Thanks to the intervention of a federal district court in Texas, the federal Department of Labor’s new “Persuader” rules did not go into effect as scheduled on Friday. The rules for the first time would require legal counsel and other persons or entities that provide behind-the-scenes advice to employers regarding the right to organize or bargain collectively, to disclose to DOL this relationship and amounts paid by the employer. Current law only requires disclosure by providers who actually meet with employees on behalf of the employer as part of the employer’s union-free efforts.
Lawyers representing employers filed suit in multiple federal district courts, contending that the rules conflict with the Labor-Management Reporting and Disclosure Act (LMRDA). The Texas court agreed, blocking DOL from implementing the rules. The district court judge expressed his opinion that the regulations are unlikely to survive the legal challenge. Several of the other cases await decisions from those courts.
DOL may seek a direct appeal of this initial decision to the Fifth Circuit Court of Appeals. In the meantime, employers and their service providers will not be required to comply with the disclosure rules. Prior to this decision, many law firms and other providers were scrambling to put into place agreements with their clients regarding labor services. These agreements would take advantage of a provision in the Persuader rules that exempt contractual relationships in existence prior to the effective date of the regulations. These agreements remain a viable option for employers if the regulations ultimately survive legal challenge.