The U.S. District Court for the Northern District of Texas on Nov. 16 enjoined the U.S. Department of Labor (DOL) from implementing and enforcing its recent changes to the Persuader Rule.
The court’s decision marks a major victory for employers, and 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.
The DOL earlier this year issued an update to its "Persuader Rule," narrowing that rule's so-called "advice exemption." The persuader 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. For many years, the rule stipulated that employers do not need to disclose hired experts if the experts never communicated directly with employees, but simply provided "advice" to employers.
The Department of Labor's new rule, which was struck down last week, would have narrowed the scope of this "advice" exemption so that far more interactions between employers and hired experts would have triggered disclosure requirements.
Judge Sam R. Cummings ruled last week that the new rule violated the First Amendment as well as the Due Process Clause of the 14th Amendment and the Regulatory Flexibility Act, the same reasons that he wrote the rule should be held unlawful when he issued a preliminary injunction in June.
Although the DOL can still appeal the ruling, such an appeal effort would likely be determined and managed by the new Trump Department of Labor. Most experts agree that the incoming administration will choose not to appeal.
Last week’s decision stems from a legal challenge filled by the National Federation of Independent Business, the National Association of Home Builders, the Texas Association of Business, the and the Lubbock Chamber of Commerce. The groups were joined by the attorneys general of 10 states as plaintiffs in the case.
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 associated with such disclosure.
In June, Judge Cummings 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.”
Rep. John Kline (R-Minn.), Chairman of the House Committee on Education and the Workforce, and Rep. Phil Roe (R-Tenn.), Chairman of the Health, Employment, Labor, and Pensions Subcommittee, applauded the decision and called on the Obama administration “to immediately abandon this extreme and partisan rule.”
The National Federation of Independent Business quickly praised the decision saying small business owners are relieved that they still have the right to seek legal advice when facing a union election. Labor law is extremely complicated, and small business owners rely on the advice of experts to help them navigate the unfamiliar territory, the group said.
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