Labor Department’s Persuader Rule Dealt Deathblow

Judge grants permanent injunction to 'unlawful' disclosure requirements

Tom Perez
Tom Perez / AP

A Texas judge permanently blocked one of the Obama administration's most controversial labor policies, which critics say would have hampered the First Amendment rights of employers.

Senior U.S. District Court Judge Samuel Cummings placed a temporary injunction against the Department of Labor from enforcing its new Persuader Rule in July after several companies and trade groups filed suit against the department. The new rule would have forced employers to disclose any legal advice they receive regarding unionization campaigns, even if those lawyers and consultants did not interact with workers or publicly advocate in the workplace—the previous disclosure standard.

Cummings made the injunction permanent on Wednesday, citing his belief that it is "unlawful."

"The Court is of the opinion that the Department of Labor's [rule] … should be held unlawful and set aside," Cummings said. "The Court's preliminary injunction preventing the implementation of that Rule should be converted into a permanent injunction with nationwide effect."

The Department of Labor declined to comment on the ruling.

Cummings is not the only federal judge who expressed skepticism about the legality of the rule. Minnesota federal judge Patrick Schlitz said in July that those challenging the rule "are likely to succeed in their claim." David Phippen, a management-side labor attorney with Constangy, Brooks, Smith, & Prophete, said the department pushed the envelope with its rule in direct contradiction to the Labor Management Reporting and Disclosure Act, which initiated reporting requirements.

"The court’s order is consistent with the plain meaning of the words used in the LMRDA statute," Phippen told the Washington Free Beacon. "The U.S. DOL interpretation of the statute in its rule tried to change the words. The problem is—'advice' means ‘advice' means ‘advice'—plain English."

Cummings said in his initial injunction that he worried the rule would erode attorney client privilege and be "impossible to enforce" because of its vagueness.

"DOL replaced a long-standing and early understandable bright-line rule with one that is vague and impossible to apply," he ruled in July. "There is substantial risk that associations, employers, and consultants, including attorneys, will not be able to determine with reasonable certainty whether their actions require reporting."

Fisher Phillips, a major labor law firm, said that the permanent injunction could bring an end to one of Labor Secretary Tom Perez's most controversial rulings—a move which will protect employers.

"A federal court judge delivered what could be the final nail in the coffin for the controversial persuader rule," the firm said in a blog post. "It seems likely that employers may have seen the last of the persuader rule for the foreseeable future."

A number of industry groups welcomed the decision. Asian American Hotel Owners Association President and CEO Chip Roger said in a release that the rule would have had a disastrous effect on small businesses that do not have the resources to afford in-house legal counsel about the union election process.

"The persuader rule was meant to rig the system against small business owners, and we applaud that the rule has been permanently blocked by the court," Rogers said in a release. "All small business owners want to do is consult with legal experts on the complex subject of labor law—made more complex and confusing by the Labor Department itself—so they can get back to growing their business and creating jobs."

Associated Builders and Contractors, a major construction industry trade group, said that it expects executive overreach will begin to peter out under a Trump administration.

"Associated Builders and Contractors is pleased that the court has ruled to maintain employers' free speech rights and is hopeful that under a Trump administration, the department will take input from the industries it regulates seriously in developing less burdensome rules that better facilitate the conditions for growth and prosperity," spokeswoman Kristen Swearingen said in a release.