Nearly a year after being urged to do so by a 17-state coalition of Attorneys General led by Texas Attorney General Ken Paxton, the Department of Labor has rescinded the so-called 2016 “persuader rule.” In November 2016, a federal district court in Texas entered a permanent, nationwide injunction, ruling that the persuader rule was unlawful and would have required attorneys to publicly disclose confidential information protected by attorney-client privilege. Paxton was behind that lawsuit.
The 2016 persuader final rule would have revised two public disclosure reporting forms: Form LM-10 (employer report) and Form LM-20 (agreement and activities report). With some exceptions, these reports must be filed when an employer and a labor relations consultant make an arrangement or agreement that the consultant will undertake efforts to persuade the employer’s workers to reject an organizing campaign or collective bargaining effort by a union.
Rule exceeds DOL’s authority. In granting the preliminary injunction that it later made permanent, the court, in National Federation of Independent Business v. Perez, considered irreparable harm, the free-speech implications of the rule, and the fact that from a practical perspective, once employers are compelled to disclose the information requested by the forms, there’s no taking it back. The rule was facially invalid, according to the court, because it conflicted with the Labor-Management Reporting and Disclosure Act (LMRDA), the rulemaking was arbitrary and capricious in violation of the Administrative Procedure Act, and the DOL exceeded its authority in promulgating it. Moreover, the rule was unconstitutionally vague and violated due process, as well as employers’ First Amendment rights, and ran afoul of the Regulatory Flexibility Act. “DOL’s New Rule is not merely fuzzy around the edges,” the court wrote. “Rather, the New Rule is defective to its core because it entirely eliminates the LMRDA’s Advice Exemption.”
DOL takes action. Instead of defending an appeal of the persuader rule, in June 2017 the DOL proposed to rescind it. The AG coalition led by Paxton urged that the rule be rescinded in comments responding to that proposal. In a final rule notice slated for publication in the Federal Register July 18, 2018, the Department has finalized the rescission.
Under this final regulatory action, “Rescission of Rule Interpreting ‘Advice’ Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act,” the reporting requirements in effect are those that existed before the persuader rule was implemented. Due to the intervening nationwide injunction, no reports were ever filed under the persuader rule, the DOL noted.
“For decades, the Department enforced an easy-to-understand regulation: Personal interactions with employees done by employers’ consultants triggered reporting obligations, but advice between a client and attorney did not,” the Office of Policy’s Deputy Assistant Secretary Nathan Mehrens said in a release. “By rescinding this Rule, the Department stands up for the rights of Americans to ask a question of their attorney without mandated disclosure to the government.”
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