Tuesday July 26th, 2016
On June 27, a federal district court judge in Texas issued a nationwide preliminary injunction against the Labor Department’s controversial “persuader” rule that was scheduled to take effect July 1. This eleventh-hour stoppage was a major victory for the many states, business groups and employers that have opposed the rule since its initial proposal in 2011.
(The “persuader” rule forces employers to disclose to their employees who is behind anti-union organizing rhetoric.)
It’s the persuader rule’s extensive disclosure requirements that make it highly unpopular and controversial. Employers are already required under the Labor Management Reporting and Disclosure Act to inform DOL when their hired consultants communicate directly with employees regarding union activities.
But that law has no impact on the lines of communication between the employers themselves and the consultants they hire to help them deal with labor relations issues. In fact, arrangements in which the consultant gives managers advice regarding workplace union activity have always been considered exempt from reporting requirements, because employees are not directly involved.
However, the Labor Department considers this a reporting gap—and it wrote the persuader rule to close it.
The final rule takes reporting responsibilities one step further than the LMRDA, and requires employers and consultants to disclose agreements for “indirect persuader activities” to the department. These activities include:
Why are businesses opposed?
The Labor Department views the persuader rule as a necessary step in providing full transparency of employer actions regarding union activities to workers.
Many business groups, lawyers, associations, states and Congressional Republicans disagree with DOL and have criticized the rule, saying the disclosure requirement is “one-sided” and stifles “employer free speech.”
A coalition of 13 state attorney generals voiced their opposition to the rule, saying it could “undermine long-standing protections for confidential attorney-client communications.” The coalition also said smaller businesses are at a greater disadvantage because they may not have in-house counsel like larger companies do and will need legal advice to ensure compliance with labor laws if employees decide to form a union—something a small business may not be able to afford. (Pulls back the curtain)
What happens now?
The Labor Department has yet to comment on the court injunction.
Millicent Sanchez, a partner at law firm Swerdlow Florence Sanchez Swerdlow & Wimmer, said in a statement that the Texas ruling halts “the government's illegal implementation of a bad rule, and protects employers’ right to seek counsel and get advice on sensitive and complicated labor matters.”
In its decision to block the persuader rule, the Texas court said the plaintiffs will likely succeed in their case because the rule is “arbitrary, capricious and an abuse of discretion.” The court also said the plaintiffs’ claims that the “rule violates First Amendment free speech and association rights and is 'unconstitutionally vague' under the Fifth Amendment's due process clause” strengthens their case against the rule.