CHICAGO (Legal Newsline) - Attorney Jeremy Glenn, the current co-chair of the American Bar Association’s Federal Labor Standards Legislation committee, said he “wholeheartedly” agrees with the U.S. Department of Labor’s recent move to rescind its so-called “persuader rule,” saying the rule would’ve meant “real consequences” for employers.

Glenn, who has been with Chicago law firm Cozen O’Connor PC since 2015 and who also serves as a member of The Litigation Counsel of America’s Wage Hour Defense Institute, has been practicing in the traditional labor area for 20 years, including advising employers on how to engage their employees in a positive way so they do not seek unionization.

The labor attorney, who was a partner with Meckler Bulger Tilson for 13 years before it merged with Cozen in 2015, said the DOL was smart to file its notice of proposed rulemaking in June, given the persuader rule’s negative impact on the attorney-client privilege communication between employers and their lawyers.

“I think the DOL took heed of the Texas federal court’s ruling as well as the evidence of the real consequences that would arise from compromising the ability of employers to receive legal advice,” Glenn recently told Legal Newsline.

The persuader rule, or Persuader Advice Exemption Rule, would have effectively eliminated 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.

Glenn said in his experience, workers seek union representation when they feel their concerns are not heard by management, or unequal treatment from supervisors, or lack of basic protections in the workplace.

Economic terms also can be a motivating factor, but he finds it is more often the non-economic elements that lead to workers seeking support from a labor union.

The rule, first published by the DOL in March 2016, would have required 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 June 12 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.

In Glenn’s case, if the Obama-era rule had gone into effect, it would have caused a “careful analysis” of the legal advice he could give to an employer who is facing a union election campaign, as well as guiding the employer through the NLRB adjudication process.

“That rule, which has been permanently enjoined by a federal court, did actually cause a number of prominent law firms to announce that they would withdraw from the practice of advising employers in union election and organization efforts matters,” Glenn pointed out, referring to a Texas federal judge’s decision last year to issue a nationwide permanent injunction against the rule.

“The net effect would have been to deny legal advice to small and medium companies that do not have a robust in-house legal department.”

In his November order converting the injunction to a nationwide ban, Senior Judge Sam R. Cummings for the U.S. District Court for the Northern District of Texas called the rule “unlawful.”

In a previous order, in which he issued a preliminary injunction, Cummings went as far as blasting the DOL for not conducting any studies or independent analysis.

“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.”

Indeed, the rule was counter to the prior 50 years of interpretation and practice of the advice exemption to the LMRDA, Glenn said.

“The real question to me is what changed and caused the DOL three years ago to alter its long-standing interpretation of the rule,” he said. “I am not convinced that there was evidence to support the rule that has now been enjoined and rescinded.”

A review of the rule should shed some light, Glenn said.

In announcing its plan for rescission in June, the DOL said it will consider the potential effects of the rule on attorneys and employers seeking legal assistance.

As Glenn explained, under administrative procedure law, anytime an agency alters its interpretation of the law the agency needs to justify and explain its rationale. 

“Courts typically do not give deference to unsupported flip-flops in agency interpretation just because the occupant of the White House has changed,” he said. “So a careful review of the rule and its historical application needs to be conducted before the Department of Labor can change positions.”

But Glenn said the DOL, in its review, should be sure to study the last five decades of how the interpretation impacted employers and employees and whether it fulfilled the intention of Congress in passing the original statute.

He said he believes it did.

“Congress did not pass a statute that required lawyers to publicly disclose their engagements with clients and the terms of those engagements to assist the labor movement in organizing workers,” Glenn said, also applauding the DOL’s effort to reach out to all constituencies and seek public comment.

“I do not have a crystal ball, but I think the DOL will find that the prior interpretation of the advice exemption, which allowed attorneys to give legal advice to employers without requiring public disclosure of that legal advice or the terms of representation, served the interest of national labor stability quite well.”

However, Glenn said it is possible the department, following its review, will issue a slightly revised rule that retains some level of “enhanced reporting” obligations for the employer/company, but removes the reporting obligation for its outside legal counsel in terms of disclosing the terms of the representation or the content of any advice transmitted as part of the attorney-client relationship.

The DOL’s 60-day comment period on its proposal ended Aug. 11.

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

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