Executive Summary: The Department of Labor (DOL) has rescinded the revised version of its “persuader rule,” which had gone into effect in April 2016. The now-rescinded rule had substantially narrowed the advice exemption to the Labor Management Reporting and Disclosure Act (LMRDA). The Final Rule rescinding the revised rule was published in the Federal Register today (July 18, 2018) and is available here. With this rescission, the DOL will return to its traditional interpretation of the persuader rule.
Since 1959, the LMRDA has required the disclosure of arrangements made between employers and labor consultants to persuade workers to oppose unionization or collective bargaining. The rule has generally applied only when a lawyer or consultant dealt directly with employees in an attempt to affect their support during the course of a union organizing campaign. As a result of the "advice" exemption, the reporting requirement has not been applied to lawyers offering advice and counsel to businesses about their rights and obligations under federal labor law. The advice of attorneys has not triggered any reporting obligation so long as (1) the client has been free to accept or reject the advice, and (2) the lawyer avoids direct communications with bargaining unit employees.
As discussed in our prior Alert, the April 2016 version of the rule would have required employers, third-party lawyers and other labor consultants to disclose to the DOL any arrangement to persuade employees directly or indirectly concerning the right to organize or bargain collectively. These reports would have had to be filed electronically and, once filed, would have become publicly available records. In November 2016, a federal district court permanently blocked implementation of the revised persuader rule.
On June 12, 2017, the DOL published a Notice of Proposed Rulemaking proposing to rescind the revised persuader rule. On July 18, 2018, the DOL published a Final Rule rescinding the regulations established in the April 2016 rule. In rescinding the revised persuader rule, the DOL stated that the revised rule was based on an inappropriate reading of the LMRDA that required reporting based on recommendations that constitute “advice” under any reasonable understanding of the term, which “alone requires rescission.” The DOL also stated that even if the statute “does not unambiguously forbid the Persuader Rule, strong policy reasons—in particular, the Persuader Rule’s effect on the attorney-client relationship—militate in favor of rescission.”
In accordance with the rescission of the final rule, the reporting requirements in effect are those that were in effect prior to the April 2016 revision.