The Department of Labor (“DOL”) issued its Persuader Activity Advice Exemption Rule (“persuader rule”), which requires attorneys and consultants who communicate with employers regarding certain labor relation activities to file a report disclosing the terms of their arrangement, including payments. Since the persuader rule was issued in final form, multiple lawsuits have been filed by employers, attorney organizations, and states. On June 27, 2016, Judge Sam Cummings of the Northern District of Texas issued a preliminary injunction enjoining, on a national basis, the enforcement of the persuader rule. National Fed’n of Indep. Bus. v. Perez, Case No. 5:16-cv-00066-C (N.D. Tex. June 27, 2016).
The court made this decision based on five specific grounds: (1) the DOL lacks the statutory authority to enforce this version of the persuader rule; (2) the persuader rule is arbitrary, capricious, and an abuse of discretion; (3) the persuader rule violates the due process clause of the fifth amendment; (4) the persuader rule violates the Regulatory Flexibility Act (“RFA”); and (5) the persuader rule creates a substantial threat of irreparable harm. First, the DOL does not have the authority to enforce the terms of this persuader rule and, in fact, the rule conflicts with the plain language of the relevant statute, the Labor-Management Reporting and Disclosure Act of 1959. Second, the persuader rule does not explain the need to change the previous interpretation, it conflicts with state rules governing the practice of law, and it violates the first amendment by infringing on free speech, expression, and association rights. Third, the persuader rule is unconstitutionally vague and does not clearly define its prohibitions; instead it replaces a long-standing and bright-line rule with a rule that is ambiguous and impossible to apply. Fourth, the persuader rule violates the RFA. Although the DOL certified that the persuader rule would not have a significant economic impact on a substantial number of small entities so as to exempt it from the RFA, the DOL failed to provide a factual basis for the cost estimates. Finally, the persuader rule will conflict with attorney duties, reduce access to legal advice, reduce access to training sessions, and burden and chill the first amendment, all of which creates serious harm.
This decision came just in time to avoid the persuader rule from becoming effective, as it was issued just days before the persuader rule was set to go in force on July 1, 2016. In light of this ruling, attorneys and advisors who provide unionization related advice to employers will not be required to report to the DOL, at least for now. This injunction prevents the DOL from enforcing the persuader rule unless the injunction is vacated in some way. If the injunction is vacated, employers and their advisors may eventually have to file reports, but the effective date of that requirement may be altered.