Texas District Court Permanently Enjoins DOL’s New Persuader Rule
On Wednesday, the United States District Court for the Northern District of Texas granted a motion for summary judgment filed by a group of employers and law firms against the Department of Labor’s (“DOL”) new interpretation of the persuader rule, and entered a nationwide permanent injunction barring the rule’s application.
The Labor Management Reporting and Disclosure Act of 1959 (the “LMRDA”) contains a rule governing the reporting obligations of employers, their attorneys, and their labor consultants regarding persuader activities (the “persuader rule”). The purpose of the persuader rule is to provide American workers with greater transparency regarding employers’ and labor unions’ arrangements with attorneys or labor relations consultants to persuade employees to organize or join labor unions. The DOL interprets and enforces the persuader rule.
For many years, the DOL required agents to report activities through which the agent had direct contact with employees, but not activities where the agent did not have direct contact with employees. In March, however, the DOL proposed a new interpretation of the persuader rule, by which it sought to expand reporting requirements to include all “persuader activity,” even if the employer’s attorney or consultant had no direct contact with employees. The proposed rule became effective April 25, 2016 and required the reporting of arrangements and agreements made on or after July 1, 2016.
The DOL’s new persuader rule was met with instant opposition throughout the country. The first rumblings against the new interpretation of the persuader rule came from a Minnesota District Court Judge, who denied an application to enjoin the rule, but suggested the DOL would likely eventually lose the trial on the merits. A few days after the Minnesota decision, Judge Sam R. Cummings, a District Court Judge for the Northern District of Texas, granted a nationwide temporary injunction against the new rule. Judge Cummings opined that the “DOL’s new rule is not merely fuzzy around the edges. Rather the new rule is defective to its core because it entirely eliminates the LMRDA’s advice exemption.”
Just yesterday, four months after he granted a nationwide preliminary injunction enjoining implementation of the new persuader rule, Judge Cummings granted plaintiffs’ motion for summary judgment on the enforceability of the rule and converted the preliminary injunction into a permanent injunction with nationwide effect. Whether Judge Cummings’ decision stands will be determined by the Fifth Circuit Court of Appeals, as the DOL took an interlocutory appeal of his June 2016 preliminary injunction.
The case is National Federation of Independent Business et al. v. Perez et al., case number 5:16-cv-00066, in the U.S. District Court for the Northern District of Texas.
The appeal before the Fifth Circuit is Nat’l Fed’n of Indep. Bus., et al. v. Perez, et al., No. 16-11315 (5th Cir. Aug. 29, 2016).