Federal Court Blocking Implementation of Persuader Rule Expected to Close the Issue – A Worthwhile Recap
Employers gave a sigh of relief late last year when a judge permanently enjoined the government from carrying out changes which would have significantly impacted the labor relations landscape. Given the new administration and its selection of the new Labor Secretary, it appears this issue is over for the foreseeable future.
For years, the government has attempted to revise the “Persuade Rule” portion of the Labor Management and Reporting and Disclosure Act of 1959 (the “LMRDA”) to eliminate the so-called “advice” exception. The LMRDA governs the reporting and disclosure of financial transactions and administrative tasks of labor organizations and employers. It requires employers and their labor counsel, among others, to report their involvement in “persuader activities” – those which include activities designed to persuade employees regarding their rights to unionize and bargain collectively – to the Department of Labor’s Office of Labor-Management Standards.
Currently, there is an exception to this reporting requirement called the “advice” exception. Under this exception, if an employer hires an attorney to help with labor issues and the attorney is not directly communicating with the employer’s employees, neither the attorney nor the employer must report when counsel advises an employer on its labor relations rights and related strategies.
The Department of Labor implemented changes to the “advice” exception which were originally set to go into effect July 1, 2016. The changes would have practically eliminated the “advice” exemption. Both the law firms and the clients receiving the advice would have been required to provide reports with detailed disclosures to the government. This information would have included the names of the law firm and client, the amounts paid, the specific persuader activity performed, and the targets of the persuader activity.
While this might have produced drastic effects on how employers acted towards labor issues, as of now this change will not be taking place. The rule change was challenged in a lawsuit brought by multiple states. Judge Sam Cummings of the Northern District of Texas first granted a preliminary injunction on June 26, staying implementation of the change. Then, late last year, the Court held the rule change unlawful and issued a permanent injunction prohibiting the government from implementing it.
This ruling will likely mark the end of the persuader rule fight. The government has the right to appeal the judge’s decision, but in light of the upcoming change of administrations, we believe the government will not challenge the ruling. Of course, only time will tell which course the government decides to pursue. We will continue to monitor the situation and keep you updated.
Brody and Associates regularly advises its clients on all labor management issues and provides various related training programs. If we can be of assistance in this area, please contact us at email@example.com or 203.454.0560.