On November 16, 2016, the US District Court for the Norther District of Texas issued a permanent nationwide injunction preventing the implementation of the Department of Labor’s controversial Persuader Advice Exemption Rule, as published in 81 Fed. Reg.15, 924 et seq. The Court had previously issued a Preliminary Injunction Order invalidating the Persuader Rule on June 27, 2016.

According to the DOL, the Persuader Rule “realigns the Department’s regulations with the text of a law passed by Congress, the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).” The Rule requires that employers and the consultants they hire file reports not only for direct persuader activities – consultants talking to workers – but also for indirect persuader activities – consultants scripting what managers and supervisors say to workers.

The Court relied on the same reasoning it used in issuing the Preliminary Injunction – that the DOL exceeded its authority under the LMRDA by effectively eliminating the Advice Exemption, contrary to the plain text of Section 203(c) of the Act. Section 203(c) states in pertinent part that nothing in the LMRDA requires an employer or other person to file a report “covering the services of such person by reason of his giving or agreeing to give advice to such employer . . .”

The Court also found that the Persuader Rule is arbitrary and capricious, because the DOL never adequately explained why it was abandoning the prior longstanding Advice Exemption. Furthermore, the Court reasoned that the Persuader Rule violates the free speech, expression, and association rights protected by the First Amendment, and was void-for-vagueness under the Constitution’s due process clause in the Fifth Amendment.

The Court’s Preliminary Injunction Order is currently on interlocutory appeal before the US Court of Appeals for the Fifth Circuit.

Takeaways

This decision is an important one for employers, attorneys, and consultants because it helps to somewhat level the union organizing playing field that the NLRB and DOL have seemingly attempted to tilt in labor’s favor. It is unclear how the Fifth Circuit may rule, but even if it overturns the lower court, the new Trump Administration may do away with the Persuader Rule anyway.