• "Persuader" Rule Is on the Horizon, says U.S. Department of Labor (which doesn’t need a quorum).
  • March 7, 2013
  • Law Firm: Constangy Brooks Smith LLP - Atlanta Office
  • On December 21, 2012, the Obama Administration published its regulatory agenda for 2013, and new "persuader" regulations from the DOL were listed for action with a "final" regulation stage anticipated in April 2013. We reported on the proposed regulations here. If adopted, these regulations will significantly change the "rules of business" by requiring employers and labor consultants, including attorneys, to report "persuader" activity under the Labor-Management Reporting and Disclosure Act. Organized labor could hardly be happier.

    The Obama Administration's attempt to neutralize employers in union organizing campaigns and in employee communications strategies in collective bargaining has not gotten much press of late, but it is potentially a sleeping giant. The LMRDA has been around for many years, but the DOL has had an interpretation of its "advice" exemption that protected employers and their advisers from some of the law's more onerous requirements: if advisors did not communicate directly with employees, they were considered to be within the advice exemption. But now the DOL is "reinterpreting" the law and taking a much more narrow view of the "advice" exemption, essentially that the advice exemption does not apply if the individual or entity communicates directly or indirectly with employees, an interpretation which may be inconsistent with the law itself. The DOL's revised interpretation of the law will have substantial implications for any employers who communicate with their employees about labor relations, as expansively defined by the DOL's new interpretations, and lawyers and labor relations consultants dealing with either union or non-union employee groups. Under the new DOL interpretation, persuader activity will occur, not only in the context of union-organizing activity, collective bargaining, strike situations, and traditional labor relations, but also in routine human resources matters having nothing to do with unions or traditional labor relations issues. The rule is also likely to affect employers' relationships with outside legal counsel providing legal advice regarding labor or employment matters, subject to very narrow exceptions. Whether this part of the rule will withstand a challenge based on attorney-client privilege remains to be seen.

    The DOL received thousands of formal comments in response to the proposed "persuader" rule. Employers and employers' associations contended that there was no need to change the regulations that have been working well for approximately 50 years. Labor groups, on the other hand, upset about the decline in union organizing and blaming it on employer interference, have long been lobbying for the change.

    One thing is certain: When these regulations are issued, there will be court challenges based on a number of grounds, including the attorney-client privilege issue and that the DOL does not have the authority to construe the "advice" exemption so narrowly as to essentially eliminate it from the statute. This is yet another labor issue that may very well wind up at the U.S. Supreme Court.