Regulation Rollback: Persuader Rule

Nov 21, 2017 by Paige Terryberry

The Department of Labor (DOL) under President Trump plans to rescind the overreaching persuader rule. The rule undermines employers’ relationships with consultants, asking employers to publicly disclose relationships of legal counsel that have previously remained confidential.

The Obama-era rule from March 2016 changed the requirements of what constitutes reportable advice for employers and labor relations consultants. In the past, reporting was required only when an advisor made direct contact with employees. Under the new rule, reportable advice expanded to include any direct or indirect advice—persuading employees about union organization.

Consulting activities are considered direct persuasion when an employee is directly persuaded concerning their representation and bargaining rights. Indirect persuasion delineates into the following types of reporting: Planning, Directing or Coordinating Supervisors or Managers, Providing Persuader Materials, Conducting a Seminar for Supervisors or Other Employer Representatives and Developing or Implementing Personnel Policies or Actions.

States, employers and business groups argued that this exceeded the DOL’s authority under the Labor-Management Reporting and Disclosure Act (LMRDA).

What Legislators Have Done

In March of 2016, 73 members of the House wrote a letter to Tom Cole (R-OK), Rosa DeLauro (D-CT), and the Chairman of the Appropriations Subcommittee on Labor, Health and Human Services. Their letter asked the DOL to no longer fund the persuader rule.

Rep. Bradley Byrne (R-AL) introduced H.J. Res 87, a joint resolution to block the rule from taking effect. In the Senate, Jeff Flake (R-AZ) and Lamar Alexander (R-TN) introduced their own resolution, S.J. Res 35, to block the persuader rule.

Lawsuits Challenging the Persuader Rule

Before the rule even took effect, the U.S. District Court for the Northern District of Texas issued a preliminary nationwide injunction against the rule. Then on November 16, 2016, the court issued a permanent nationwide injunction against the persuader rule which stated that the persuader rule violated the First Amendment rights to free speech and free association. The court claimed the DOL lacked statutory authority to enforce the persuader rule.

Other groups have sued as well, arguing that the rule is without statutory authority, conflicts the law, and violates the Constitution.

Changes under the Trump Administration

In June of 2017, the DOL released a proposal to rescind the rule. This allowed for a 60-day public comment period. The comment period closed on August 11 and the Office of Labor-Management Standards (OLMS) is reviewing the comments received.

This rollback is important because it shows the current administration’s commitment to free market values and individual responsibility. The persuader rule would give unions a leg-up, making it harder for employers to receive legal advice on their labor issues. If a company was worried that its workers may unionize—they could hire a consultant and persuade the employers not to unionize. Under the persuader rule, this transaction would need to be reported. The reporting requirement of the persuader rule was intended to provide more public information to better inform employer’s decisions. Instead, the rule would have forced confidential information to be disclosed while creating a massive compliance burden.