Jessica Karmasek Aug. 18, 2016, 1:16pm


LITTLE ROCK, Ark. (Legal Newsline) - A D.C.-based public interest law firm is urging an Arkansas federal court to join a Texas federal court in striking down the U.S. Department of Labor’s so-called “persuader rule,” arguing the new rule violates First Amendment protections against compelled speech.

“This brief shows that the Persuader Rule dramatically expands the definition of who is a ‘persuader’ to include those who have no direct contact with employees and who merely provide advice on labor relations to employers which could be regarded as having the object of persuading employees regarding organizing and collective-bargaining rights,” the Washington Legal Foundation wrote in a brief filed in the U.S. District Court for the Eastern District of Arkansas last week.

“This expanded definition of persuaders, which simultaneously shrinks the definition of exempt ‘advice,’ places a heavy new content-based and viewpoint-based burden on speech that would push Section 203 well over the edge of constitutionality.”

Section 203 of the Labor Management Reporting and Disclosure Act of 1959 is a federal law that basically requires employers to report each time they engage a consultant to persuade employees on how to use their collective bargaining rights.

Employers and consultants tend to engage in persuader activities during union campaigns to persuade employees not to unionize.

WLF argues in its brief, filed in Associated Builders and Contractors of Arkansas v. Perez, that the DOL has “significantly altered” its interpretation of Section 203 with its persuader rule.

The rule, or Persuader Advice Exemption Rule, effectively eliminates the “advice exemption” under the LMRDA.

The new rule requires that employers and the consultants they hire file reports not only for direct persuader activities -- i.e. consultants talking to workers -- but also for indirect persuader activities -- consultants scripting what managers and supervisors say to workers.

“Section 203 has survived over the past five-and-a-half decades in large measure because its enforcer, the U.S. Department of Labor, did not read the law so broadly that it could not bear up under the sort of strict judicial scrutiny that protects First Amendment rights,” WLF wrote in its 34-page brief, filed Aug. 12.

The foundation, which regularly advocates in support of free speech rights, contends the DOL’s reinterpretation of the law is too “aggressive” and “runs afoul” of the U.S. Constitution.

“The federal rules governing who must file disclosure reports and what they must disclose have been in force for over half a century. The Department of Labor’s latter-day gambit would overturn longstanding bipartisan consensus and dramatically expand reporting requirements,” WLF General Counsel Mark Chenoweth said in a statement last week.

“The agency’s effort to create leverage against law firms and others who counsel the management side of labor disputes runs headlong into First Amendment limits on compelled speech.”

In its brief, WLF argues the rule makes it difficult to discern who, exactly, is a persuader of employees and who is a mere advisor regarding labor relations “because the classification depends on the state of mind of the consultant.”

“Put differently, any consultant, including any law firm, that delivers advice or service to an employer regarding any labor relations, without making the disclosures required of persuaders, can never be confident that he will not be charged with a violation of Section 203(b) and must be prepared to show the lack of intent to persuade employees -- a negative proposition that can be nearly impossible to show and can thus easily mire the consultant in costly litigation,” the foundation wrote.

WLF filed a similar brief in preliminary injunction proceedings in a Texas federal court case.

In June, Senior Judge Sam R. Cummings for the U.S. District Court for the Northern District of Texas issued an order in National Federation of Independent Business v. Perez temporarily blocking the rule.

In his ruling, Cummings blasted the DOL for not conducting any studies or independent analysis on the new rule, which, according to the department, took effect April 25. The rule was to be applicable to arrangements, agreements and payments made on or after July 1.

The Texas judge said the rule, which mostly applies to labor lawyers, creates “substantial potential conflicts” for attorneys, and imposes “content-based burdens” on speech and cannot survive strict scrutiny.

WLF argues the Arkansas federal court should follow Cummings’ ruling, instead of a Minnesota federal judge’s ruling five days before that declined to temporarily block the rule but came to a similar conclusion that it was “likely invalid.”

“The Department has pointed a gun squarely at the head of every employer that obtains advice or services concerning labor relations, and it has made clear that any consultant providing such advice, whether that advice has the object of persuading employees or not, must be prepared to disclose all fees that it has received from any employer to which it provides advice or services regarding labor relations and all disbursements that it has made in connection with such advice or services,” the foundation wrote.

Arkansas Attorney General Leslie Rutledge, along with nine other state attorneys general, filed a similar amicus brief in the Arkansas federal lawsuit in April.

“For more than half a century, attorney-client communications relating to labor relations issues have been exempted from disclosure,” Rutledge said in a statement. “However, the new Persuader Advice Exemption Rule would overturn this long-standing precedent.

“The Department of Labor’s extreme interpretation will require disclosure to the government of the legal advice being provided to business, large and small, on very sensitive matters such as union elections. I am proud to lead my colleagues in this effort and urge the court to enjoin this rule, which will hit small businesses disproportionately hard.”

Rutledge was joined by attorneys general from Alabama, Arizona, Michigan, Nevada, Oklahoma, South Carolina, Texas, Utah and West Virginia.

Office of Labor-Management Standards Director Michael Hayes has said the rule is simply about disclosure.

“More disclosure here means more peaceful and stable labor-management relations,” Hayes said in a statement. “With workers having a better understanding of the true source of persuader communications, worker-supervisor and other workplace relationships are likely to proceed more smoothly no matter what is decided regarding union representation.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

Organizations in this Story

Washington Legal Foundation
2009 Massachusetts Avenue Northwest
Washington, DC 20036

Arkansas Attorney General
323 Center St Suite 200
Little Rock, AR 72201

U.S. Department of Labor
200 Constitution Ave NW
Washington, DC 20210

U.S. District Court for the Eastern District of Arkansas
500 W Capitol Ave
Little Rock, AR 72201

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