Back in 2016, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which Shawe Rosenthal is a member, we filed suit against the U.S. Department of Labor to block the DOL’s new interpretation of the “persuader rule,” which is the advice exemption of the Labor Management Reporting and Disclosure Act (“LMRDA”). Several other suits were filed as well, a nationwide injunction was issued by a federal court in Texas, the DOL issued a proposed rule to rescind the new interpretation, and now, repeatedly citing the favorable decisions in our lawsuit and directly quoting the comments to the DOL’s proposed rule we submitted on behalf of Worklaw, the DOL has officially rescinded the rule.
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We Sued the Department of Labor, and Now It Has Backtracked on the Persuader Rule
As we previously blogged, Shawe Rosenthal, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which we are a member, filed suit last year against the U.S. Department of Labor to block the DOL’s new interpretation of the advice exemption of the Labor Management Reporting and Disclosure Act (“LMRDA”), or the “persuader rule.” And now, on Monday, June 12, 2017, the DOL announced a Notice of Proposed Rulemaking (“NPRM”) that proposes to rescind that new persuader rule interpretation.
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Persuader Rule Lawsuit Update
As you may remember, Shawe Rosenthal joined with other law firms in Worklaw® Network in a lawsuit against the U.S. Department of Labor to block its implementation of the controversial “persuader rule” in order to protect your right to seek counsel on employment, labor and HR matters with privacy and confidentiality. Here’s a brief recap of the milestones:
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Court Finds DOL’s New Persuader Rule “Flawed”
The U.S. District Court in Minnesota ruled, on June 22, 2016, that the Department of Labor’s new interpretation of the advice exemption from the persuader rule is “untenable” and “flawed.” The Court did not issue an injunction against the new interpretation, which goes into effect July 1, 2016, but that was based on its finding that the DOL suspended the most objectionable reporting requirement after the lawsuit was filed. The challenge to the new interpretation was filed by Worklaw Network, a national alliance of labor and employment firms of which we are a member. Our firm, along with Seaton, Peters & Revnew, P.A. of Minneapolis, represented Worklaw, as we discussed in a prior post, “Shawe Rosenthal and Worklaw Just Sued the DOL.”
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Shawe Rosenthal and Worklaw Just Sued the DOL
Although the government is often a thorn in the side of many of our clients, it is not every day that we decide to sue the government. Today was a different story.
On March 31, 2016, Shawe Rosenthal, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which we are a member, filed suit against the U.S. Department of Labor to block the Department’s new interpretation of the persuader rule. A copy of the complaint can be viewed here.
We discussed the new persuader rule in a previous post. To reiterate briefly, a federal law called the Labor-Management Reporting and Disclosure Act requires people who assist employers to fend off union organizing drives to file reports with the Department of Labor. The law contains an “advice exemption” under which employers and their attorneys do not have to report confidential information protected by the attorney-client relationship. For decades, the Department has correctly held that the “advice exemption” applies to lawyers who advise clients concerning union organizing drives, as long as the lawyers do not communicate directly with employees. Under the new interpretation, effective July 1, 2016, the Department has substantially narrowed the advice exemption. (Actually, the Department would say it substantially narrowed the exemption. I would say the Department completely eliminated it.)
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DOL Issues Persuader Rule
On March 23, 2016, the Department of Labor released the long-pending revisions to the “persuader rule,” drastically expanding employers’ disclosure requirements regarding their use of union avoidance consultants, including attorneys as well as HR consultants and media specialists. Our firm, on behalf of Worklaw, an international management-side network of labor and employment firms, will be filing suit to block implementation of the rule.
Under the “persuader rule” in the Labor-Management Reporting Disclosure Act of 1959 (LMRDA), employers are required to file reports and disclose expenditures to the DOL each time they engage a consultant to persuade employees regarding employees’ rights to organize. However, the LMRDA provides an “advice exception,” which had been interpreted for over 50 years to exclude an employer’s discussions with its labor relations consultants – including legal counsel – regarding opposition to a union organizing campaign, as long as the consultants had no direct contact with employees.
Under the new rule, however, the scope of an employer’s reporting obligations under the LMRDA has been substantially expanded, and will include a broad range of activities beyond “direct contact” provided by labor relations consultants – including attorneys. The intent of this one-sided rule is to discourage employers from retaining such consultants, and thereby promote unionization.
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