The “Persuader Rule” Permanently Enjoined

16 November 2016 Labor & Employment Law Perspectives Blog
Authors: Gregory W. McClune

As we have previously reported, in March of 2016, the Department of Labor (“DOL”) issued a reinterpretation of the Persuader Activities Rule (The “Revised Rule”). This Revised Rule required that:

  1. employers must annually report agreements that have the object of dissuading employees from supporting unions (“persuader activities agreements”);
  2. consultants must report such persuader activities agreements within 30 days; and
  3. consultants who enter persuader activities agreements must report payments from employers for all “labor relations advice and services.” (the “LM-21 Report”).

This changed a long-standing rule for what qualified as “persuader activities.” Previously, if the consultant had direct contact with the target employees, it was acting as a “persuader” and the employer and the consultant had to file reports. However, if the consultant had no direct contact with employees, it fell under an exemption that covered the “advice” exception.

On June 27, 2016, the Revised Rule was temporarily enjoined by the Honorable Sam R. Cummings, a federal judge in Lubbock, Texas. That action stopped the Rule’s enforcement nationwide, pending further court proceedings.

Today, we have learned that the same judge has determined that the Rule is unlawful. He has issued a “permanent injunction” which has the effect of indefinitely preventing the DOL from enforcing the Revised Rule nationwide. It is likely that the DOL will at least consider appealing this decision to the federal court of appeal that has jurisdiction. However, intervening political developments stemming from the forthcoming transition to the Trump administration may cause the DOL to question the value of such an appeal.

There appears little doubt that the March 2016 “reinterpretation” was a political decision, intended by the current administration to aid unions attempting to organize employees. With the election of a new President and the appointment of a new Secretary of Labor who will almost certainly be more aligned with employer interests, we believe there is a strong likelihood that, at least, the March 2016 “reinterpretation” would be withdrawn and the DOL would revert to its prior interpretation.

Thus, the DOL may well determine that continuing to try and enforce this Revised Rule would be futile. Any greater relief, such as the abolition of the original “Persuader Rule” entirely, would require an act of Congress and, in the short term at least, is very unlikely.

We will keep you updated as to any further developments.

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