U.S. Department of Labor Updated “Persuader Rule” In Jeopardy

U.S. Department of Labor Updated “Persuader Rule” In Jeopardy
 
Under the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”), no report is required regarding the services of a consultant giving or agreeing to give “advice” to an employer. Previous the U.S. Department of Labor (“DOL”) guidance held that a consultant incurs a reporting obligation only when it directly communicates with employees with the objective of persuading them.
 
DOL’s March 2016 Persuader Rule
 
On March 24, 2016, DOL issued its final “Persuader Rule” which narrowed the “advice” exemption under LMRDA and greatly expanded reporting obligations. The 2016 Persuader Rule identified several examples of previously exempted indirect persuader activities, including activities typically undertaken by labor management attorneys during union organizing campaigns. The following activities would now be subject to reporting: (1) drafting, revising, or providing written materials, speeches, audiovisual or multi-media presentations, or web content for presentation, dissemination, or distribution to employees; (2) training supervisors or employer representatives to conduct individual or group employee meetings; (3) coordinating or directing the activities of supervisors or employer representatives; (4) developing employer personnel policies or practices; and (5) conducting a seminar for supervisors or employer representatives. 
 
Litigation over 2016 Persuader Rule
 
The 2016 Persuader Rule took effect on April 25, 2016 and was set to apply to arrangements, agreements, and payments made on or after July 1, 2016. On June 27, 2016, in National Federation of Independent Business et al. v. Perez et al, the U.S. District Court for the Northern District of Texas issued a temporary injunction prohibiting the DOL from implementing the rule on the grounds that it exceeded the DOL’s authority under the LMRDA by requiring employers to report “advice” information specifically protected by the Act. The Court issued a nationwide permanent injunction against enforcement of the 2016 Persuader Rule on November 16, 2016.
 
Trump Administration’s Intent to Rescind Persuader Rule
 
Under the Trump administration, the DOL has expressed an intent to rescind the 2016 Persuader Rule. On June 12, 2017, the DOL published a notice of proposed rulemaking seeking comments regarding rescission of the 2016 Persuader Rule. The notice identifies several reasons for the proposed rescission, including: (1) an opportunity to give more consideration to effects of the Rule on the regulated parties (e.g. the 2016 Persuader Rule made many labor relations consultants and attorneys who had previously not been required to file reports under the LMRDA responsible for filing both Form LM-20 and Form LM-21s, which impose unique record keeping and reporting burdens on the filer); (2) an opportunity to engage in further statutory analysis regarding the interaction “between the coverage provisions of the LMRDA, and the Act’s exemption for advice”; (3) an opportunity to consider the interaction between Form LM-20 and Form LM-21; (4) an opportunity for a more detailed consideration of attorneys’ activities, as many regulated entities expressed concern regarding the interaction between the new category of “indirect” persuasion and the role of attorneys in advising their clients; and (5) the DOL’s limited resources, as the 2016 Persuader Rule would have resulted in significantly more reports being filed.  
 
Conclusion
 
Because the 2016 Persuader Rule was enjoined before its application became mandatory, no reports have even been filed or are currently due under it. And it is readily apparent, through the June 12, 2017 notice, that there will be no change from past interpretations of the Persuader Rule. Thus, the reporting requirements will remain the same as they were before the 2016 Persuader Rule was implemented and only activities involving direct communication with employees with the objective of persuading them will be subject to reporting.

 
Katie Parham is a senior associate at Ford & Harrison’s Memphis office, where she concentrates her practice on representing management in employment matters before administrative agencies and in employment litigation in state and federal court. She is a graduate of University of Tennessee College of Law, magna cum laude, 2010. Katie may be reached at KParham@fordharrison.com or 901-291-1519.
 
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