Court Rules Against “Persuader Rule” Regarding Union Organizing Rights

The U.S. Department of Labor (DOL) issued a final rule, known as the “persuader rule,” in early 2016. The rule dealt with actions by employers, both direct and indirect, “to persuade employees about how to exercise their rights to union representation and collective bargaining.” 81 Fed. Reg. 15923, 15924 (Mar. 24, 2016). It marked a significant change from the agency’s previous interpretation of an employer’s obligation to disclose communications related to labor organizing activity. A court permanently enjoined implementation of the new rule in November, however, finding that the DOL exceeded its rulemaking authority. The old version of the rule, based on the old interpretation of the statute, remains in effect.

The Labor Management Reporting and Disclosure Act (LMRDA) of 1959, 29 U.S.C. § 401 et seq., requires employers to disclose various payments and communications made to labor organizations, employees, and others with regard to union organizing activities. For example, an employer must disclose payments made to an employee or a group of employees to induce them “to persuade other employees” with regard to “the right to organize and bargain collectively through representatives of their own choosing.” Id. at § 433(a)(2). The statute might also require the disclosure of communications involving attorneys or consultants specifically involved in advising an employer about ongoing labor negotiations.

Section 203(c) of the LMRDA, id. at § 433(c), exempts certain communications from the disclosure requirement. The persuader rule determines how far this exemption applies. Under the previous interpretation of the persuader rule, disclosure was only required if a consultant communicated directly with employees. The DOL concluded that this “left a broad category of persuader activities unreported” and therefore “den[ied] employees important information” they might need to make an informed decision about union representation. 81 Fed. Reg. at 15924. It modified the persuader rule to include the disclosure of both “direct” and “indirect” activities aimed at “persuading” employees. See 29 C.F.R. § 406.2(a).

Several business organizations filed suit against the DOL shortly after the publication of the rule, seeking an injunction to prevent its implementation. Federal courts have the authority to set aside an agency rule on various grounds, such as a finding that the rule exceeds the agency’s statutory authority, that the agency failed to observe proper procedures in promulgating the rule, or that the rule itself is “arbitrary, capricious, [or] an abuse of discretion.” 5 U.S.C. § 706(2).

A federal judge issued a preliminary injunction in June 2016. In its order, the court outlined the objections raised by the plaintiffs, including concerns that the deadlines imposed by the new rule left employers with little time for consultation with legal counsel and others and that the disclosure requirements “would conflict with various ethical duties.” Nat’l Fed. of Indep. Business et al. v. Perez et al., No. 5:16-cv-00066, order at 11 (N.D. Tex., Jun. 27, 2016). The court found that the plaintiffs were likely to succeed on their claims that the DOL lacked statutory authority, that the rule was arbitrary and capricious, and that the rule violated the plaintiffs’ rights under the First and Fifth Amendments. It made the preliminary injunction permanent on November 16, 2016.

If you need to speak with an employment attorney about a matter in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at (646) 867-7997.

More Blog Posts:

Employment Practices That Violate Antitrust Laws Can Have Both Civil and Criminal Penalties, The New Jersey Employment Law Firm Blog, December 9, 2016

Servers at Famous New York City Restaurant Vote to Unionize, The New Jersey Employment Law Firm Blog, October 21, 2016

New York City Mayor Issues Executive Order Regarding Union Organizing, The New Jersey Employment Law Firm Blog, September 22, 2016

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