The Department of Labor’s final rule regarding the advice exemption to the “persuader rule” in the Labor-Management Reporting Disclosure Act of 1959 (LMRDA) is currently facing three lawsuits filed by various law firms, business groups, and associations. The DOL’s new Rule modifies the “advice exemption” by revising the instructions to forms filed by employers (Form LM-10) and labor relations consultants (Form LM-20) to report persuader agreements and arrangements. According to those new instructions, the advice exemption is significantly narrowed in an attempt to increase the number of disclosures required to be filed by employers and their labor relations consultants and law firms. The three lawsuits assert similar claims in three different jurisdictions.

The first lawsuit was filed on March 30, 2015, one week after the Rule was issued, in the Eastern District of Arkansas by the National Association of Manufacturers, other industry groups, and a law firm.  The lawsuit asserts that the Rule:

  • “infringes on the right of those who seek to give labor relations advice to employers, including the Plaintiff associations, attorneys, and other third party consultants…to render such advice without fear of criminal penalties for failing to file the reports newly required by the Rule”;
  • violates the plaintiffs’ First Amendment rights of Freedom of Speech and Freedom of Association; and
  • infringes on the confidentiality of the plaintiffs’ attorney-client communications and impermissibly invades the attorney-client relationship.

The second lawsuit, filed by a group of labor and employment law firms and an association of management-side labor and employment law firms, was filed on March 31, 2015, in the District of Minnesota. The Minnesota lawsuit, raising similar claims, asserts that the Rule “is an impermissible viewpoint-based regulation of speech” as it “singles out for regulation communications that are ‘anti-union.'”

The National Association of Home Builders and the National Federation of Independent Business (NFIB) filed the third challenge in the Northern District of Texas. In the Texas lawsuit the plaintiffs assert:

[The new rule] is without statutory authority, is in direct conflcit with specific existing statutory provisions, is contrary to Constitutional provisions, and usurps, without legal authority, the right of States to regulate the attorney-client relationship. It will require practicing attorneys to either violate DOL’s new federal “interpretation” of federal law or state ethics rules on disclosure of attorney-client information. DOL’s new rule illegally interferes with the right of Plaintiff’s employer-members to obtain confidential legal advice and impedes their right to communicate with employees about unions and workplace issues.

All lawsuits seek to enjoin the Rule pending a final decision on the merits and an order vacating the challenged rule.

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