CLIENT UPDATE

Putney, Twombly, Hall & Hirson LLP
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New York, NY 10175
Tel: (212) 682-0020

 

June 16, 2017

United States Department of Labor Rescinds the Persuader Rule

On June 12, 2017, the United States Department of Labor (the “DOL”) issued a Notice of Proposed Rulemaking to rescind recent changes to the so-called “Persuader Rule.” The revised rule would have required employers, attorneys and consultants to disclose all arrangements for legal services related to persuading employees to exercise their rights to union representation and collective bargaining, even when the attorneys and consultants limited their activities to advising employers and revising communications to be made to employees. The proposal to rescind comes as no surprise in the wake of the change in Presidential administrations as well as National Federation of Independent Business v. Perez, Case No. 16-cv-066 (N.D. Tex. November 16, 2016), in which the United States District Court for the Northern District of Texas permanently enjoined the DOL from enforcing the Persuader Rule. For more information on the Persuader Rule and the injunction thereof, please see our client alerts dated March 30, 2016, June 27, 2016, and November 18, 2016 at http://putneylaw.com/cu_033016.html, http://putneylaw.com/cu_062716.html and http://www.putneylaw.com/cu_111816.html.

The DOL proposed to rescind the Persuader Rule to address the various concerns raised by courts and regulated entities.  The courts made clear that the Persuader Rule needed a clearer explanation of the DOL’s statutory authority to promulgate any rule requiring the disclosure of previously exempt activities. In light of concerns about the potentially chilling effect of the Persuader Rule on employers’ ability to obtain legal counsel and representation, the DOL also determined that it had not provided an adequately detailed analysis of how the disclosure of previously exempt activities will affect the furnishing and receiving of legal services in the regulated community.  The DOL further determined that rescission was appropriate due to the DOL’s limited resources as the reporting requirements of the Persuader Rule would have increased the DOL’s investigation responsibilities fivefold.

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Although the DOL is accepting comments until August 11, 2017, we expect that the Persuader Rule will be rescinded shortly thereafter. We will continue to provide updates in the event of any developments. Please do not hesitate to contact us with any questions on the rescission of the Persuader Rule.