Federal Court Issues Injunction Against Persuader Rule

Calling the Department of Labor’s new interpretation of its Persuader Rule “defective to its core,” the District Court for the Northern District of Texas issued a nationwide injunction in late June against the final rule. The ruling came just days before July 1, the date on which the new rule’s most problematic reporting requirements would have become fully effective.

The Persuader Rule would have expanded reporting requirements under the Labor Management Reporting and Disclosure Act of 1959 (LMRDA). The law would have required financial reporting and disclosure by employers and their consultants of any agreement or arrangement by which the consultant would undertake activities, directly or indirectly, to persuade employees related to their right to organize and bargain collectively.

The rule would ensnare, for the first time, consultants or advisers who provide advice that might have some persuasive impact on the employees—regardless of whether that consultant or adviser has direct contact with employees.

The rule would require attorneys to report on the nature of their engagement and fees paid if they did any work for the employer in connection with the persuasion of employees, such as training managers and supervisors how to respond lawfully to organizing efforts, providing lawful draft communications, or developing personnel policies.

The District Court for the Northern District of Texas determined the rule:

• Exceeds DOL’s authority under the LMRDA;
• Is “arbitrary, capricious, and an abuse of discretion; and
• Unreasonably conflicts with state rules governing the practice of law, and violates the attorney-client privilege.

The court further ruled that the Persuader Rule would cause irreparable harm to the Plaintiffs by reducing “access to full, complete, un-conflicted legal advice and representation.”

The injunction encourages employers to continue to prepare for the possibility of enforcement at a later date, considering the likelihood of more litigation.

Source: Labor Relations Today