Minnesota Judge Denies Injunction Against Soon-To-Be Effective Persuader Rule but Notes Potential Issues with Rule
We kicked off the week by reminding you the Department of Labor’s (DOL) new “persuader” rules are set to take effect July 1. The DOL’s new rules expand the circumstances 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. Most notably, the rules expand the definition of persuader activities to include a number of indirect activities, such as holding educational seminars for employers, developing personnel policies, and drafting or editing materials distributed to employees.
On Wednesday, a Minnesota federal judge refused to issue a temporary restraining order blocking implementation of the persuader rule in response to a lawsuit and application for injunction filed by an association of law firms and groups representing management in labor and employment matters. U.S. District Judge Patrick J. Schiltz declined to issue the injunction on the grounds that plaintiffs failed to show they will suffer irreparable harm without one. However, all was not lost for employers and groups seeking to challenge the persuader rule. The silver lining is that the Court noted plaintiffs are likely to eventually “succeed in their claim that portions of the new rule conflict with the LMRDA.” Providing a lengthy analysis of the merits of the action, the Court explained “the root of the DOL’s problem is in its insistence that persuader activity and advice are mutually exclusive categories.”
The case is Labnet Inc., et al. v. U.S. Department of Labor, et al., case no. 0:16‑cv00844, in the United States District Court for the District of Minnesota. Two other similar challenges have been brought in District Courts in Texas and Arkansas. The Texas case in particular points to violations of employers’ constitutional rights and potential harm to attorney‑client confidentiality.
Employers, labor consultants, and law firms should monitor these developments, but should nevertheless continue to prepare to adapt to the new rules.