Persuader” rule requiring employers to publicly reveal who they were using and the amounts paid—including attorneys’ fees—for outside advice on how to deal with labor unions.
The rule was originally adopted by the Obama-era DOL in 2016 and at the time was hailed by several national labor unions as a significant step forward in making it easier for them to organize workers. At the same time, organizations representing hundreds of companies and attorneys raised alarms about the changes and filed suits to overturn the rule.
Before the rule could go into effect in 2016, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction halting its implementation. The court made the stay permanent following the 2016 presidential election. Last year, the Trump DOL issued a proposal to rescind the rule.
Although reporting requirements had been in force for decades in regards to management’s use of labor relations consultants, none of rules had been as extensive and sweeping as the 2016 rule.
Activities that would have triggered reporting under the new rule included indirect consultant activity undertaken with a potential object to persuade employees, such as planning, as well as directing or coordinating supervisor activities. The rule also covered the preparation of communications and other educational materials to be distributed to employees by management.
Controversy also arose because the rule required reporting of details about attendance by supervisors or other management representatives at employer and labor relations seminars and workshops. This covered labor relations educational sessions that are held regularly by industry and professional associations at conventions and conferences.
Don’t Get Lawyers Mad
The reporting also required publicly airing the details of any agreements between the employer and third parties, and the fees paid to them, including both consultants and lawyers. The public airing of fees paid by clients to law firms turned out to be a particular sticking point for many attorneys, including the American Bar Association.
Since the mid-20th Century when the Labor-Management Reporting and Disclosure Act (LMRDA) was enacted, such attorney-client communications had been exempted from the reporting requirement so long as the attorneys did not speak or otherwise communicate directly with their clients’ employees.
Among those commenting negatively on the new rules during the rulemaking proceeding was the law firm of Seyfarth Shaw. According to firm attorney Bradford L. Livingston, “We argued that the DOL’s 2016 interpretation was contrary to the LMRDA, inherently vague and ambiguous, and would inhibit employers from seeking needed and proper legal advice,” he notes.
Employers and consultants believed the reporting requirement would have a chilling effect on employers’ willingness to seek legal advice during union organizing campaigns, a time when obtaining such advice is critical, Livingston says.
Nathan Mehrens, deputy assistant secretary of DOL’s Office of Policy, remarked when the rule was withdrawn, “For decades, the department enforced an easy-to-understand regulation: Personal interactions with employees done by employers' consultants triggered reporting obligations, but advice between a client and attorney did not. By rescinding this rule, the department stands up for the rights of Americans to ask a question of their attorney without mandated disclosure to the government.”
In spite of the good news regarding the rule, Livingston issued a prescient warning that “in Washington, no bad idea ever dies. Democrats in Congress are looking to pass legislation that would codify the now-rescinded rule. And who knows what the mid-term elections will bring this November, or what the 2020 elections will bring.”