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Federal Court Blocks Implementation of Department of Labor’s Persuader Rule

By Mark D. Nelson

On Monday, June 27, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction barring the U.S. Department of Labor from implementing the revised Persuader Rule that was scheduled to become effective on July 1, 2016. Designed to amend certain provisions of the Labor Management Reporting and Disclosure Act (LMRDA), the now-enjoined Persuader Rule sought to impose onerous reporting obligations upon employers and threaten to disrupt the attorney/client relationship relating to union organization activities. 

The Court held that “the new rule is defective to its core because it entirely eliminates the LMRDA’s advice exemption.”  Further finding that DOL’s rule “nullifies” the exemption for advice, and fails to provide notice to employers, lawyers and consultants of what activities relating to persuasion are covered by the advice exemption, which means those impacted have to “guess what activities with an object to persuade fall within the LMRDA’s advice exemption.”

However, this likely is not the final word on the Persuader Rule.  The Department of Labor may appeal this ruling and there are similar lawsuits pending in federal courts in Arkansas and Minnesota (where the district court found similar problems with the Final Rule, but refused to issue a preliminary injunction).

Therefore, employers should give consideration to entering into agreements—before July 1, 2016—with their lawyers (and consultants) regarding the provision of indirect persuader activities, as the impact and status of the Persuader Rule is uncertain.