The persuader rule is history.
On July 17, the Department of Labor formally rescinded the Obama-era rule. Karen Harned, Executive Director of the NFIB Small Business Legal Center, has previously referred to the persuader rule as “an act of sabotage” against small business owners.
The persuader rule required small business owners to report outside legal counsel or services regarding employee relations or union organizing—including the cost of said services—to the DOL.
“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 stated in a press 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.”
With support from the Trump Administration, the DOL’s ruling marks a tremendous win for NFIB, which has been in opposition to the rule since its announcement in early 2016.
NFIB filed a lawsuit against the DOL, claiming a violation of the First Amendment’s guarantee of freedom of speech and right of association—a right previously protected under the “Advice Exemption” of the Labor-Management Reporting and Disclosure Act of 1959. Representatives from seventeen states opposed the law in August 2017.
So what does this mean for the future of small business? The recent rollback will no longer require small business owners to report outside legal counsel or services regarding employee relations or union organizing to the DOL, allowing business owners the freedom to seek confidential legal counsel.
“The Department of Labor’s rescission of the union persuader rule is a relief for many in the small business community,” said Harned. “We have been working to rescind this harmful rule, which puts small businesses who simply do not have the means to employ in-house lawyers or compliance officers at a distinct disadvantage when it comes to dealing with union elections and employee relations.”
The rule’s rescission will take full effect on August 17, 2018.