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U.S. District Court Issues Injunction Against Department of Labor “Persuader Rule”

Proposed rule violates attorney-client privilege and would have chilling effect on First Amendment

SALT LAKE CITY July 5, 2016 – In the latest in a series of judicial reversals of federal overreach, a district court has issued a national injunction against a Department of Labor (DOL) administrative rule in a case in which Utah joined with Texas, Arkansas, Alabama, Indiana, Michigan, Oklahoma, and South Carolina, as well as several private plaintiffs.

Instituted on March 24, the rule—known informally as the “persuader rule”—purported to reinterpret a section of the Labor-Management Reporting and Disclosure Act (LMRDA) that has long exempted from federal oversight communications between lawyers and clients during union-organizing campaigns. The persuader rule would have narrowed that exemption to exclude from it “indirect communications” by management-side consultants and lawyers during union-organizing campaigns—including speeches or scripts provided to supervisors to share with employees and intended to sway employees against unionizing. Besides redefining the statutory exemption to exclude such communications, the rule also required attorneys and consultants to report those communications to DOL, which would compile them and make them publicly available on its website, where they could be used against the employers by third parties.

The management-side attorneys and consultants subject to the rule argued in the request for the injunction that the rule would impose onerous reporting requirements when they act as indirect persuaders for employers that oppose unionization—reporting requirements that could interfere with their confidential relationship with employers. In particular, the rule would have required attorneys to violate attorney-client privilege, would have had a chilling effect on attorneys’ ability to provide advice to clients, and would have infringed on First Amendment speech rights.

“We are pleased that the court has enjoined the persuader rule,” said Tyler Green, Utah Solicitor General. “The injunction recognizes a key tenet of our federal system:  There are limits to what federal agencies can do.  Here, DOL not only exceeded those limits in the persuader rule, but did so toward particularly harmful ends—infringing and chilling confidential communications between attorneys and their clients.”

In response to a request for a preliminary injunction by Utah and nine other states in conjunction with legal and business groups, Judge Sam Cummings, of the U.S. District Court for the Northern District of Texas Lubbock Division, issued an order this week preventing the new persuader rule from taking effect. The judge recognized that the rule forces employers to report any “actions, conduct or communications” undertaken to “affect an employee’s decisions regarding his or her representation or collective bargaining rights,” and would have required attorneys advising employers about labor elections to report their activities to the DOL for posting on public web sites, effectively breaking the confidentiality of the attorney-client privilege.

In his order, Judge Cummings said that these requirements threaten to chill protected speech—and the “chilling of speech protected by the First Amendment is in and of itself an irreparable injury[.]”

A copy of the injunction is linked here.

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