Earlier this week, a federal district court in Texas granted a nationwide preliminary injunction that halts the Department of Labor's implementation of its Persuader Final Rule: Nat'l Fed'n of Indep. Bus. v. Perez (N.D. Tex. June 27, 2016). The development was welcome news for employers, who would have been required to comply with the Final Rule beginning July 1, 2016.
The Final Rule represents DOL's new interpretation of the so-called "advice exemption" under the Labor-Management Reporting and Disclosure Act (LMRDA). Under the LMRDA, employers are required to report relationships with labor consultants who are engaged to persuade employees on union activities. However, the LMRDA does not require employers to file reports when a consultant has been engaged to give "advice," which has been interpreted to include "indirect" persuasion activities. As a result, the advice exemption has historically limited an employer's reporting obligations to those situations when a consultant has been engaged to have direct contact with employees.
The Final Rule significantly narrows the advice exemption by requiring employers to report not only "direct" persuader activities, such as when a consultant is hired to speak with employees in the midst of a union campaign, but also "indirect" persuader activities, such as when a consultant is hired to prepare scripts for managers or otherwise coach supervisors on communications to employees.
The concern of many employers - and their consultants - has been that the Final Rule will stifle the ability of employers to obtain timely advice and will discourage consultants from providing many services, such as trainings and seminars on union matters, which could become subject to reporting requirements under the rule. The federal district court in Texas agreed. In addition to finding that the Final Rule likely infringes on employers' free speech and exceeds the DOL's rule-making authority, the court found that the rule essentially eliminates the advice exemption under the LMRDA and is therefore "defective to its core."
Under the court's ruling, the DOL is only preliminarily enjoined from implementing the Final Rule pending final resolution of the case, which could include any appeals by DOL. Consequently, although the Final Rule's implementation may no longer be imminent, it remains an issue that employers and their consultants must continue to monitor.