A Texas federal judge has entered a nationwide injunction barring the U.S. Department of Labor (DOL) from enforcing its so-called “persuader” rule (Final Rule), which was scheduled to go into effect on July 1, 2016.
On March 24, 2016, the DOL published new rules relating to reporting of persuader activity under the Labor-Management Reporting and Disclosure Act (LMRDA). The DOL has historically interpreted the LMRDA to exclude attorneys and other consultants from reporting their assistance to employers regarding union organizing campaigns, so long as the attorney or consultant had no direct contact with employees and the employer was free to accept or reject any recommendations. The DOL’s new rules represent a dramatic shift in that interpretation, for the first time requiring employers and their advisors (including attorneys and consultants) to file public reports with the DOL disclosing agreements or arrangements to provide advice that “indirectly persuades” employees regarding union organizing or collective bargaining, as well as payments received pursuant to that persuader activity and payments received for all traditional labor work.
In April, the National Federation of Independent Business and other Texas-based business groups sued in federal court to block the Final Rule’s implementation. On June 27, 2016, the U.S. district judge sided with the business groups, finding that the DOL likely exceeded its authority in passing the Final Rule and would no longer have protected closed-door, confidential attorney-client communications. The court enjoined the Final Rule’s implementation, acknowledging that the DOL would suffer no harm from its delayed enactment.
This ruling will have an immediate impact on employers who currently or will in the future face employee unionizing efforts. As the DOL currently is prohibited from enforcing the Final Rule, unless attorneys or consultants have direct contact with employees regarding union organizing campaigns, they are not obligated to report such agreements or activity. However, employers should note that the Texas court’s ruling is only temporary, and the Final Rule, or some revised version of it, could become effective in the future. In light of this, employers should still consider reviewing existing engagements with labor counsel to ensure compliance should the Final Rule eventually be implemented.