- Persuader Rule Update
- July 23, 2016
- Law Firm: - Office
- A federal court has issued a nationwide injunction in one of the three cases that has been filed challenging the Department of Labor’s new interpretation of the advice exemption from the persuader rule.
Under the “persuader rule” in the Labor-Management Reporting Disclosure Act of 1959 (LMRDA), employers are required to file reports and disclose expenditures to the DOL each time they engage a consultant to persuade employees regarding employees’ rights to organize. However, the LMRDA provides an “advice exception,” which had been interpreted for over 50 years to exclude an employer’s discussions with its labor relations consultants - including legal counsel - regarding opposition to a union organizing campaign, as long as the consultants had no direct contact with employees. Under the new rule, however, the scope of an employer’s reporting obligations under the LMRDA has been substantially expanded, and will include a broad range of activities beyond “direct contact” provided by labor relations consultants - including attorneys.
Three lawsuits were filed, in Arkansas, Minnesota, and Texas, to block implementation of the revised persuader rule, including one by our firm and Seaton, Peters & Revnew, P.A. of Minneapolis on behalf of Worklaw Network, a nationwide alliance of labor and employment firms representing management.
Like the Minnesota court last week in our case, as discussed in our June 23, 2016 E-lert, the Texas court found that the plaintiffs are likely to succeed in their claims against the DOL. The federal court in Texas found the rule to be "defective to its core because it entirely eliminates the LMRDA’s Advice Exemption." Unlike the Minnesota court, however, the Texas court found there would be the possibility of substantial harm to the plaintiffs if the rule were to take effect, and thereby issued an injunction. The Kansas court has yet to issue its ruling in this matter.
We will keep you posted on further developments in these cases. But for now, the new persuader rule will not take effect on its planned implementation date of July 1, 2016.