District Court Blocks Persuader Rule

The U.S. District Court for the Northern District of Texas on June 27 granted a preliminary injunction that temporarily prevents the U.S. Department of Labor (DOL) from implementing and enforcing its recent changes to the Persuader Rule. That rule was scheduled to take effect July 1.  The injunction will be in effect until the district court issues a decision on the merits of the lawsuit or a higher court overrules the injunction if the DOL appeals it.

As a practical matter, the June 27 ruling means that NATSO members will be able to continue relying on attorneys and consultants for advice regarding employee unionization efforts without being subjected to any additional federal disclosure requirements.  Disclosure is only required when such hired experts communicate directly with employees.  Had the court not granted the preliminary injunction, such activity may have triggered additional disclosure obligations beginning July 1 -- even if the experts did not communicate directly with employees.
 
The DOL in March issued a final Persuader Rule that limits the so-called "advice exemption" in the Persuader Rule. The rule requires employers and the experts they hire to disclose any arrangements where an expert is hired to communicate directly with employees about their decision to unionize.

If the experts do not communicate directly with employees, but are simply providing "advice" to the employer about how to effectively/legally communicate with employees, this has for decades been exempt from disclosure requirements pursuant to the "advice exemption."

The final rule narrows the scope of the "advice" exemption so that far more interactions between employers and hired experts providing advice on employee or labor relations will be subject to disclosure requirements. 

"Narrowing the advice exemption in this way is clearly part of an effort to make it more difficult for employers to communicate with employees about the potential consequences of unionization," said David Fialkov, NATSO's Vice President of Government Affairs.  "It's part of a larger trend that we are seeing out of the Department of Labor in the final year of the Obama Administration."  

Many in the employer and legal community fear that employers will no longer have access to routine legal counsel or expert advice on employee relations, human resources or employee benefits because of the excessive costs and complexities associated with such disclosure.
 
In granting the preliminary injunction, the Texas court found that the plaintiffs challenging the new, narrower scope of the rule's advice exemption are likely to succeed on the merits of their claim, and further that allowing the rule to be enforced pending the outcome of the case would cause the plaintiffs "irreparable harm."
 
The plaintiffs in this case allege that narrowing the advice exemption in this manner is "arbitrary and capricious" and violates free speech and association rights protected by the First Amendment. In his decision to enjoin the rule, the judge wrote that the plaintiffs had demonstrated the rule will cause irreparable harms by "reducing access to full, complete, unconflicted legal advice"; "reducing access to training, seminars, information, and other advice relating to unionization campaigns"; and "burdening and chilling First Amendment rights."
 
The injunction is designed to preclude the DOL from enforcing this new aspect of the rule until the court reaches a final decision.
 
The rule is being challenged in at least three separate pending federal lawsuits, including one brought by the Coalition for a Democratic Workplace (CDW), of which NATSO is an active member. 

Several elected officials also have introduced legislation seeking to nullify the controversial rule. Most recently, Senators Jeff Flake (R-Ariz.) and Lamar Alexander (R-Tenn.) introduced S.J.Res. 35, a resolution that would prohibit implementation of the final persuader rule. CDW plans to send a letter of support to the Senators. CDW also supports similar legislation in the House, H.J. Res 87, introduced by Rep. Bradley Byrne (R-Ala.) in April to block the Persuader Rule through the Congressional Review Act. 

Shortly after the Texas court’s ruling, Rep. Byrne said, “We have repeatedly warned that the Obama Administration’s persuader rule will upend decades of labor law and disrupt attorney-client privilege rights, and today a federal judge agreed. This rule is nothing more than another attempt by this radical Department of Labor to tilt the scales of power in support of Big Labor bosses, and I am pleased the courts have blocked it.” 

 

Tiffany Wlazlowski Neuman's photo

Tiffany Wlazlowski Neuman

Tiffany Wlazlowski Neuman develops and executes communications strategies to advance NATSO’s public relations and advocacy goals. Tiffany also develops and oversees partnerships related to the NATSO Foundation’s public outreach initiatives. Tiffany lives in the D.C. metro area with her husband and their two sons.More
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