Judge Blocks Persuader Rule
TAB President Wallace: This is first step to stopping latest federal overreach
AUSTIN, TX— Judge Sam Cummings of the Northern District of Texas has issued a nationwide injunction prohibiting the U.S. Department of Labor (“DOL”) from implementing its so-called “Persuader Rule” which would have severely limited an employer’s ability to obtain legal advice during a union organizing campaign. The Texas Association of Business, along with the National Federation of Independent Business, Lubbock Chamber of Commerce and other nonprofits, requested the injunction on behalf of their member-employers, and were joined by the Attorneys General of 10 states, including Texas, as plaintiffs in the case.
“This is certainly a successful first step in our challenge of this rule that we consider an extreme overreach by the Department of Labor,” said TAB President Chris Wallace. “We realize, however, that we have a long way to go before we can declare victory in this case.”
Historically, the Labor and Management Reporting and Disclosure Act of 1959 (“LMRDA”) has required labor relations consultants and their clients to file reports about “persuader activities” – arrangements to persuade employees to reject unions. The LMRDA, however, expressly carves out “advice” from these persuader activities, and the DOL’s longstanding interpretation of the “advice exemption” has meant that lawyers who offer advice to their clients on union organizing are not required to report their activities, as long as the lawyers do not communicate face-to-face with workers and the clients are free to accept or reject their lawyers’ advice.
The DOL’s new Persuader Rule would have changed all of that. The Persuader Rule, if implemented, would have required employers who get legal advice on union organizing campaigns to file onerous reports that would become public, including identifying their lawyers, how much was paid for legal advice concerning union activities and what type of advice was given. Moreover, lawyers who advise employers regarding union organizing would have to file similar public reports, but not only with respect to clients for whom they provide advice regarding union organization, but also for other clients for whom they provide general labor relations advice, even if that work is not related to union organizing. The DOL’s motivation in issuing its new Persuader Rule has not been disguised – it believes that by requiring employers and their lawyers to disclose their legal fees and how the money is spent, employers will stop using legal counsel to advise them on union campaigns, lawyers will stop engaging in that type of work, and ultimately unions will win more and more elections.
Finding the Persuader Rule “defective to its core” because of its effect on the lawyer-client relationship and its efforts to prohibit employers from exercising their free speech rights under the First Amendment, Judge Cummings enjoined the implementation of the rule on a nationwide basis. The DOL will likely appeal, but the first round is a complete victory for employers, including the many businesses represented by TAB.
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