Issuance of a nationwide, permanent injunction and the election of Donald Trump put an end to DOL’s controversial persuader regulations.
The US District Court for the Northern District of Texas last week issued a nationwide, permanent injunction that prevents the US Department of Labor (DOL) from implementing its so-called “persuader” regulations. The decision made permanent a preliminary injunction issued on June 27, 2016 that blocked DOL’s original July 1, 2016 implementation date for the new regulations.
DOL issued the persuader regulations on March 23, 2016 and sought to broaden the scope of circumstances under which employers, law firms, and consultants could trigger reporting requirements under the Labor-Management Reporting and Disclosure Act (LMRDA). Specifically, reporting would have been triggered in connection with a wide array of activity where an object was to directly or indirectly persuade employees in their rights to organize and bargain collectively. The regulations would have had significant implications for all employers, however, not just those involved in union organizing, collective bargaining, or other union-related activity.
In issuing the permanent injunction, Judge Sam Cummings reaffirmed his original legal conclusions from June, namely that DOL’s rule conflicted with the LMRDA’s exemption of “advice” given to employers from the reporting requirements. Judge Cummings also pointed to the intrusion on the attorney-client relationship and to conflicts with the First Amendment’s free speech and the Fifth Amendment’s due process rights under the US Constitution.
Although DOL has the right to appeal Judge Cummings’s decision, the election of Donald Trump to the presidency makes such an appeal very unlikely. The Trump administration is widely anticipated to reverse or not enforce the persuader rules.
Significantly, these developments moot the serious concerns that caused some US law firms, including Morgan Lewis, to cease providing so-called “indirect” persuader services that under the new persuader regulations could have required reporting by clients of law firm retentions and expenditures for legal advice. Longstanding DOL interpretative guidance and court decisions that define the bounds of reportable persuader activity under the LMRDA, in effect since the early 1960s, will continue to govern.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Harry I. Johnson, III
Ross H. Friedman