Labor Department Wants to Withdraw 2016 Persuader Rule

Blocked last year by court order, the DOL seeks to definitively kill rule about advice employers can get to educate employees on unions

Allen Smith, J.D. By Allen Smith, J.D. June 9, 2017
Labor Department Wants to Withdraw 2016 Persuader Rule

Employers should be able to receive behind-the-scenes advice from lawyers and consultants on what to say to educate employees about unionization without either side having to report who said what, according to the U.S. Department of Labor (DOL). The department will publish a request in the Federal Register on June 12 to withdraw the so-called new persuader rule issued by the Obama administration in 2016 that would have required reporting on such advice.  

The difference between the old and new persuader rules is how indirect advice from consultants or attorneys is treated—it was reportable to the DOL under the new rule and was not required to be reported under the old rule.

The new rule would have chiseled away at the old rule's "advice exemption" from the long-standing requirement that consultants report to the Labor Department when they communicate directly with an employer's rank and file about unionization. The exemption excepted attorneys or consultants providing recommendations on union avoidance to employers behind closed doors rather than trying to influence employees directly through speeches.

[SHRM members-only toolkit: Preparing for the Possibility of Union Organizing]

Some unions think employers have an unfair advantage under the old persuader rule because they could get advice from entities the unions aren't privy to, noted Steve Bernstein, an attorney with Fisher Phillips in Tampa, Fla. They instead favored complete transparency and hoped that the new persuader rule would discourage businesses from hiring attorneys or consultants for fear of disclosure that they were getting advice from expensive "union busters." He noted that "nothing precludes future administrations from revisiting this issue again" and said that the proposed withdrawal of the persuader rule has the potential to become a "politicized issue."

New Rule Already Blocked

The U.S. District Court for the Northern District of Texas already blocked the new persuader rule last year as being overly broad, arbitrary and capricious. So why the rulemaking withdrawing the blocked regulation?

Phil Wilson, president and general counsel of labor relations consultancy Labor Relations Institute in Broken Arrow, Okla., said that while there is an injunction to enforcing the new rule, technically the rule still went into effect. The only way to remove it is through another rulemaking to be "completely sure the rule goes away," he said.

Bernstein said, "The purpose of withdrawing the rule is to remove any question for employers." He noted that both employers and consultants have to report who has provided direct advice under the old and new persuader rules. Under the new persuader rule, they both would have to report who has provided indirect advice on unionization and how much money was paid or charged.

The DOL stated that ever since the injunction, the law has returned to the status quo that existed before the new persuader rule was issued. The department also noted that it wanted to address the concerns raised by the court.

Employers may want consultants to give speeches directly to employees about unionization, and under the reinstated, old persuader rule, employers will still be required to report who provided the speech and how much they were paid. They may decide to bring in consultants for company presentations out of recognition that they aren't subject matter experts about unions.

Interference with Attorney-Client Relationship

Attorneys opposed the new persuader rule, saying it intruded on attorney-client privilege and the lawyers' rule for keeping clients confidential, Bernstein said.

The new persuader rule "would have vastly expanded the obligations on employers, consultants and attorneys to report to the government for public disclosure sensitive and confidential information relating to employee activity arising under the NLRA [National Labor Relations Act]," said Michael Lotito, an attorney with Littler and co-chair of its government affairs branch, the Workplace Policy Institute. "This would have included fees received, details regarding the arrangements between the parties and specific descriptions of the kind of assistance provided.

"The rule was designed to intimidate especially smaller employers from hiring any outside assistance to help deal with employee concerted activity under the NLRA. Larger employers might have also been reluctant to engage with counsel, as the public disclosures could be used in corporate campaigns against the companies," he said.

"For over 50 years, federal law required employers and their attorneys or consultants to report to DOL only when those attorneys or consultants directly communicated with employees about unionization," noted Jim Plunkett, senior government relations counsel with Ogletree Deakins in Washington, D.C. "The 2016 persuader regulation, however, upended this clear, bright-line exemption in favor of an ambiguous reporting standard and would have required reporting for a wide array of innocuous activities, such as retaining an attorney to draft certain workplace policies."

Lotito observed that the district court found the new persuader rule to be "defective to its core." He said, "One could easily assert such a court conclusion would have permitted the DOL to accept the judge's decision as the law of the case, drop the appeal and rescind the rule, but the DOL is acting more cautiously."


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