Injunction of Persuader Rule Blocked by Federal Court

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In the first decision by a court following three lawsuits challenging the U.S. Department of Labor’s “Persuader Rule”, a federal judge in a Minnesota district court refused the challenger’s (a group of employer representatives) request for a preliminary injunction to block the rule from going forward. However, all is not lost for opponents of the rule: Judge Patrick J. Schlitz opined that the rule was likely invalid regardless because it was in conflict with the language of the statute the DOL used to issue to authorize the rule. Thus, the plaintiffs in the Minnesota lawsuit will likely have to argue the merits of the case (unless a motion for summary judgement is offered and granted), but stand a good chance of success in ultimately striking down the law.

It is also possible that in one of the two other cases filed to block the Persuader Rule that plaintiffs will find success in a preliminary injunctions.

ACCA has been following these legal proceedings on behalf of our members since their inception, and will continue to report on the outcomes of the cases as they wind their way through the courts. As you will recall, all three lawsuits challenge the DOL’s expansion of the circumstances permissible under the Labor-Management Reporting and Disclosure Act (LMRDA) in which employers, labor consultants, and law firms must report fees and expenses associated with activity aimed at persuading employees against unionizing. The new rule targets so called “persuader activity” that takes place between employers and their consultants and attorneys on or after July 1.

Had the judge allowed the injunction, it would have blocked the rule from taking effect at the end of this week. However, the Minnesota judge found that employers had not established the likelihood of irreparable harm if the Persuader Rule was permitted to go into effect, and that it was “preferable to let the regulation take effect and leave the [employer representatives]…to raise their arguments in the context of actual enforceable actions.”

Employers, labor consultants, and law firms should monitor these developments, but nevertheless should prepare for the new regulations. We have learned that because of the deadline of July 1 in the regulation, some employers have begun signing long-term agreements with consultants and attorneys to beat the deadline, and any payments made pursuant to those agreements will not trigger reporting, according to the DOL.

And, as stated above, the Persuader Rule may very well be enjoined from proceeding further if one of the other two federal courts – Arkansas and Texas – will arrive at a different conclusion prior to July 1. The Texas case in particular points to violations of employers’ constitutional rights and potential harm to attorney-client confidentiality.

Time will tell. Stay tuned for further developments.

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Posted In: Legal