Labor Update: DOL Rescinds Persuader Rule, NLRB Rejects Joint Employer Settlement

The Department of Labor (DOL) announced July 17 that it would rescind an Obama-era rule known as the Persuader Rule. This 2016 regulation would have required more disclosures from employers that work with consultants to counter union activities. The rule required employers and consultants to disclose not only when they reached an agreement regarding activities to persuade employees about “how or whether to exercise their collective bargaining rights,” but also when consultants simply provided advice, including “recommending drafts of or revisions to…speeches and communications” that were intended to influence employees with regard to collective bargaining and other organizational rights.

In rescinding the rule, DOL said it “impinged on attorney-client privilege by requiring confidential information to be part of disclosures and was strongly condemned by many stakeholders, including the American Bar Association.” In November 2016, a federal court in Texas had issued a permanent injunction, saying the rule was incompatible with the law and client confidentiality. DOL published its final rule rescinding the Persuader Rule in the Federal Register on July 18, 2018. The rescission will take effect on August 17, 2018.

Also on July 17, a National Labor Relations Board (NLRB) judge rejected a proposed settlement in a joint employment case involving McDonald’s. Plaintiffs in the case are attempting to hold McDonald’s liable as a joint employer for certain labor law violations of a franchisee. The settlement would have allowed McDonald’s to provide some recompense to the plaintiffs while not actually saying McDonald’s is a joint employer. However, Administrative Law Judge Lauren Esposito said that the settlement proposal did not make clear that the parties to the case had actually reached an agreement and “virtually guarantee[d] that the settlements will not definitively end the case.” As such, she rejected the proposal. McDonald’s has said it may appeal the decision.

Overall, the issue of the definition of a joint employer remains undecided. The Obama Administration in 2015 broadened the standard for joint employers from requiring an employer to have direct and actual control over employees, to merely requiring potential or indirect control. In December 2017, the Trump-era NLRB overturned the 2015 ruling and returned the standard back to its narrower definition of direct and actual control. However, due to an ethics issue in which Board Member William Emanuel did not recuse himself despite his firm having a relationship with a party to the case in question, the overturning of the standard was vacated in February 2018, putting the Obama-era standard back into effect. The NLRB has since stated that it intends to deal with the joint employer definition via notice-and-comment rulemaking. At this time, no rule has been proposed.

 

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