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DOL’s New Persuader Rule Unenforceable Due to Court Ruling

On June 27, the U.S. District Court for the Northern District of Texas granted a preliminary injunction in National Federation of Independent Business (NFIB), et al. v. Perez (see decision here)The injunction prevents the U.S. Department of Labor (DOL) from implementing and enforcing its recent changes to the persuader rule, which was scheduled to go into effect July 1. The final “persuader” regulations were issued by DOL on March 23 of this year and sought to revise the interpretation of “advice” as it pertains to the employer and labor relations consultant persuader reporting requirements of Section 203 of the Labor-Management Reporting and Disclosure Act, which applies to private but not public institutions.

As part its ruling, the Texas court found NFIB and other plaintiffs were likely to succeed on the merits of their claims. This is the second court to make such a determination. On June 22, the U.S. District Court for Minnesota ruled against the plaintiff, Labnet Inc., in its request for an injunction against the rule, finding that the plaintiff failed to show irreparable harm. The court did conclude, however, that the plaintiff was likely to ultimately succeed in its challenge to the rule.

Prior to issuance of the final regulations, many concerns were expressed and shared widely by the American Bar Association, arguing it would violate attorney-client privilege, and Congressional Republicans and the Arkansas Attorney General, who fear it will harm small business owners, “chill employer free speech,” and “continue to discourage job growth and hinder economic development.” More than 9,000 comments were filed on the proposed rule in 2011, including comments filed by ACE, CUPA-HR and other higher education associations.

In light of the severe impacts the final rule would have on employers and outside attorneys, the Coalition for a Democratic Workplace (CDW), of which CUPA-HR is a member, filed a lawsuit on March 30, 2015 in the federal district court in Arkansas. The CDW motion for a preliminary injunction is pending. Whether the court issues a decision on our request for the preliminary injunction may depend on whether DOL appeals the Texas court’s injunction (if DOL chooses not to appeal, our motion may be moot).

The injunction will be in effect until the district court issues a decision on the merits or a higher court overrules the injunction on appeal (if DOL appeals). We will be following the suit closely and will keep you apprised of any developments as they become clear.

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