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Federal Court Permanently Blocks DOL Persuader Rule

On November 16, 2016, a federal court in Texas issued an order permanently prohibiting the Department of Labor (DOL) from enforcing its new “Persuader Rule.” The DOL’s Persuader Rule interprets a provision of the federal Labor-Management Reporting and Disclosure Act (LMRDA) that requires employers and consultants hired to assist in communicating and advising employees of their rights and the law during a union campaign, to report their business relationship.

The issue before the court was the DOL’s elimination of the long held general “advice exemption” and a specific “attorney-client communications exemption” that has been in place for the past 54 years. These exemptions exclude advice given by attorneys from being reported. Had the rule gone into effect as planned, it would have required employers and attorneys who provide advice on how to discuss issues with employees during a union campaign to file comprehensive reports related to that advice. Prior to the Persuader Rule, attorney advice given to employers, but not directly to employees, did not have to be reported under the LMRDA. That distinction was eliminated by the DOL’s new Persuader Rule.

The court’s order follows its ruling in June that temporarily blocked the DOL from rolling out its Persuader Rule as planned on July 1, as discussed previously on the Nemeth Law Employment Blog. Relying on the same grounds as the prior ruling, the court stated, “[T]he Court is of the opinion that the [DOL’s] Persuader Advice Exemption Rule…should be held unlawful and set aside.” The court also ordered that its prohibition against enforcement of the Persuader Rule be given “nationwide effect.” Several Texas-based business groups initially filed the lawsuit in federal court earlier this year to block the rule. Later, ten state attorneys general, including the Michigan Attorney General, joined the lawsuit on behalf of their respective states against the DOL.

As noted by the court in its order, its first ruling that temporarily stopped the DOL’s Persuader Rule from going into effect is currently on appeal to the U.S. Court of Appeals for the Fifth Circuit. While this is good news for employers across the nation, the DOL will almost certainly appeal this ruling as well. Nemeth Law will continue to monitor this case and report on any updates on the Nemeth Law Employment Blog.

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