Department of Labor Appeals "Persuader Rule" Order

29 August 2016 Labor & Employment Law Perspectives Blog

As employers may be aware, on March 24, 2016, the Office of Labor-Management Services (OLMS), an agency in the federal Department of Labor (DOL), issued a new interpretation of the so-called “Persuader Rule” that would have imposed significantly expanded reporting obligations on employers, consultants, and attorneys during union organizing and similar activities.  OLMS “reinterpreted” its long-standing position (in place for over half a century) that reportable persuader activity only occurred when there was direct contact between the consultant and the target employees.  Now, according to the new Rule, reportable persuader activities would occur in a whole range of activities, the parameters of which were frequently unclear and ill-defined.

The new interpretation of the Rule was challenged in three separate lawsuits filed in federal courts in Little Rock, Ark., Minneapolis, and Lubbock, Texas and, in each case, the plaintiffs sought to enjoin its enforcement.  Although the attempt to obtain an injunction was unsuccessful in the Minneapolis case, the federal judge in Texas did grant a preliminary injunction and even made its effect national in scope, thereby blocking enforcement of the Rule throughout the country.

DOL Appeals the Injunction

On August 25, a few days before the deadline, the DOL filed an appeal in the federal Court of Appeals for the Fifth Circuit, the appellate court with jurisdiction over the Lubbock court,  challenging  the order entering the preliminary injunction. At this stage,  we have not yet seen the DOL’s grounds for its appeal but we can state that it will face a difficult standard of review and would be unlikely to succeed unless it could demonstrate that the decision of the lower court was based on “erroneous legal principles.”

Overturning the decision on factual grounds may be even more challenging because the  appellate court will have to conclude that the lower court’s findings of fact were “clearly erroneous.”  The DOL will follow up the notice by filing detailed grounds for its appeal and the plaintiffs will thereafter file their response.  Resolution of the appeal is likely months away, at the earliest.

What is the Current Status of the “Persuader Rule?”

Despite the appeal, the prior interpretation of the Rule applicable before March 24, 2016, has, in effect, been restored.  Thus, the filing of the appeal in the Fifth Circuit has no immediate impact on the ruling in the Lubbock District Court which continues to apply in that district and throughout the country.  Until further notice, this means that a consultant or attorney does not engage in reportable “persuader activity” unless there is direct contact with a target employee, and employers are not required to file reports for the expanded types of activity that were set forth in the “reinterpreted” rule.

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