Court Signals Trouble for Persuader Rule But Lets It Proceed

Employment Law

A federal district court concluded this week that employers "have a strong likelihood of success on their claim that the new [Labor Department persuader] rule conflicts with the plain language of the statute," but refused to grant an injunction blocking the rule from taking effect on July 1.  Meanwhile, DOL has stated that the new rules will only apply to agreements entered into after July 1.  The decision will force employers to wait for specific enforcement actions which can then be challenged in court.  The rule, promulgated earlier this spring, significantly expands the reporting requirements for employers using outside labor counsel and consultants in union avoidance strategies to include those who are merely providing advice rather than being fully engaged in implementing the strategy.  The decision, the first in three separate court cases seeking to block the rule, says "the root of DOL's problem is its insistence that persuader activity and advice are mutually exclusive categories."  However, in denying an injunction, the court decision also noted the plaintiffs "have not shown that their First Amendment rights will be violated, nor that they will be forced to violate the attorney-client privilege, nor that they will be forced to violate the rules of professional conduct.  They also have not shown that they will have to identify clients for whom they have not engaged in any persuader activities [as] DOL has suspended the enforcement of that portion of the LM-21."