Hailed by the US Department of Labor as a regulatory change to promote transparency and to help employees make well-informed decisions about union representation, the Department of Labor’s final rule on reporting union persuader activities has been permanently blocked by Texas US District Court Judge Sam R. Cummings.
The new rule attempted to narrow the scope of advice that would be exempt from the reporting requirements under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).
Under the new rule, employers and labor relations consultants, including lawyers, were required to disclose information and report any activities undertaken with the objective to persuade employees regarding their choice for or against a union.
This would include any indirect persuasive activities such as union avoidance seminars for supervisors or a speech written by a consultant to be given to employees by an officer of the employer.
The new rule was expected to take effect and apply to all arrangements, agreements and payments made on or after July 1, 2016.
However, several business groups in Texas, as well as industry groups in Minnesota and Arkansas, challenged the new rule. In March, these groups filed complaints requesting a preliminary and permanent injunction of the rule.
A Minnesota federal judge refused to issue a temporary injunction blocking the rule. But in Texas, Judge Cummings issued a nationwide preliminary injunction barring enforcement of the rule on June 27, 2016, stating that the rule threatened employers’ rights to secure legal advice about union organizing activity. Judge Cummings’ preliminary injunction ruling has since been appealed to the Fifth Circuit.
Subsequently, the business groups in Texas moved for summary judgment and a permanent injunction of the new rule alleging that it was arbitrary and capricious, and that it would impinge the right of states to regulate the attorney-client relationship. On November 16, 2016, Judge Cummings granted the summary judgment and converted the preliminary injunction into a nationwide permanent injunction, thus blocking enforcement of the new rule.
With the appeal of Judge Cumming’s preliminary injunction still pending before the Fifth Circuit and the lawsuit filed by industry groups still pending in Arkansas, the saga of the DOL’s new persuader rule will continue. For now, employers and labor relations consultants may continue with business as usual, and must only report direct persuasive activities where the consultant makes contact with employees.
It is, however, recommended that employers consult with an experienced labor attorney with respect to the determination of reportable activities and information prior to the filing of any reporting forms to the DOL.
