Labor Department's Persuader Rule 'a dead duck,' attorney says

By Deb Rogers | Nov 28, 2016

COLUMBUS, Ohio (Legal Newsline) — A federal judge last week issued a permanent injunction against a rule that would have made attorney and client talks on union issues on the record.

U.S. District Court Judge Sam Cummings, of the Northern District of Texas, granted a permanent injunction against the Persuader Rule, and it will not be resuscitated, an attorney said.

“It looks as though this is a dead duck,” David Hiller told Legal Newsline. Hiller is a partner in Fisher Phillips, which has 350 lawyers in 31 offices across the country.

The business-unfriendly rule will likely not be brought back because of the Nov. 8 election, he said.

“Right now there’s not an appeal pending,” Hiller said. “And with President-Elect Trump being able to appoint a secretary of labor, the expectation is the new secretary of labor will withdraw any new appeal.”

An attorney with Fisher Phillips, Richard Meneghello, wrote a blog post explaining the history of the issue.

“The Labor Management Reporting and Disclosure Act (LMRDA) of 1959 requires labor relations consultants and their clients to file reports about arrangements to persuade workers to reject unionization. However, the statute expressly carves out mere advice,” Meneghello wrote. 

“Since 1962, U.S. Department Labor has not attempted to regulate lawyers who offer advice and counsel, so long as their clients remain free to accept or reject the advice and so long as lawyers do not communicate directly with workers.”

The Persuader Rule would have mandated reporting anytime an attorney’s advice could directly or indirectly include employees.

“But the (former) statue expressly exempts advice,” Hiller said, adding that that had been the case for 50 years with the U.S. Department of Labor.

Businesses, state attorneys general and lawyers opposed the change, and a temporary injunction against the rule was issued in June.

“It was an attempt to provide campaign ammunition to union organizers,” Hiller said. “What the Department of Labor wanted was for management-side labor lawyers to have to file reports as to how much they were paid by client employers.”

It could be turned around, Hiller said, so labor organizers would point out that the employer spent thousands of dollars on attorneys that could have been spent on wages or benefits.

Meneghello wrote that at the time of the temporary injunction, the court said that the rule “is far too broad and captures much activity that the LMRDA intends to exclude. Here, the court said, USDOL replaced a longstanding and easily understandable bright-line rule with one that is vague and impossible to apply.” 

In conclusion, “USDOL’s new rule is not merely fuzzy around the edges. Rather, the new rule is defective to its core because it eliminates the LMRDA’s advice exemption,” Meneghello wrote.

The USDOL appealed to the U.S. Court of Appeals for the Fifth Circuit.

Hiller said Cummings’ two-page permanent ruling was not unexpected. In it, the judge said the Persuader Advice Exemption Rule should be held unlawful and set aside.

“Its brevity was surprising. We expected the judge would stick to his guns,” Hiller said.

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