On November 16, 2016, a Texas federal judge permanently blocked the U.S. Department of Labor (“DOL”) from enforcing a new rule expanding employers’ disclosure requirements related to union-organizing campaigns.
The DOL’s Labor-Management Reporting and Disclosure Act (“LMRDA”) of 1959, 29 U.S.C. § 433, requires employers and labor relations consultants to file reports with the DOL concerning agreements or arrangements to (i) directly persuade employees concerning their rights to organize and bargain collectively or (ii) supply the employer with certain information concerning the activities of employees or a labor organization in connection with the labor dispute involving the employer. The LMRDA reporting requirements are subject to certain exceptions, which provide, in part, that no report is required when hiring law firms to provide advice, provided there is no direct contact with the employee.
In March 2016, the DOL published the Persuader Advice Exemption Rule (“Persuader Rule”), 81 Fed. Reg. 15,924, et seq. which broadened the scope of reportable activity to include indirect persuasive activities, effectively eliminating the “advice” exemption. Employers and law firms would be required to file a report, even if there was no direct contact with employees, if the attorney was engaged in indirect activities such as the development of policies for employers intended to persuade employees or advice related to employer communications with employees in matters involving unions.
Businesses, state attorneys general and attorneys challenged the Persuader Rule in multiple states, claiming the rule was too broad, violated the duty to protect client confidentiality and the attorney-client privilege, and blurred the LMRDA’s clear “advice” exemption. A federal judge in Texas agreed and held the Persuader Rule unlawful and ordered the court’s previous preliminary injunction preventing the implementation of the rule to be converted into a permanent injunction with nationwide effect.
One month later, a federal judge in Arkansas ordered a case challenging the Persuader Rule should be stayed pending appeal of Texas federal judge’s November decision blocking the rule. In Minnesota, a federal judge denied summary judgment motions stating that: “there is significant reason to believe that the new administration will withdraw the Persuader Rule – or at least decline to defend the validity of the Persuader Rule in its current form.”
The interpretation of the Persuader Rule requiring employers to report indirect contact with employees will most likely remain blocked and it is expected that the Trump administration will not appeal the decision.