To the relief of many employers that rely on third parties to provide labor advice and services, a Texas federal court has permanently blocked a rule that would have required them to make certain disclosures about their consultants to the Department of Labor. In National Federation of Independent Business v. Perez, the U.S. District Court for the Northern District of Texas held that the DOL's "persuader" rule "should be held unlawful and set aside," and that the temporary injunction the court issued in June to prevent the DOL from enforcing the rule be made permanent. As a result of this permanent injunction, employers—at least for the foreseeable future—do not need to comply with the consultant disclosure requirements.
The controversial rule at issue, published in the Federal Register on March 24, 2016, would have required employers to file public reports with the DOL when they use consultants (including lawyers) to provide labor relations advice and services that have the purpose of persuading employees regarding union organizing or collective bargaining. The consultants would also have been required to file similar reports containing the details of advice and services provided and the amount of payment received for that advice and service. For decades, these reports have been required only when a consultant providing advice has direct contact with employees.
Shortly after the persuader rule’s publication, several associations and other entities filed lawsuits against the DOL seeking to enjoin the rule. Among other arguments, the plaintiffs contended that the rule: (1) exceeds the DOL’s authority under the Labor-Management Reporting and Disclosure Act (LMRDA) by effectively eliminating the advice exception; (2) contains reporting requirements that are inconsistent with and undermine the attorney-client privilege and the confidentiality of the attorney-client relationship; (3) is unconstitutional; and (4) violates the Regulatory Flexibility Act.
On June 27, 2016, the court temporarily enjoined enforcement of the rule after assessing the plaintiffs' likelihood of success on the merits of their claims. On November 16, 2016, the court granted the plaintiffs' motion for summary judgment, and issued an order making the injunction permanent. With a permanent injunction now in place, employers can breathe a sigh of relief that their engagement of labor consultants will not trigger additional LMRDA reporting requirements.
It should be noted, however, that the court's July preliminary injunction order was appealed to the U.S. Court of Appeals for the Fifth Circuit. Presumably, the November 16 decision moots that appeal. Observers will be looking to see what steps, if any, the DOL—and the incoming Trump Administration—will take as a result of the district court's decision.