DOL Persuader Rule

Rule Stopped for Now

On November 16, U.S. District Court Judge Sam R. Cummings permanently blocked the U.S. Department of Labor’s (DOL’s) Persuader Rule, ensuring that the rule will not be implemented. In June the Texas court enjoined the rule, and now this final ruling makes the injunction permanent. In the court’s decision, Cummings called the rule “unlawful” and declared it should be “set aside.” NCA firmly agrees with the ruling.

The case, brought by National Federation of Independent Business and several other business organizations, included an amicus brief filed by NCA's allies in the Coalition for a Democratic Workplace. The rule was previously put on hold by the same court in June 2016.

As we have stated, the Persuader Rule amended the Labor-Management Reporting and Disclosure Act (LMRDA). Under LMRDA, only direct contact between the attorney and the employees—where the attorney tries to persuade the employees against joining a union—would trigger the LMRDA disclosure requirements.

While direct persuader activities start the reporting requirements, indirect activities were never subject to the LMRDA disclosure requirements. They were specifically excluded under the law’s “advice exemption.”

The advice exemption allows attorneys to discuss a strategy with an employer and devise a plan to deal with the union campaign. The employer would then go forward and implement the plan himself. This had been the rule for more than fifty years.

Unfortunately, this new rule would have removed the advice exemption. As such, all direct and indirect contact with employees would cause the LMRDA disclosure requirements to kick in.

NCA’s concern with this rule is that it will discourage many lawyers from assisting clubs when a union organizing campaign begins—leaving those clubs unable to effectively communicate their side of the story during the campaign. The rule also threatens the attorney/client relationship for clubs by forcing attorneys to disclose confidential information and by forcing clubs to disclose things they will not want out in the open during a union campaign.

Most importantly, the rule will allow union organizers to stress that a club has money to pay for “hired guns” so it must have money to increase wages or benefits. Such a message will be a valuable tool for unions during a campaign.

This decision is a major victory for clubs and our industry. NCA’s concern with this rule was that it would have discouraged many lawyers from assisting clubs when a union organizing campaign begins—leaving those clubs unable to effectively communicate their side of the story during the campaign. The rule also threatened the attorney/client relationship for clubs by forcing attorneys to disclose confidential information and by forcing clubs to disclose things they would not want out in the open during a union campaign.

Most importantly, the rule would have allowed union organizers to stress that a club has money to pay for “hired guns” so it must have money to increase wages or benefits. Such a message is a valuable tool for unions during a campaign.

Clubs can now breathe a sigh of relief as the rule will not be enacted. The DOL may appeal this ruling, however, NCA believes this scenario is unlikely as any appeal would be rescinded by the next administration. If you have any questions or concerns regarding the Persuader Rule or other union issues, please contact NCA's Vice President of Government Relations and General Counsel, Brad D. Steele, at steele@nationalclub.org.

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