On June 12, 2017, the U.S. Department of Labor’s (“DOL”) Office of Labor-Management Standards published a notice of proposed rulemaking regarding its intention to rescind the so-called “persuader rule,” moving the DOL one step closer to withdrawing the controversial regulation introduced by the Obama administration.
The “persuader rule,” first published by the DOL in March 2016 and previously discussed here, would have required employers and their labor relations consultants, including legal counsel, to publicly disclose relationships which had long been permitted to remain confidential under the Labor-Management Reporting and Disclosure Act (“LMRDA”). The required disclosures included (1) the identity of any outside lawyer or consultant seeking to affect employees’ decisions whether to unionize; (2) the goals, terms, and conditions of such an arrangement; and (3) the activities performed and to be performed by the consultant. Many feared that the rule would be used to force employers to disclose information protected by the attorney-client privilege.
However, in November 2016, a Texas federal court issued a nationwide permanent injunction preventing the “persuader rule” from taking effect. The court ruled that the proposed regulation exceeded the DOL’s authority under the LMRDA by requiring employers to report information specifically protected from disclosure by the Act.
Under the leadership of new Labor Secretary Alexander Acosta, the DOL now appears poised to reverse the Obama administration’s position on the “persuader rule.” The DOL’s notice offers a number of reasons for the proposed rescission, including the DOL’s desire “to give more consideration to several important effects of the [r]ule on the regulated parties,” to “address the concerns that have been raised by reviewing courts,” to consider the substantial burden created by the rule’s disclosure requirements, and to “consider the potential effects of the [r]ule on attorneys and employers seeking legal assistance.” The DOL’s notice also explains that “the impact of shifting priorities and resource constraints” weighs in favor of rescinding the rule.
In the event the DOL rescinds the rule, an employer’s reporting requirements under the LMRDA would return to the requirements in existence before the rule was enacted. The DOL will accept comments on its proposal until August 11, 2017.