DOL’s Persuader Rule Permanently Blocked
On November 16, the U.S. District Court for the Northern District of Texas granted a nationwide, permanent injunction in National Federation of Independent Business et al. v. Perez. The decision made permanent a June 27 preliminary injunction and prevents the U.S. Department of Labor (DOL) from implementing and enforcing its recent changes to the persuader rule, which was scheduled to go into effect July 1.
The final persuader regulations were issued by DOL in March of this year and sought to revise the interpretation of “advice” as it pertains to the employer and labor relations consultant persuader reporting requirements of Section 203 of the Labor-Management Reporting and Disclosure Act which applies to private but not public institutions. Previously, employers and their consultants or attorneys were required to disclose when an attorney or consultant aided employers with a union organizing campaign. There was an exemption to this requirement if they did not speak directly with the employees but only provided the employer with legal advice. The new rule, however, considerably narrowed this exemption, resulting in nearly all interactions being reportable, making it more difficult for employers to find competent counsel for representation or information and clarity on labor law.
Prior to issuance of the final regulations many concerns were expressed and shared widely by the American Bar Association, arguing it would violate attorney-client privilege, and Congressional Republicans and the Arkansas attorney general, who feared it would harm small business owners, “chill employer free speech” and “continue to discourage job growth and hinder economic development.” More than 9,000 comments were filed on the proposed rule in 2011, including comments filed by the American Council on Education, CUPA-HR and other higher ed associations.
As part of its ruling, the Texas court reaffirmed the original legal conclusions from June’s preliminary injunction that found NFIB and other plaintiffs were likely to succeed on the merits of their claims. Two other lawsuits are currently underway challenging the rule in Minnesota and Arkansas, and judges overseeing these two cases have hinted at the success of the plaintiffs challenging the rule.
The next administration will have the opportunity to repeal the rulemaking and/or drop its challenges to the lawsuits currently pending. Additionally, there is a resolution of disapproval in both chambers of Congress, which nullifies the rule in its entirety; however, that legislation would need to be reintroduced in the next session.