Last week, we reported that a federal district court in Minnesota determined that the new Department of Labor (DOL) persuader rule likely is unenforceable because it conflicts with the Labor Management Reporting and Disclosure Act (LMRDA). However, the court declined to enjoin the rule, and thus left open the possibility that the onerous reporting obligations under the new rule would kick in on July 1. Yesterday, a federal district court in Texas gave employers, labor consultants and labor attorneys the other half of the loaf when it not only found the new rule “defective to its core,” but also issued a nationwide injunction blocking the new rule in its entirety pending further legal proceedings.
In its decision, the court agreed with the plaintiffs, among whom were business groups and several state attorneys general, that the new rule: was contrary to the plain meaning of the LMRDA; violated employer free speech rights under the First Amendment; was overly vague; violated the Regulatory Flexibility Act; and was arbitrary, capricious, and an abuse of discretion. The court was also concerned that the new rule, in “entirely [eliminating] the . . . Advice Exemption,” effectively eliminates employers’ ability to obtain legal advice and representation on matters of union organizing and conflicts with attorneys’ ethical obligations across the country. The court further found that the plaintiffs had established that irreparable harm would result if the rule was not enjoined.
For now, the new rule is not in effect and its future depends on further legal proceedings in the Minnesota and Texas district courts, in another case pending in an Arkansas federal district court, and possibly in the federal courts of appeal. Pending the outcome of future legal proceedings, employers, consultants and attorneys may continue to follow the persuader rule as it has been interpreted and administered for the past 50 years.