DOL’s new rule on persuader activities, which significantly narrowed the scope of the “advice” exemption, took effect on April 25th and would have applied to any agreements entered into after July 1st, but was halted by this recent injunction. Specifically, the new persuader rule would require employers and their hired consultants to report when the consultant directly persuades workers or where the consultant engages in other non-direct activities including where the consultant:
- Plans, directs, or coordinates managers to persuade workers;
- Provides persuader materials to employers to disseminate to workers;
- Conducts union avoidance seminars; or
- Develops or implements personnel policies or actions to persuade workers.
The new rule would have applied to arrangements, agreements, and payments made on or after July 1, 2016, but on Monday U.S. District Judge Sam Cummings of the Northern District of Texas entered a nationwide injunction barring the DOL from enforcing the new persuader rule. The court stated that the new rule threatens employers’ rights to secure legal advice about union organization, running afoul of the First Amendment right to free speech and free association, and that the rule was impermissibly vague in violation of the Fifth Amendment right to due process. The Court held that the DOL likely exceeded its authority in passing the rule, and also that the agency had not calculated the cost to small businesses as required by the Regulatory Flexibility Act.
Stay tuned for additional guidance on how best to prepare for these persuader rule changes. If the preliminary injunction becomes permanent and survives any appeals, the new persuader rule won’t take effect, indirect persuader activity won’t be reportable, and the traditional advice exemption will still apply to a broader category of services. In the meantime, the new rule carves out “services and payments made pursuant to a multi-year agreement, even if they occur after July 1…so long as the agreement was signed before July 1, 2016.” Employers may want to take advantage of this loophole by reaffirming or executing any such agreements before July 1, 2016 in the event the injunction is overturned and the new persuader rule is implemented.
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