On July 18, the Department of Labor’s (DOL) Office of Labor-Management Standards issued a final rule rescinding the so-called “persuader rule,” a controversial Obama-era regulation requiring employers to disclose advice received regarding opposition to union efforts.
The persuader rule was published in final form in March 2016. The rule changed the DOL’s longstanding interpretation of the Labor-Management Reporting and Disclosure Act (“LMRDA”). Among other things, the LMRDA required that when an employer retained a consultant (including an attorney) for the purpose of persuading employees regarding unionization, both the employer and the consultant would have to file a report disclosing the retention with the DOL. However, the LMRDA contained an exception from the reporting requirements for legal advice.
For decades, with respect to attorneys, the DOL had interpreted the LMRDA “advice” exception to require reporting only when the retained attorney actually met with the employees directly in order to persuade them. As a result, many management labor law attorneys would not meet with employees, but only provided advice to the employer. During the Obama Administration, however, the DOL changed its interpretation to include reporting of so-called “indirect” persuasion by attorneys by, e.g., drafting materials such as speeches and letters for use by the employer in communicating with its employees. Retention of an attorney to provide this type of work product was reportable even if the attorney’s work product also contained or constituted advice.
The new rule caused much consternation among employers and their attorneys. There was fear that the rule would dissuade employers from seeking counsel, or would require attorneys to disclose privileged information in their reports, in conflict with the universal rule against disclosing such information. There was also concern that aspects of the advice reporting requirement would drive some practitioners from the practice of traditional labor law.
The rule, however, never went into place. In November 2016, a federal district judge in Texas permanently blocked the rule from taking effect nationwide, ruling that it exceeded the DOL’s rulemaking authority under the LMRDA and violated first amendment rights, including the attorney-client privilege. The rule’s days appeared to be further numbered in the early months of the Trump Administration. On June 12, 2017, the DOL issued a notice of proposed rulemaking announcing its intention to rescind the rule.
In issuing its rescission on July 17, 2018, the DOL clarified that the reporting requirements will revert to those that existed before the new rule. “By rescinding this Rule,” said Nathan Mehrens, Deputy Assistant Secretary of the DOL’s Office of Policy, “the Department stands up for the rights of Americans to ask a question of their attorney without mandated disclosure to the government.”
The long term future of the persuader rule is not entirely clear because the topic remains subject to rulemaking by future administrations. Additionally, the appeal of the November 2016 permanent injunction is still pending at the Fifth Circuit, and whether the injunction is vacated, modified or left standing will of course impact any future rulemaking. But at least for the time being, employers and their counsel are free from the requirement to report retention for the purpose of rendering legal advice.