CLIENT UPDATE

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June 23, 2016

United States District Court Denies Motion for Injunction Against Department of Laborís Persuader Rule

On June 22, 2016, the United States District Court for the District of Minnesota denied a motion to enjoin the United States Department of Labor (the “DOL”) from enforcing its recently revised “Persuader Rule.”† Labnet Inc. v. United States Department of Labor, Case No. 16-CV-0844 (PJS/KMM) (D. Minn. 2016).

The DOL promulgated the Persuader Rule under the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”), which imposes certain disclosure and reporting obligations on unions and employers, as well as on persons who are retained by employers to engage in so-called “persuader activities” concerning employees’ collective-bargaining rights. Under its new Persuader Rule, the DOL †has abandoned its longstanding interpretation of the LMRDA and now insists that something done by a consultant or attorney cannot be both persuader activity (subject to LMRDA’s reporting requirement) and advice (exempt from LMRDA’s reporting requirement). In other words, consultants and attorneys who give advice may also be considered “persuaders” and therefore subject to annual reporting of not only the client for whom they engaged in persuader activity, but also information about all other employers for whom they provided advice or services concerning labor relations, even if that advice and those services did not involve persuader activity. For more information about the Department of Labor’s persuader rule please see our alert, dated March 30, 2016, at http://putneylaw.com/cu_033016.html.

Although the District Court criticized the Persuader Rule for requiring the reporting of some activities that are exempt from disclosure under the LMRDA (“Ö [the] DOL ends up drawing lines that are simply incoherent”), it held that the plaintiffs failed to demonstrate that they were likely to suffer irreparable harm or that the threat of irreparable harm was sufficient to outweigh the public interest in the Rule. The Court also rejected claims that the Persuader Rule violates the First Amendment, is void for vagueness, arbitrary and capricious, overbroad, or in violation of the Regulatory Flexibility Act. Therefore, it denied the plaintiffs’ motion for a temporary restraining order, or, in the alternative, for a preliminary injunction or stay.

Takeaway for Employers

In addition to this case, challenges to the DOL’s Persuader Rule have been brought in United States District Courts in Arkansas and Texas. If the plaintiffs succeed in either of these cases, the DOL could be temporarily or permanently enjoined from enforcing the Persuader Rule.

Employers should also be aware that even if the Persuader Rule survives all legal challenges, open-ended or multi-year agreements entered into prior to July 1, 2016 are not reportable, even if activities undertaken (and payments made) pursuant to such an agreement occur after July 1.† We will continue to provide updates in the event of any developments.

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If you have any questions regarding the District of Minnesota’s decision or the Persuader Rule, please do not hesitate to contact us.