The United States Department of Labor issued regulations earlier this year finalizing the “Persuader Rule.” Under the new Rule, employers and consultants (including lawyers) would be required to report labor relations advice and services under the Labor-Management Reporting and Disclosure Act’s “persuader activity” regulations when such advice and services are offered in the context of union organizing campaigns. Information subject to mandatory reporting under the Persuader Rule includes the identity of the employer, a description of the services rendered to the employer, and the fee arrangement between the employer and consultant/attorney.

The rule was set to become effective on July 1, 2016. Fortunately for employers and management-side labor attorneys everywhere, a United States District Judge in Texas issued a nationwide injunction barring the Department of Labor from enforcing the rule. According to the Judge, the rule obligates attorneys to violate the attorney-client privilege by disclosing clients’ identities, fee arrangements, and the nature of the advice and services provided. The opinion also holds that the Persuader Rule violates employers’ First Amendment rights to free speech and association, as well as their Fifth Amendment Rights to due process.

The decision does not mean that the Persuader Rule is dead, however. The Department of Labor may appeal the District Court’s Decision to the Fifth Circuit Court of Appeals. Alternatively, the Department could elect to scrap the current rule and go back to the drawing board. For now, however, employers and management-side attorneys are not required to comply with the Persuader Rule. We will continue to monitor this issue and report any further developments...