New Persuader Rule Put on Hold … for Now

On June 27, a Texas federal district court judge issued a preliminary injunction against the Department of Labor’s (DOL) implementation of its new Persuader Rule, which was intended to go into effect on July 1, 2016. Nat’l Fed’n of Indep. Bus. v. Perez (N.D. Tex. 2016).

The new Persuader Rule, which has faced significant criticism from employers and attorneys throughout the country, would have required employers and their attorneys to file public reports disclosing the kinds of union avoidance activities they are working on together, as well as the fees that the employer pays its lawyers for those services. This new reporting requirement is in stark contrast to the current Rule, which only requires employers and their attorneys or consultants to disclose any face-to-face union avoidance activities between those attorneys or consultants and the employers’ employees.

With a chief concern being the potential erosion of attorney-client privilege, the court held that the new Persuader Rule was concerning enough to justify a nationwide injunction, thereby blocking its implementation.

In granting the preliminary injunction, Judge Sam R. Cummings said that the plaintiffs, including the National Federation of Independent Business, are likely to prevail on the merits of this case. Specifically, the challengers argue that the new Persuader Rule violates the Labor-Management Reporting and Disclosure Act (LMRDA), which would result in irreparable harm to those impacted by the Rules.  Agreeing with this assertion, Cummings stated that the new Rule is “arbitrary, capricious, and an abuse of discretion.”

It is important to remember that the new Persuader Rule may still go into effect, as this case will still go to trial. But, with this case being one of three lawsuits filed against the DOL to prevent the implementation of this new Rule, employers are encouraged to watch for updates on the issue from MSEC going forward.