Court puts hold on AGC-opposed “persuader rule”

 

A federal court on June 26 issued a nationwide preliminary injunction preventing the U.S. Department of Labor's (DOL) final "persuader" rule from taking effect as scheduled on July 1. Although the injunction is only temporary, the ruling is a significant victory for employers and for the associations, attorneys, and consultants that advise them.

The “persuader” rule seeks to revise reporting obligations of labor relations “consultants” (which is defined to include attorneys and associations) who conduct activities to persuade employees about their rights to organize or bargain collectively and the reporting obligations of employers who receive assistance from such consultants. While the regulations do not directly restrict employers from using consultants, the reporting obligation may well have a chilling effect on employers’ willingness and ability to seek needed advice from experts.

For more information on the revised regulations, click here.

In issuing the preliminary injunction, the U.S. District Court for the Northern District of Texas found that the plaintiffs demonstrated a substantial likelihood of success on the merits in their challenge to the validity of the rule and a substantial threat of irreparable harm if the rule were implemented as scheduled.  More specifically, the court found that the plaintiffs were likely to succeed in their claims that DOL lacks statutory authority to issue and enforce the rule and that the rule: is arbitrary, capricious, and an abuse of discretion; violates First Amendment rights to free speech and association; violates the Fifth Amendment’s due-process clause as overly vague; and violates the Regulatory Flexibility Act.

The case is one of three lawsuits challenging rule in different courts. In a second case, the U.S. District Court for the District of Minnesota declined to issue a preliminary injunction but indicated that the plaintiffs would likely succeed on the merits. The third lawsuit is pending in the U.S. District Court for the Eastern District of Arkansas, which has yet to issue any rulings in the matter. AGC, as a member of the Coalition for a Democratic Workplace, is a plaintiff in that case. AGC is also a member of the U.S. Chamber, which submitted amicus briefs in all three cases.

The injunction issued by the court in Texas will remain in place until a decision is issued on the merits or the injunction is overturned on appeal. DOL has not yet announced whether it will appeal the ruling. AGC will continue to closely monitor the litigation and report on significant developments.

For more info, contact Denise Gold, Associate General Counsel, AGC of America, at goldd@agc.org or 703.837.5326.