Federal Court Permanently Blocks Implementation of the Department of Labor’s Persuader Rule

On November 16, 2016, in National Federation of Independent Business v. Perez, No. 16-cv-066 (N.D. Tex. 2016), the United States District Court of Texas held that the Department of Labor’s (“DOL”) “Persuader Rule” was unlawful and should be set aside.  Additionally, the Court held that the temporary injunction issued by the Court in June to prevent the DOL from enforcing the rule would be made permanent.  Judge Sam R. Cummings held the DOL’s “persuader rule” is inconsistent with the Labor-Management Reporting and Disclosure Act and, therefore, is unlawful.

Under the controversial rule published in March of 2016, employers would have been required to disclose to their employees the identity of who assisted the employer prepare its anti-union organizing campaign.  The rule also would have required employers, labor relations consultants and law firms hired by employers to file reports not only for direct persuader activities—consultant talking to employees—but also for indirect persuader activities, such as the consultant preparing a script of what the managers and supervisors can say to employees during a union organizing campaign.  In addition, the new rule would have modified the “advice exemption” and required a consultant to file a report even if the consultant had no direct contact with employees, but engaged in activities such as directing managers and supervisors, providing persuader materials, conducting seminars for employers’ representatives, or developing personnel policies intended to persuade employees.

On June 27, 2016, Judge Cummings granted a preliminary injunction to business groups suing the DOL to prevent implementation of the rule.  In Judge Cummings’ June order, he found implementation of the new rule would cause irreparable harm because it would “[r]educe access to full, complete, un-conflicted legal advice and representation,” and would “burden and chill First Amendment rights . . .”  The Court’s most recent order granted the plaintiff’s motion for summary judgment, and made the injunction permanent.

Employers who utilize outside counsel or consultants to assist them through the rigors of organizing campaigns can now breathe easier as the implementation of the permanent injunction blocks the additional reporting requirements.  Employers should continue to monitor the developments in this litigation, however, to determine whether the DOL under the Trump administration will appeal the district court’s decision to the United States Court of Appeals.  In addition, employers should make sure they follow the requirements of the law and stay within the confines of the “advice” exemption when dealing with union organizing campaigns.

The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters, including discrimination defense and legal compliance diligence, for sixty years, and are available to discuss these issues and others.  As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts.  The choice of a lawyer is an important decision and should not be based solely on advertisements.