On Monday, June 27, a U.S. District Court in Texas put the U.S. Department of Labor’s (DOL’s) Persuader Rule on hold, giving clubs a much needed respite from the rule’s impact. The rule was supposed to go into effect this Friday, July 1. This stay will remain in effect until the case is finalized.
As we have stated, the Persuader Rule amends the Labor-Management Reporting and Disclosure Act (LMRDA). Under LMRDA, only direct contact between the attorney and the employees—where the attorney tries to persuade the employees against joining a union—would trigger the LMRDA disclosure requirements.
While direct persuader activities start the reporting requirements, indirect activities were never subject to the LMRDA disclosure requirements. They were specifically excluded under the law’s “advice exemption.”
The advice exemption allows attorneys to discuss a strategy with an employer and devise a plan to deal with the union campaign. The employer would then go forward and implement the plan himself. This had been the rule for more than fifty years.
Unfortunately, this new rule would remove the advice exemption. As such, all direct and indirect contact with employees would cause the LMRDA disclosure requirements to kick in.
NCA’s concern with this rule is that it will discourage many lawyers from assisting clubs when a union organizing campaign begins—leaving those clubs unable to effectively communicate their side of the story during the campaign. The rule also threatens the attorney/client relationship for clubs by forcing attorneys to disclose confidential information and by forcing clubs to disclose things they will not want out in the open during a union campaign.
Most importantly, the rule will allow union organizers to stress that a club has money to pay for “hired guns” so it must have money to increase wages or benefits. Such a message will be a valuable tool for unions during a campaign.
In the ruling, the court stated that there is a strong likelihood the challenge to the rule would succeed once the case goes to trial. Since the Persuader Rule removes LMRDA’s “advice exemption” and since this is a congressionally created exemption, we do not believe DOL has the authority to rewrite federal law. It seems the court agrees with us, but we will have to wait for a final verdict.
For now, clubs can breathe a sigh of relief, as the rule won’t be enforced while the case is pending. As always, when we receive additional information, we will pass that on to you.
