Breaking: Federal Judge Temporarily Blocks DOL’s Persuader Rule

A federal judge in Texas has stepped in to stop the U.S. Department of Labor’s (“DOL”) “persuader rule” in its tracks. The union-backed persuader rule requires employers (both union and non-union) to publically report when they use consultants (including lawyers) for labor relations advice given for the purpose of persuading employees not to unionize. It would also require the reporting of what services are provided and the fees paid for those services. Employers who fail to report, risk significant civil and even criminal penalties. The rule was set to take effect July 1, 2016.

The new rule has faced several legal challenges by groups opposed to giving this information to the public, including Skoler Abbott. Our firm, along with several other management-side law firms across the United States, sued the DOL and asked the court to strike down the new rule for a variety of reasons. The judge in our case issued a preliminary decision last week stating that there was a “strong likelihood” that we would prevail down the road. The federal judge in Texas went one step further and blocked the rule entirely, at least temporarily. The judge found that the DOL overstepped its authority in implementing the rule and was concerned that the rule conflicts with an attorney’s duty to keep attorney-client communication confidential.

Where does this new persuader rule come from and what is reportable?

 The persuader rule stems from the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”), which requires public reporting by employers and the consultants that they retain to persuade employees on union organizing or collective bargaining. The LMRDA’s reporting requirements has an important exception: Employers do not have to file reports covering advice provided by consultants/counsel. For the last 50 plus years, this “advice exception” protected most lawyer-to-employer communication from disclosure. Reporting obligations were only triggered when the attorney communicated directly to rank-and-file employees. However, the persuader rule drastically narrows this “advice exemption.” The end result is that indirect persuader communication (i.e., lawyer-to-employer communication) might now trigger reporting obligations. Indirect persuader communication can include:

  • Directing or coordinating activities by supervisors (including advising on when and where to meet, guidance on topics to be discussed at a meeting, orchestrating next steps in a campaign, and identifying materials to provide to employees);
  • Drafting, editing, or choosing materials to distribute to employees regarding unionization;
  • Holding seminars that discuss union-avoidance; and
  • Developing personnel policies related to union-avoidance.

For example, if an attorney drafts material or communications for an employer that will be sent from the employer to its employees, and such material or communications is specifically created to persuade those employees not to unionize, the persuader rule would trigger government reporting obligations. Similarly, an attorney drafting policies with the goal of persuading employees not to unionize would also require reporting under the new rule.

Action steps for employers

The DOL recently explained that multi-year agreements between employers and labor consultants and/or lawyers executed before July 1, 2016, will be excluded from the new rule, even if the legal services and payments occur after July 1, 2016. Although the Texas federal court decision is favorable to employers, the DOL is likely to appeal the decision. Because the rule is still up in the air, employers should reach out to their legal counsel as soon as possible to determine whether counsel performs “reportable” work for the employer and, if so, whether existing agreements need to be revised or re-executed before July 1, 2016. At Skoler Abbott we are currently working with clients to do this and minimize the impact of this new rule on them.

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