Here We Go Again! DOL Proposes to Rescind the Permanently Enjoined “Persuader” Rule - and Perhap

Harold Coxson
June 28, 2017

The U.S. Department of Labor (DOL) moved one step closer to undoing President Obama’s permanently enjoined “persuader activity” regulation when, on June 12, the agency issued a notice of proposed rulemaking (NPRM) for reverse rulemaking to rescind the rule and perhaps revise it. According to the NPRM, the DOL will be accepting public comments on the rule until August 11, 2017.

The DOL’s rule would have significantly revised and expanded the reporting and disclosure requirements imposed on employers and advisors (including consultants and lawyers) under the Labor-Management Reporting and Disclosure Act (LMRDA). If implemented, the DOL’s new rule would have required employers and consultants to report and disclose direct or indirect communications that have an object to persuade employees with regard to union organizing—including what was formerly considered exempt “advice” provided to management by consultants, including lawyers.

The so-called “persuader” rule, which would have required employers to disclose who advises them on how to discourage union organizing activity, was already set aside last November when a Texas federal judge ruled that, among other grounds, it exceeded the DOL’s authority and compromised free speech and attorney-client privilege. Employers and other interested parties should use this opportunity to provide comments to the DOL on the effects of the persuader rule on their organizations.

What is “Persuader Activity”?
Ever since the 1947 Taft-Hartley Act amendments, employees in the United States have had protected rights to engage in or refrain from union activity or other forms of concerted action. Unions have consistently sought to undermine, in Congress, employees’ rights to refrain from union activity and have labeled employers who inform employees of their rights to refrain from union membership, “union busters.”

Attacks against employer communications have occurred despite the fact that section 8(c) of the Taft-Hartley Act amendments (the so-called “free speech” proviso) shields employers from unfair labor practice charges for communications and views or opinions expressed about unions with their employees provided that the communication “contains no threat of reprisal or force or promise of benefit.” While supporting section 8(c) legal “free speech” protections, the ever-changing decisions of the NLRB have created a mine field of interpretations as to what constitutes unlawful “threat[s] of reprisal[s] or force or promise of benefit[s].”

The Advice Exemption
In the 1950s, some employers engaged in the practice of secretly hiring “persuaders” to pose as employees and deceptively communicate with fellow employees to convince them to vote against the union. These were not employees—they were consultants secretly paid by the employer as its agents to “persuade” employees and report back to the employer. That activity truly was “union busting.” With the 1959 Landrum-Griffin Act amendments (the LMRDA), Congress sought to eradicate this corrupt practice by requiring public disclosure of “persuaders.” Congress was careful, however, to exclude mere “advice” to employers from the reporting obligations: Thus, the so-called “advice exemption.”

Over the ensuing 50 years, this exemption has been interpreted to mean that only “persuaders” must report when they communicate directly with employees. Today, employers and their consultants and legal advisors understand that they must publicly report only when the outside persuader has direct communications with employees. Employees are not deceived, and advice to employers is excluded from the law’s reporting obligations.

Unions that blame employers and their law firms for the continuing decline in union density, seek to expand the scope of reportable law firm advice and services to include virtually every type of protected confidential communication typically provided exclusively to employer-clients during union organizing. The persuader rule would have prevented most law firms from providing legal advice related to union organizing other than the standard DOs and DON’Ts. Discussion of lawful communications strategies beyond that would not have been possible because to provide such advice would force law firms to breach attorney-client confidences for all of its clients, even if the client involved waived the privilege.

That is part of the problem with the persuader rule: By breaching the attorney-client privilege and requiring public reporting for one client, the law firm would be required to breach the attorney-client confidences of all clients.

The Persuader Rule Enjoined
On March 31, 2016, the National Federation of Independent Business (NFIB), the Lubbock Chamber of Commerce, the Texas Association of Business, the National Association of Home Builders (NAHB), and the Texas Association of Builders filed a lawsuit challenging the persuader rule. Ogletree Deakins represented the plaintiffs in this case. The State of Texas along with nine other states intervened in support of the plaintiffs’ position.

On June 27, 2016, in National Federation of Independent Business et al. v. Perez, et al., the U.S. District Court for the Northern District of Texas (Lubbock Division) granted the plaintiffs’ Motion for a Preliminary Injunction, thereby enjoining the DOL from implementing and enforcing its revised persuader rule on a national basis. The court found that the plaintiffs’ challenge to the new rule, which was set to become effective on July 1, 2016, had a substantial likelihood of success on the merits and that the plaintiffs had shown that they would be irreparably harmed if the rule was not enjoined.

On November 16, 2016, the court converted its injunction preventing implementation of DOL’s revised persuader rule on a national basis from preliminary to permanent. According to Judge Sam R. Cummings’s order, the court converted the preliminary injunction to a permanent one for the same reasons “stated in the court’s Preliminary Injunction Order entered June 27, 2016.” Judge Cummings found the DOL’s revised persuader rule to be “not merely fuzzy around the edges. Rather the New Rule is defective to its core.” And in his final judgment entered on December 16, 2016, Judge Cummings ruled that the persuader rule “is held unlawful and set aside.”

On August 25, 2016—during President Obama’s last term—the DOL appealed the decision to the Fifth Circuit Court of Appeals. After giving the agency a number of extensions, the Fifth Circuit gave the DOL until June 16 to file a brief in its appeal. The DOL then moved for an abeyance of the appeal—which the plaintiffs opposed—while the agency decided whether to rescind the rule. The Fifth Circuit held the case in abeyance pending the DOL’s rulemaking process (or until December 12, 2017). On June 12, 2017, the DOL issued the new NPRM to rescind the enjoined rule. The public now has 60 days from the date the DOL published its NPRM to comment on whether the government should rescind the persuader rule.

What’s Next?
Jeffrey C. Londa and Christopher C. Murray of Ogletree Deakins represent the successful plaintiffs—the NFIB, the NAHB, and their respective state chapters in Texas, the Texas Association of Business, the Texas Builders Association, and the Lubbock Chamber of Commerce. Unions can be expected to flood the rulemaking record with comments defending the rule and challenging the injunction during the course of the comment period. Even if the reverse rulemaking ultimately results in a rescission of the persuader rule, unions can be expected to challenge the reverse rulemaking in a court of their choosing. Remember, legal authority demands that it’s not a sufficient basis for reverse rulemaking simply to provide that “we changed our minds” or that a new administration has a “different point of view”; the rulemaking must be supported by “reasoned analysis.” It will be incumbent on the business community to provide that analysis through public comments filed with the rulemaking record.

What’s worrisome is the NPRM alluded to the need to rescind the Obama rule in order to consider a new Trump rule in the future. “If it’s not broke, don’t fix it!”

Mr. Coxson is a shareholder with Ogletree, Deakins, Nash, Smoak & Stewart and concentrates on traditional labor law.
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Government Unions in the Crosshairs (Read More…)

Two suits seek to overturn 40-year-old precedent allowing for forced union dues, exclusive representation for government employees
BY: Bill McMorris June 6, 2017

The Supreme Court could revisit a 40-year-old precedent that allows government agencies to force public sector workers to pay union dues, an issue the court deadlocked on in 2016 following the sudden death of Antonin Scalia.

The National Right to Work Foundation will file two petitions on Tuesday with the high court challenging coercive dues schemes for government employees (Janus v. AFSCME), as well as monopoly bargaining rights for home health aides that receive Medicaid dollars (Hill v. SEIU). The suits seek to overturn Abood v. Detroit Board of Education, a 1977 case that enabled government agencies to require the payment of union dues or fees as conditions of employment.

Bill Messenger, the National Right to Work Legal Defense Foundation’s lead attorney in both cases, told the Washington Free Beacon in an exclusive interview that the plaintiffs are petitioning the court to consolidate both cases, but, if given the chance, will ask to first consider Janus v. AFSCME before moving to Hill v. SEIU. Messenger said the plaintiffs are asking the court to resolve the question of “how far can you extend monopoly bargaining rights.”

“It’s the state’s burden to justify infringing on a worker’s association rights,” he said. “The key is there’s no difference between collectively bargaining with the government and lobbying the government. If you can’t force people to pay to lobby the government, then you can’t force them to pay union dues or exclusively bargain with them.”

This is not the first time that public sector workers have attempted to overturn Abood. In 2014, the Supreme Court struck down an agreement initiated by imprisoned Democratic Illinois Gov. Rod Blagojevich that forced home healthcare providers that receive Medicaid reimbursements to pay union dues. The court ruled in Harris v. Quinn that those workers could not be considered actual government employees because the workers’ primary employers were patients, rather than the state government. The decision led many states to end similar practices, but stopped short of overturning Abood.

Public sector workers who objected to union representation felt that the decision authored by Justice Samuel Alito opened up the possibility of ending forced union participation for all public workers. In 2014, California public school teacher Rebecca Friedrichs initiated a suit against the California Teachers Association arguing that she was forced to fund her union’s political positions. Friedrichs, a former union official, argued that government unions were inherently political because they negotiate over the disbursement of taxpayer dollars and other budget questions.

The Friedrichs case reached the Supreme Court in January 2016, and several justices appeared sympathetic toward the teacher’s legal challenge during oral arguments.
“The union basically is making these teachers compelled riders for issues on which they strongly disagree,” Justice Anthony Kennedy said. “Agency fees require that employees and teachers who disagree with those positions must nevertheless subsidize the union on those very points.”
However, the case failed to definitively resolve the constitutionality of forced dues for government workers. Justice Scalia died suddenly in February 2016. The court issued a 4-4 deadlock, which handed a victory to government unions because lower courts affirmed the Abood precedent. The High Court then rejected a bid from Friedrichs and her attorneys to rehear the case when a ninth judge was confirmed to the court.

Messenger said that Janus largely follows the precedent set by Harris v. Quinn and will build off of the Friedrichs argument regarding dues payments as forced political speech. Hill v. SEIU addresses the issue beyond the monetary concerns of workers; it challenges whether the government has the right to declare an organization an “exclusive representative” without a compelling interest. The case was brought by several home healthcare workers in Illinois, many of whom were freed from the burden of paying union dues by the Supreme Court in 2014. While they now avoid automatic deductions by SEIU, the union continues to be treated as the “exclusive representative” of all home health aides in the state.

Messenger compares the situation to a hypothetical bill in which Texas passed legislation saying that it would treat the National Rifle Association as the face of all gun-owners in the state or if the federal government forced all doctors to associate with the American Medical Association for the purpose of lobbying. Such an arrangement would grant “special powers for lobbying the state” to a government-favored organization at the expense of other individuals.

“The providers in Hill are private citizens. If you can force a mandatory representation policy on them then you can force mandatory representation on anybody,” he said. “The reality is you’re forcing people to support an advocacy group and our system prohibits the government from dictating who speaks for its citizens.”
Neither of the unions involved in the cases, American Federation of State, County & Municipal Employees Local 31, nor the Service Employees International Union, Healthcare Illinois, Indiana, Missouri, Kansas, returned a request for comment.