Department of Labor “Persuader Rule” Put on Hold

Department of Labor “Persuader Rule” Put on Hold


For the past several years, the healthcare industry has been targeted by union organizers hoping to add nurses, physical therapists and others to their ranks. In the first half of 2015, there were more than 150 union elections in the healthcare industry, with unions winning more than three-quarters of these elections.

Healthcare employers seeking to remain union free in an already challenging environment were handed an additional challenge earlier this year when the United States Department of Labor (DOL) changed the law to require reporting of “persuader” activity under the Labor-Management Reporting and Disclosure Act. Yesterday, however, a federal judge in Texas entered a nationwide injunction barring the DOL from enforcing the rule. The Court stated that a trial date would be scheduled in the near future.

The new Rule would require employers, as well as their consultants and attorneys, to report to the DOL all arrangements in which an “object” (directly or indirectly) is to persuade employees in the exercise of their “rights to organize and bargain collectively through representatives of their own choosing” under federal labor law.  In other words, if attorneys or consultants provide an employer with materials to communicate with employees, revise employer-created materials, conduct supervisory seminars, develop or implement personnel policies or actions or otherwise assist the employer in activities that have as their objective to “persuade” employees, the employer must disclose services rendered and fees paid in connection with union organizing and other labor disputes. This Rule would significantly broadens labor and employment services that are reportable, and greatly narrows the “legal advice” exception.

Notwithstanding the issuance of the nationwide injunction, Waller is advising clients to take advantage of a provision in the Rule that avoids the stringent reporting requirements applicable to future “persuader” activity because the DOL has provided guidance that the Rule “will be applicable to agreements and arrangements . . . made on or after July 1, 2016.” Thus, if an employer signed an agreement prior to that date that includes persuader activity within its scope of services, the employer was not required to comply with the Rule for those services. If the DOL prevails on appeal the Rule will stand, and if an employer has not signed an agreement it will have lost the opportunity of the safe harbor provision.

Waller will monitor developments related to the Persuader Rule and will provide updates as additional information becomes available.

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