In late April 2021, the U.S. Department of Labor’s (DOL) Office of Labor-Management Standards (OLMS) signaled its intent to revisit the “persuader rule,” an Obama-era regulation that imposed strict reporting requirements on employers facing union organization. Although the rule hasn’t yet been reinstated and will almost certainly face significant opposition, you should be aware of the possible ramifications.
What Is the Persuader Rule?
The persuader rule is a regulation first established by the DOL during the Obama administration. It alters the agency’s interpretation of the Labor Management Reporting and Disclosure Act of 1959, which requires employers and their labor consultants to report any activities “undertaken with an object, directly or indirectly, to persuade employees about how to exercise their rights to union representation and collective bargaining.”
Since the Act’s inception, it has been interpreted as exempting “advice” from the reporting requirements. As long as labor consultants didn’t have direct contact with employees, their guidance was considered “advice” and not subject to the reporting requirements.
The persuader rule eliminates the “advice” exception, meaning employers would have to report any assistance rendered by labor consultants, including attorneys, that is “undertaken with an object, directly or indirectly, to persuade employees about how to exercise their rights to union representation and collective bargaining.”
The persuader rule faced substantial opposition from national, state, and local business groups culminating in three lawsuits seeking to enjoin its enforcement. In June 2016, the U.S. District Court for the Northern District of Texas issued a temporary injunction blocking the rule from taking effect. The judge found the business groups opposing the rule were likely to succeed on their claims that, among other things, it violated First Amendment rights of free speech and association and the due process clause of the Fifth Amendment because of its vagueness.
Ultimately, in November 2016, the same district court permanently blocked the persuader rule. After Donald Trump was elected president, the federal government didn’t pursue an appeal.
Why DOL Is Revisiting Rule
The Biden administration is committed to effectuating a national labor policy that seeks to increase union membership. A major component is the Protecting the Right to Organize (PRO) Act of 2019, which would codify the increased reporting requirements embodied in the persuader rule. Although the PRO Act passed the U.S. House of Representatives in February 2020, it faces an uphill battle in the Senate. In lieu of hoping the Act passes there, the Biden administration can implement certain components via rulemaking.
One example of such rulemaking is by revisiting the persuader rule, which would aid organizing efforts by imposing stricter reporting requirements on employers and labor consultants. In an organizing campaign, the rule would require employers to report all third-party consultants who provide advice about the ongoing organization, including attorneys. In that manner, the rule could:
- Give organizers advanced notice and early insight about employers’ efforts and strategies to avoid organization; and
- Present a risk that communications traditionally protected by the attorney-client privilege may be subject to reporting.
What Employers Should Do
Although the OLMS announced it plans to revisit the persuader rule, there’s no timeline for implementation. The rule almost certainly will face strong opposition like it did in 2016. In addition to opposition from national, state, and local business organizations, the American Bar Association (ABA) recently criticized the PRO Act’s reporting requirements for intruding upon the attorney-client privilege. That’s particularly significant because the ABA historically remains neutral in union-management disputes.
Despite the strong opposition to the persuader rule and the PRO Act, you should be aware of and prepared for the potential ramifications of the increased reporting requirements.
Daniel Dorson and Matthew A. Fontana are attorneys with Faegre Drinker. You can reach them at daniel.dorson@faegredrinker.com or matthew.fontana@faegredrinker.com.