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13 states fight DOL’s proposed persuader agreement rule

Alabama Attorney General Luther Strange recently announced that his state is spearheading a coalition of 13 states who oppose the Obama Administration’s proposed Persuader Advice Exemption Rule that they say could force small businesses to disclose communications with outside counsel in labor relations matters. The rule is on track to be finalized in March.

In a letter to the U.S. Office of Management and Budget, Attorney General Strange and 12 other Attorneys General voiced opposition to the Obama Administration’s proposed new rule which they say will undermine long-standing protections for confidential attorney-client communications and would place undue burdens on small business which would be singled out under the rule.

“For more than 50 years, the Labor Management Reporting and Disclosure Act (LMRDA) has preserved the confidentiality of attorney-client communications by exempting attorney advice relating to labor relations issues from disclosure generally, and specifically, by exempting confidential attorney-client interactions. This new rule, however, would undermine these protections by requiring the reporting of advice related to the persuasion of employees, regardless of whether the lawyers who provide the advice communicate with anyone other than their clients,” the Attorneys General wrote.

They further noted that impact of the proposed rule effectively targets small business: “The new rule would cause particular harm to small business in our states. The reporting requirement applies specifically to outside consultants. Because many large corporations employ in-house counsels, they will have access to legal advice on labor matters, free of the disclosure concerns raised by the new rule. Small businesses, by their very nature, are less likely to employ an in-house counsel. The burden of this new rule will fall chiefly on them, with heavy penalties if they fail to comply.”

According to Strange, the Obama Administration’s proposed new labor rule is an assault on a sector of the economy which vital to economic growth and jobs. “Small businesses make up over 90 percent of all businesses both in Alabama and across America,” Strange said. “These local job providers can least afford further unwarranted federal mandates that will erode their ability to compete. I have joined with my fellow Attorneys General to stand up for fairness and protect small businesses from this unnecessary federal overreach.”

The letter was signed by Attorneys General from Alabama, Arizona, Arkansas, Georgia, Idaho, Kansas, Louisiana, Michigan, Nevada, Oklahoma, South Carolina, South Dakota and West Virginia.