BREAKING: DOL's 'Persuader' Rule Blocked By Texas Judge

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06/27/2017

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BREAKING: DOL's 'Persuader' Rule Blocked By Texas Judge

By: Glen A. Williams

A breaking news article was posted this afternoon on Law360.com, providing welcome news, and at least temporary relief, to employers and their labor attorneys regarding the Department of Labor’s new “persuader" rule.  Following is the pertinent text of the article:

Law360, New York (June 27, 2016, 3:15 PM ET) -- A Texas federal judge on Monday entered a nationwide injunction barring the U.S. Department of Labor from enforcing its so-called “persuader” rule, saying it threatens employers’ rights to secure legal advice about union organization.

U.S. District Judge Sam Cummings found the DOL likely exceeded its authority in passing the rule, which requires labor relations consultants, including attorneys, to file disclosure reports specifying the nature of “persuader activities” undertaken with employers. The rule interprets the Labor Management Reporting and Disclosure Act of 1959, which regulates labor unions' internal affairs and their officials' relationships with employers.

The DOL had previously interpreted the LMRDA to exclude attorneys and other consultants from having to report their assistance to employers regarding union organizing campaigns, so long as the attorney had no direct contact with employees and the employer was free to accept or reject any recommendations. But under a rule change proposed in 2011, the DOL would no longer have protected closed-door, confidential communications between attorney and client, Judge Cummings wrote.

“DOL’s new rule is not merely fuzzy around the edges,” Judge Cummings wrote. “Rather, the new rule is defective to its core because it entirely eliminates the LMRDA’s advice exemption.”

The judge said the DOL’s rule “nullifies” the exemption for advice, failing to provide notice to employers, lawyers and consultant of what activities relating to persuasion are covered by the advice exemption. That means the employers and their consultants, along with unions, employees and government investigators and prosecutors, have to “guess what activities with an object to persuade fall within the LMRDA’s advice exemption,” he said.

The judge said the DOL would suffer no harm from the delayed implementation of its rule, saying the injunction keeps intact the same status quo the country has operated under for half a century.

Last week, a Minnesota federal judge refused to bar the persuader rule.

But Judge Cummings found the new interpretation threatens employers’ access to legal and other advice, citing the American Bar Association’s opposition to the rule as conflicting with attorneys’ ethical duties, and the testimony of one attorney who advises West Texas employers in union organization matters that he and his firm would stop such representation if the DOL’s new rule became effective and enforceable.

The National Federation of Independent Business and other Texas-based business groups sued to block the rule in April. Because the new rule would deter employers from obtaining counsel on how to exercise their free speech rights as part of efforts to persuade employees about their rights to organize or to bargain collectively, the irreparable injury would be the violation of the groups' First Amendment rights, they argued.

“Today is a victory for the preservation of the sanctity of attorney-client confidentiality,” Texas Attorney General Ken Paxton, who had intervened in the suit, said in a statement Monday. “Every American knows that when they talk to a lawyer, their conversation is confidential. That confidentiality has been the cornerstone of the attorney-client relationship since before our nation’s founding. If information confidentially given to one’s attorney is also accessible by the federal government, it would damage the very foundation of our system of justice.”

A spokesman for the DOL did not immediately respond to a request for comment.

COUNSEL TO MANAGEMENT:

This injunction is welcome news indeed, considering the new rule’s obligations requiring employers and their labor attorneys to report the type, extent, and costs of legal services performed involving persuasive activities.  Nevertheless, the Court’s injunction is only temporary at this time, and all employers should still promptly communicate with their labor attorneys about the implications of the “persuader" rule and this ruling.  Please contact the experts at The Saqui Law Group if you have any questions pertaining to mandatory reporting of “persuader activities” in labor relations.


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