DOL moves to rescind its persuader rule, citing ‘concerns’ raised by courts and need to review

By Jessica Karmasek | Aug 17, 2017

WASHINGTON (Legal Newsline) - The U.S. Department of Labor, in a recent notice of proposed rulemaking, is moving to rescind its so-called “persuader rule.”

The DOL’s Office of Labor-Management Standards published its notice June 12, explaining it intends to rescind the rule, first published by the department in March 2016.

The rule, or Persuader Advice Exemption Rule, effectively eliminates the “advice exemption” under the Labor Management Reporting and Disclosure Act of 1959, or LMRDA.

Basically, LMRDA requires employers to report each time they engage a consultant to persuade employees on how to use their collective bargaining rights.

Employers and consultants tend to engage in persuader activities during union campaigns to persuade employees not to unionize.

The new rule requires that employers and the consultants they hire file reports not only for direct persuader activities -- i.e. consultants talking to workers -- but also for indirect persuader activities -- consultants scripting what managers and supervisors say to workers.

According to its notice, the DOL seeks to rescind the rule to provide the department “with an opportunity to give more consideration to several important effects of the Rule on the regulated parties.”

“Rescission would ensure that any future changes to the Department's interpretation would reflect additional consideration of possible alternative interpretations of the statute, and could address the concerns that have been raised by reviewing courts,” the notice states.

The department said it also will consider the potential effects of the rule on attorneys and employers seeking legal assistance.

“Rescission would also permit the Department to consider the impact of shifting priorities and resource constraints,” the DOL wrote in its notice.

A Texas federal judge’s decision to issue a nationwide permanent injunction against the rule, thus preventing its implementation, most likely played a part in the DOL’s proposal.

“... the Court is of the opinion that the Department of Labor’s Persuader Advice Exemption Rule should be held unlawful and set aside pursuant to 5 U.S.C. Section 706(2), and the Court’s preliminary injunction preventing the implementation of the Rule should be converted into a permanent injunction with nationwide effect,” Senior Judge Sam R. Cummings for the U.S. District Court for the Northern District of Texas wrote in his November order.

In the judge’s previous order, in which he issued the preliminary injunction, Cummings blasted the DOL for not conducting any studies or independent analysis on the new rule, which, according to the department, took effect April 25, 2016. The rule was to be applicable to arrangements, agreements and payments made on or after July 1, 2016.

“DOL has not articulated a compelling governmental interest for its new Advice Exemption Interpretation,” the judge wrote. “DOL has only identified vaguely described, speculative benefits that it believes may result from the New Rule.”

Cummings said in his initial order, issued in June 2016, that the rule, which primarily applies to labor lawyers, creates “substantial potential conflicts” for attorneys and imposes “content-based burdens” on speech and cannot survive strict scrutiny.

The Washington Legal Foundation, a D.C.-based public interest law firm that regularly advocates in support of free speech rights, said it supports the DOL’s proposal.

The foundation has, for months, argued the department’s reinterpretation of the law is too “aggressive” and “runs afoul” of the U.S. Constitution.

On Friday, WLF filed comments with the DOL urging it to rescind the rule, calling it “clearly unconstitutional.”

Specifically, the foundation contends the rule violates the First Amendment because it suppresses the viewpoint of specific speakers based on the content of their speech.

This type of discrimination must withstand strict scrutiny, a test the rule cannot survive, WLF argues.

WLF contends the permanent nationwide injunction of the rule further establishes the rule’s “unlawfulness.”

“WLF supports LMRDA’s goal of ensuring that labor and management conduct labor management relations in a manner that protects the rights of employees to exercise their right to choose whether to be represented by a union for purposes of collective bargaining,” its wrote in its comments. “However, the Persuader Rule expands LMRDA’s reporting requirements far beyond anything contemplated by Congress and to such an extent that it seriously impinges on the First Amendment rights of individuals who play no direct role in union-representation issues.”

The DOL’s 60-day comment period on the proposal ended Friday.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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