Yesterday, Cross, Gunter, Witherspoon & Galchus, P.C., joined by Associated Builders and Contractors of Arkansas and its national organization, the Arkansas State Chamber of Commerce/Associated Industries of Arkansas, the Arkansas Hospitality Association, the Coalition for a Democratic Workplace, and the National Association of Manufacturers, filed suit against the U.S. Department of Labor (DOL) to prevent enforcement of the new "Persuader Rule" regulations that were issued on March 24, 2016.
Congress passed the Labor-Management Reporting and Disclosure Act (LMRDA) in 1959 to require employers to make certain disclosures to the federal government when they hire "consultants" or "middlemen" to speak directly with their employees in an attempt to persuade them against unionization. This "Persuader Rule" has been interpreted and consistently applied for over 50 years as requiring employers and consultants to make the required disclosures only when there is direct contact between the consultant and employees. The Persuader Rule specifically exempted indirect contact and "advice" from the reporting obligations, such as instances where attorneys draft scripts for supervisors, provide union avoidance seminars, and draft certain handbook policies.
In an unprecedented move, DOL's revised Persuader Rule would require employers, their attorneys, and their consultants to file reports-not just for direct persuader activity (e.g., consultants directly talking to workers)-but also for so-called indirect persuader activities, such as those routine practices discussed above that, for over 50 years, have been exempt from disclosure. In overturning 50 years of precedent, the challenged Rule replaces clear-cut legal definitions with vague and complicated language that will drastically harm all U.S. businesses, making it difficult for employers to access legal counsel without fear of disclosure. Importantly, employers and their attorneys and consultants, if they fail to make the broad and sweeping disclosures now required under the Persuader Rule, face criminal penalties, including up to one year of prison time and fines up to $10,000.00.
In addition to invading the confidentiality afforded by the attorney-client relationship, the reporting requirements under the challenged Rule have a dangerous chilling effect on the First Amendment speech and association rights of every employer. Similarly, because it is so vague and unclear, the Rule violates an employer's right to the due process guaranteed by the Fifth Amendment of the U.S. Constitution.
For these reasons, Cross, Gunter, Witherspoon & Galchus, P.C. proudly brings this case, as counsel and as co-Plaintiff, to stop the DOL from enforcing these dangerous and unnecessary regulations. We stand united with our colleagues in the business community and will continue to zealously advocate for our clients' rights.
The lawsuit was filed in the United States District Court for the Eastern District of Arkansas and is styled as follows: Associated Builders and Contractors of Arkansas et al. v. Thomas E. Perez, Secretary of Labor, U.S. Department of Labor et al., 4:16-CV-169 (E.D. Ark.). Judge Kristine G. Baker is presiding over this case.