A federal judge’s decision to block the U.S. Department of Labor (DOL) from enforcing its new persuader rule means employers may continue hiring legal counsel on unionization issues without facing an argument from the DOL that fees paid to legal counsel must be publicly disclosed.
U.S. District Judge Sam Cummings of the Northern District of Texas granted summary judgment on Nov. 16 in favor of plaintiffs challenging the rule, including the National Federation of Independent Business, other business groups and several states. He also converted a previous preliminary injunction that prevented the rule’s implementation into a permanent injunction.
In effect, his decision means the DOL’s new persuader rule — which would have forced the disclosure of attorney-client relationships related to employers’ efforts to deal with unions — will be blocked nationwide.
What would the new persuader rule have meant for employers?
The updated final rule, which the DOL issued in March 2016, would have required employers and their attorneys to disclose any attempts to persuade employees with respect to union activities, subject to an exception for pre-existing arrangements. The disclosure would have included information on the parties involved as well as specific actions taken. It represented a departure from long-standing policies that exempted lawyers and law firms from disclosure unless they were directly speaking to workers.
The DOL stated that the disclosures would help workers better understand the arguments being directed at them regarding whether to unionize. However, the rule faced significant opposition from law firms, bar associations and businesses, which saw it as a threat to confidential attorney-client information and a deterrent for employers who want to seek legal counsel on union matters.
What was the judge’s reason for blocking the rule’s implementation?
The Nov. 16 order is brief and states “the court is of the opinion that the Department of Labor’s Persuader Advice Exemption Rule … should be held unlawful and set aside.” However, in its June order for preliminary injunction, the court elaborated that the rule exceeded the DOL’s authority, was too vague to apply properly and could threaten employers’ First Amendment rights and affect their ability to seek or obtain certain legal advice. The judge described the rule as “defective to its core” because of its elimination of the Labor-Management Reporting and Disclosure Act’s advice exemption, which has traditionally protected legal advice from such disclosure.
What happens now?
This move may signify the end of the road for this controversial rule. While the DOL could appeal, many predict the Obama-era rule will not survive under the Trump administration. For now, employers do not need to comply with the rule, but we will continue to follow any further developments on this blog.