Update On The DOL's Persuader Rule

By Kamer Zucker Abbott

August 29, 2017

Earlier this year we alerted you to several lawsuits filed against the Department of Labor ("DOL") over a change to reporting requirements under the Labor-Management Reporting and Disclosure Act ("LMRDA"). We write to update you on this matter.

The LMRDA has long required employers, labor relations consultants and attorneys to report to the DOL certain "persuader activity" - actions undertaken to persuade employees not to vote for a union.  No report was required, however, if the activity constituted "advice" and the lawyer or consultant did not deal directly with the employees.

In early 2016, the DOL issued a new rule that effectively eliminated this advice safeguard by requiring disclosure of the attorney-client relationship and attorney work product if labor counsel develops new policies, conducts training for supervisors, provides its client with materials to disseminate to employees, or helps plan or coordinate the employer's activities. This new "persuader rule" was contrary to the law and significantly discouraged an employer from seeking labor law advice during the critical time period between the filing of a union election petition and an election. Accordingly, several lawsuits were filed against the DOL challenging the new rule, including one filed by KZA and other affiliated Worklaw® Network law firms.

Ultimately, in June 2016, a federal court in Texas granted a nationwide preliminary injunction against the DOL forcing it to refrain from implementing "any and all aspects" of the persuader rule until a further order of the court.  In November 2016, the court made the injunction permanent, declaring the persuader rule unlawful.  The DOL appealed this ruling.

So, what happened once the leadership of the DOL changed under President Trump?

In June 2017, the DOL published a Notice of Proposed Rulemaking to rescind the rule.  The DOL explained its proposal for rescission as follows: "The Department proposes to rescind the Rule to provide the Department with an opportunity to give more consideration to several important effects of the Rule on the regulated parties. Rescission would ensure that any future changes to the Department's interpretation would reflect additional consideration of possible alternative interpretations of the statute, and could address the concerns that have been raised by reviewing courts. Rescission is further proposed because the burden of the Form LM-20 may have been substantially increased by the Form LM-21's requirements, and the Department considers it prudent to consider the effects of those requirements together. The Department will also consider the potential effects of the Rule on attorneys and employers seeking legal assistance. Rescission would also permit the Department to consider the impact of shifting priorities and resource constraints."  Over 1,000 comments were received by the DOL in relation to this Notice from employers, attorneys, experts and unions.  The DOL will now consider whether it will rescind the rule.  In the meantime, its appeal of the injunction has been stayed.

Employers should be on the look out for the DOL's next steps here and should continue following the LMRDA's prior reporting requirements.  If you have questions about this matter, please contact a KZA attorney.