The Persuader Rule Under the Trump Administration

This is the first in a series of posts about likely changes in labor and employment law under the new Trump Administration. We can expect that the Trump Administration will seek to undo or overturn a number of labor-friendly initiatives implemented by President Obama. One of the more controversial initiatives of the Obama Administration related to the Department of Labor’s (DOL) so-called Persuader Rule under the Labor-Management Reporting and Disclosure Act (LMRDA).

Background of the Persuader Rule

The DOL’s new Persuader Rule changed the nature of reportable persuader activity and non-reportable advice in a fundamental way. Under the previous Persuader Rule, reporting was only required when an advisor made direct contact with employees. Under the new Persuader Rule, however, any advice designed to persuade employees about union organization or collective bargaining, whether through direct or indirect means, is reportable by employers and their counsel.

Several states and a host of employers and business groups cried foul when the DOL introduced the new Persuader Rule in late March 2016. They sought to enjoin the new rule in various federal courts on the grounds (1) that it exceeds the DOL’s authority under the LMRDA by eliminating a statutory exemption for legal advice, and (2) that it conflicts with the rules of professional responsibility for lawyers, which generally prohibit the identification of clients, the disclosure of client-billing information, and the disclosure of details about legal advice.

Just before the new Persuader Rule was to take effect in early July 2016, a federal court in Texas entered a preliminary, nationwide injunction preventing the DOL from enforcing the new Persuader Rule. On November 16, 2016, the same federal court converted that preliminary injunction into a permanent injunction with nationwide effect, preventing the DOL from enforcing its new Persuader Rule going forward. The grounds for the permanent injunction were the same as those given for the preliminary injunction: (1) the rule frustrated the attorney-client privilege; (2) the rule violated free speech and association rights guaranteed by the First Amendment to the U.S. Constitution; (3) the new Persuader Rule was unconstitutionally vague; (4) the new Persuader Rule was invalid because the DOL improperly calculated the costs of the regulation and did not make an appropriate cost-benefit analysis; and (5) the DOL lacked statutory authority to enforce the new Persuader Rule.

The Road Ahead

The fate of the new Persuader Rule is unclear. On January 12, 2017, while the Obama Administration was still in charge, the DOL appealed the Texas district court’s decision to the Court of Appeals for the Fifth Circuit. However, more than likely, the Trump Administration will take steps to eliminate the Persuader Rule in the near future. The DOL may also drop the appeal after new leadership takes charge of that agency. Thus, the Persuader Rule will likely be one of the first regulations of the Obama Administration to go following the election.