gavel-1238036DOL’s Attempt to Interfere with Attorney-Client Relationships Blocked by Texas Court

Back in March of this year, the Department of Labor (DOL) tried to interfere with employers’ confidential communications with their attorneys.  Some law firms surrendered, ran, or hid, saying they would no longer have the kinds of conversations DOL wanted to interfere with.  Shawe Rosenthal, along with other Worklaw Network firms, stood up and fought.  We filed a lawsuit against the DOL to protect our clients’ interests and maintain the integrity of the attorney-client relationship.  Two similar lawsuits were filed against the DOL, and in one of them, employers can consider themselves victorious following an Order from a United States District Court in Texas holding the DOL’s new rule unlawful and setting it aside.
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gavel-1238036The U.S. District Court in Minnesota ruled, on June 22, 2016, that the Department of Labor’s new interpretation of the advice exemption from the persuader rule is “untenable” and “flawed.”   The Court did not issue an injunction against the new interpretation, which goes into effect July 1, 2016, but that was based on its finding that the DOL suspended the most objectionable reporting requirement after the lawsuit was filed.  The challenge to the new interpretation was filed by Worklaw Network, a national alliance of labor and employment firms of which we are a member.  Our firm, along with Seaton, Peters & Revnew, P.A. of Minneapolis, represented Worklaw, as we discussed in a prior post, “Shawe Rosenthal and Worklaw Just Sued the DOL.”
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Although the government is often a thorn in the side of many of our clients, it is not every day that we decide to sue the government. Today was a different story.

On March 31, 2016, Shawe Rosenthal, on behalf of the Worklaw®Network, a nationwide association of independent labor and employment law firms of which we are a member, filed suit against the U.S. Department of Labor to block the Department’s new interpretation of the persuader rule. A copy of the complaint can be viewed here.

We discussed the new persuader rule in a previous post. To reiterate briefly, a federal law called the Labor-Management Reporting and Disclosure Act requires people who assist employers to fend off union organizing drives to file reports with the Department of Labor. The law contains an “advice exemption” under which employers and their attorneys do not have to report confidential information protected by the attorney-client relationship.  For decades, the Department has correctly held that the “advice exemption” applies to lawyers who advise clients concerning union organizing drives, as long as the lawyers do not communicate directly with employees.  Under the new interpretation, effective July 1, 2016, the Department has substantially narrowed the advice exemption.  (Actually, the Department would say it substantially narrowed the exemption.  I would say the Department completely eliminated it.)
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On March 23, 2016, the Department of Labor released the long-pending revisions to the “persuader rule,” drastically expanding employers’ disclosure requirements regarding their use of union avoidance consultants, including attorneys as well as HR consultants and media specialists. Our firm, on behalf of Worklaw, an international management-side network of labor and employment firms, will be filing suit to block implementation of the rule.

Under the “persuader rule” in the Labor-Management Reporting Disclosure Act of 1959 (LMRDA), employers are required to file reports and disclose expenditures to the DOL each time they engage a consultant to persuade employees regarding employees’ rights to organize. However, the LMRDA provides an “advice exception,” which had been interpreted for over 50 years to exclude an employer’s discussions with its labor relations consultants – including legal counsel – regarding opposition to a union organizing campaign, as long as the consultants had no direct contact with employees.

Under the new rule, however, the scope of an employer’s reporting obligations under the LMRDA has been substantially expanded, and will include a broad range of activities beyond “direct contact” provided by labor relations consultants – including attorneys. The intent of this one-sided rule is to discourage employers from retaining such consultants, and thereby promote unionization.
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