By:  Christopher W. Kelleher

Seyfarth Synopsis: On June 27, 2016, a federal district court in Lubbock Texas issued a nationwide preliminary injunction preventing the Department of Labor’s new persuader regulations from taking effect this July 1, 2016.

The United States District Court for the Northern District of Texas dealt the Department of Labor (DOL) a major blow yesterday when it entered a nationwide injunction prohibiting the enforcement of DOL’s new “Persuader Rule.” (Decision) The Rule, which was set to take effect on July 1, requires certain public reporting by employers and their consultants (including attorneys).  The specific parameters of the reporting requirements are discussed in numerous prior blogs, including here and here and here.

The Court held that the Plaintiffs (including several states and business associations) would suffer irreparable harm absent injunctive relief.  Not only does the Rule reduce access to comprehensive legal advice and representation, but it also chills First Amendment rights, “including the right to express opinions on union organizing and to hire and consult with attorneys.”  Moreover, the regulation “conflicts with the promulgated rules of every State regarding an attorney’s ethical obligation to maintain client confidences.”

The Court determined that the DOL lacks the authority to promulgate and enforce such an arbitrary and capricious regulation.  The Court further concluded that the harm associated with depriving employers of access to legal counsel and burdening their constitutional rights outweighs any potential harm to the DOL.

While there is some uncertainty surrounding how the DOL will respond, several similar challenges are circulating through the courts, and one or more of these cases will eventually be heard by the federal courts of appeals.  For the time being, this decision is a significant victory for employers, as it preserves their right to obtain sound legal advice protected from disclosure by the attorney-client privilege.