On June 27, 2016, in National Federation of Independent Business et al. v. Perez, et al., the U.S. District Court for the Northern District of Texas (Lubbock Division) issued a nationwide injunction preventing the U.S. Department of Labor (DOL) from implementing its revised “Persuader Rule,” which had been set to take effect on July 1, 2016. The Court found that NFIB and other plaintiffs established a substantial likelihood of success on their claims attacking the legality of the new rule. The decision is a major victory for employer groups challenging the DOL rule, and came less than a week after a federal court in Minnesota issued a ruling criticizing the DOL’s interpretation of the rule as “drawing lines that are simply incoherent.” Labnet, Inc. v. U.S. Department of Labor.
In April 2016, DOL modified its 54 year old “Persuader Rule,” which applies to communication with employees regarding union activity. The proposed revisions significantly restrict employer rights to be advised on how and what information can be disseminated to employees by providing burdensome reporting requirements on both the employer and the advisors -including attorneys – assisting the employer in responding to union organizing activity. Among other requirements, employers and their advisors would be required to publicly disclose how much was paid in fees for services provided.
The Texas court ruled that the plaintiffs were likely to succeed on their arguments that the rule violated the First Amendment, is unconstitutionally vague, and undermines the attorney-client privilege by eviscerating the long-standing “advice exemption, ” which allowed attorneys and their clients to avoid reporting obligations unless the attorneys had direct contact with employees. The court also ruled that the plaintiffs established that the rule will cause irreparable harm to employers and their advisors, while the DOL will suffer no harm from the “delay[ed] implementation of an invalid rule.” In fact , the court noted that DOL waited until five years after it first proposed the rule to finalize it, undercutting the argument that it would suffer any harm as a result of any delayed implementation of the rule.
At this point, it seems likely that DOL will appeal the court’s ruling, so the fight is far from over. But for the time being, at least, employers can continue to freely engage counsel and consultants to assist in combatting union organizing attempts and to provide their managers with guidance on rights and responsibilities under the National Labor Relations Act.