Week 1 – DOL Persuader Rule Update

  • December 11, 2015

Persuader Rule UpdatePersuader

As I’m sure you aware by now, the Department of Labor (DOL) surprised a lot of people earlier this week when they sent the long-delayed persuader rules to the Office of Management and Budget (OMB, thereby indicating their intent to implement some version of the new rules in March 2016. The new rules would require employers to report more details on some provisions of their labor relations.

As first mentioned here when the story broke a few days ago on Politico Morning Shift when the Labor Department sent its long-delayed “persuader rule” to the Office of Management and Budget, according to several people familiar with the matter, including a senior administration official meaning that the proposed regulation has moved one step closer to implementation.

A key provision in the final rule would narrow the range of activities exempt from public disclosure under the Labor Department’s “advice exception.” …

But the Labor Department concluded in 2011 that its “advice exception” might be overbroad, noting that “the consultant may have devised and orchestrated certain, or even all, aspects of activities with a direct or indirect object to persuade employees about their rights to organize and bargain collectively.” OMB review is a key prerequisite for finalizing the rule. In its unified agenda released last month, the Labor Department said it hoped to finalize the regulation by March.

We’ve placed some additional links containing more details on the rules changes and how they could potentially impact employers in the CUE Weekly newsletter which is going out today, but here are some highlights from those resources for anyone who doesn’t receive the newsletter, but wants to learn more.

From the Littler Labor Blog:

This broad interpretation would have a drastic impact on the confidential nature of the attorney/client relationship, as it would expand the types of union-related activities that would trigger reporting requirements from both employers and law firms. Small employers would be at a particular disadvantage, as they often lack in-house counsel to assist with the LMRDA’s reporting requirements.

From Labor Relations Today, regarding possible legal challenges to the new rules:

Not surprisingly, the final rule is not without its critics, and there has been some speculation that DOL has taken its time in order to bolster the rule against potential legal challenges. Specifically, critics claim that the proposed rule is improper because it effectively writes the advice exception out of the statute. Moreover, the American Bar Association and the Association of Corporate Counsel assert that the proposed rule is also inconsistent with the rules of professional conduct pertaining to lawyer-client confidentiality. They and others believe that the proposed rule forces lawyers to disclose privileged attorney-client information and that it will discourage employers from seeking legal assistance during union organizing campaigns.

Opponents also claim the new persuader rule will place enhanced burdens on employers to comply, and they take exception to the DOL’s estimate that compliance with the rule will only cost all employers and their lawyers about $826,000 a year. Indeed, others project the increased burden from the narrowing of the “advice exception” to cost employers over $200 million a year, with a former chief economist at the DOL estimating that the new rules will cost approximately $60 billion over a 10 year period.

At the moment, it is unclear what the final rules will look like, but we have already started discussions with CUE experts about developing guidance for CUE members based upon what is known. We’ll have more information on this in the coming weeks here on the blog and via direct communication with members to assist you in preparing for these changes, if they are implemented.