On July 17, 2018, the DOL rescinded its 2016 “persuader rule” — a controversial reinterpretation of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) that would have required employers and their consultants (including lawyers) to report their relationships and the fees paid related to persuading employees “to exercise or not to exercise… the right to organize and bargain collectively… .”
The 2016 rule effectively eviscerated the LMRDA’s exemption for reporting advice, including legal advice, if the DOL concluded that an object of the advice — directly or indirectly — was persuading employees about whether or not to form or join a union. Activities that would have triggered reporting included indirect consultant activity undertaken with a potential object to persuade employees, such as planning, directing, or coordinating activities undertaken by supervisors; providing material or communications for dissemination to employees; conducting positive employee relations seminars for supervisors or other employer representatives; and developing or implementing personnel policies, practices or actions for the employer. The reporting would have included any agreements between the employer and third party, and both fees paid to and received by the third party.
Employers and their consultants believed that such reporting would have a chilling effect on employers’ willingness to seek legal advice during union organizing campaigns — a time when obtaining such advice is critical. Several lawsuits challenged the DOL’s 2016 reinterpretation, and a federal district court entered a nationwide injunction to prevent it from being implemented. An appeal is pending before the Fifth Circuit Court of Appeals.
After President Trump was inaugurated, the DOL sought public comments as to whether it should rescind the 2016 rule. Among several other employer groups, Seyfarth Shaw filed comments on our and our clients’ behalf where 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.
In its final pronouncement yesterday, the DOL specifically cited Seyfarth Shaw’s comments in explaining why the 2016 rule was being rescinded. The DOL is reverting to the longstanding prior interpretation of the LMRDA and its advice exemption, whereby neither employers nor their consultants or lawyers are required to report advice so long as the consultant or lawyer is not directly persuading employees.
But 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. So stay tuned.