CLIENT UPDATE

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November 18, 2016

United States District Court Permanently Blocks Department of Labor’s Persuader Rule

On November 16, 2016, the United States District Court for the District of Texas permanently blocked the United States Department of Labor (the “DOL”) from enforcing its recently revised “Persuader Rule.” Nat’l Fed’n of Independent Bus. v. Perez, Case No. 16-cv-066 (N.D. Tex. November 16, 2016).

The Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”) has long required that employers report and disclose their dealings with third-party consultants/attorneys when such consultants/attorneys communicated directly with employees in an effort to persuade employees about their rights to union representation and collective bargaining. However, employers have been protected from certain disclosures under the LMRDA’s “Advice Exemption,” which exempted reporting and disclosing advice received from consultants/attorneys concerning persuading employees about their rights to union representation and collective bargaining. The DOL’s Persuader Rule would have effectively eliminated the “Advice Exemption” by requiring employers to disclose to the DOL’s Office of Labor-Management Standards from whom they receive assistance regarding resisting union organizing campaigns, such as attorneys or other consultants, and the financial terms of such engagements. “Persuader” activities subject to disclosure under the Persuader Rule would have included planning or conducting meetings to persuade employees, training supervisors to conduct such meetings, and developing related policies.

In granting summary judgment to Plaintiffs (Texas, along with nine other states and various business groups were the plaintiffs), the Court converted its preliminary injunction, issued in June of 2016, into a permanent order blocking the Rule’s nationwide implementation. For more information about the Persuader Rule and the District Court’s preliminary injunction, please see our alerts dated March 30, 2016 and June 27, 2016 at http://putneylaw.com/cu_033016.html and
http://putneylaw.com/cu_062716.html.

Takeaway for Employers

This decision is an important victory for employers as it prevents the DOL from imposing the Persuader Rule and the significant reporting and disclosure obligations under the Rule. It is unclear whether the DOL will appeal this decision. Barring a reversal by the United States Court of Appeals for the Fifth Circuit, or the United States Supreme Court, employers will remain free of disclosure requirements when merely consulting with attorneys and other consultants about opposing union organizing campaigns. We will continue to provide updates in the event of any developments, but please contact us with any questions.

Putney, Twombly, Hall & Hirson LLP