DOL Intends to Rescind Persuader Rule

By Nelson Cary and Cory Catignani

After months of waiting and wondering how the new administration would handle the appeal of the nationwide injunction prohibiting enforcement of the Obama Administration’s “persuader rule,” we finally have our answer.  The DOL is proposing to rescind the rule through notice and comment rulemaking.  Thus, on June 2, the DOL, under recently confirmed Secretary Alexander Acosta, asked the court to put the pending appeal on hold.

Yesterday, the government submitted a draft of the Notice of Proposed Rulemaking (NPRM) to the court, which it expects will be published on Monday, June 12, 2017. The NPRM gives the following reasons for rescinding the persuader rule:

• To engage in further statutory analysis in order to provide as thorough an explanation as possible in the event DOL elects to change the scope of “reportable activity” under the Labor-Management Reporting and Disclosure Act. The NPRM is critical of the DOL’s earlier explanations for what constituted “reportable activity.”
• To consider the interaction between Form LM-20 and Form LM-21. As you may recall, DOL did not address how the proposed changes to reporting requirements, which are made on Form LM-20, affected the reporting of disbursements, made on Form LM-21. This lack of consideration caused significant confusion.
• To allow a more detailed consideration of the effects of the Rule on attorneys’ interactions with their clients, that is, the scope of communications that would be privileged from disclosure.
• To evaluate whether there are more productive uses for DOL’s limited resources instead of reviewing and investigating the significant increase in reports that the Rule would produce.

Notably, neither the NPRM nor the filing the DOL made with the court promises to ultimately reject the Obama Administration’s Rule; only that it wishes to reevaluate it at this time. Perhaps that is why the parties that initially sued to enjoin enforcement of the Rule — a collection of employer-aligned trade organizations — have indicated their intent to oppose the government’s request for a stay.  Check back with us as we continue to provide updates on the persuader rule’s status.