By Nelson Cary and Cory Catignani
Challenges to the Department of Labor’s (“DOL”) new persuader rule have reached a critical stage. Parties opposing the rule, including industry associations and law firms, have asked courts in three separate lawsuits to stop the DOL from enforcing the rule while the courts determine whether the rule is invalid. Several states, as well as the U.S. Chamber of Commerce, Employment Law Alliance, and Washington Legal Foundation, have filed supporting briefs urging the courts to stop enforcement of the rule. DOL responded, making arguments that largely mirror its positions set forth in the final rule.
Courts in Minnesota and Arkansas have held hearings on the parties’ arguments of whether enforcement of the rule should be delayed. Another hearing is scheduled in Texas federal court for June 20, 2016.
If the challenges are unsuccessful, all employer-consultant agreements and arrangements for so called “persuader activities” entered into on or after July 1, 2016, will be subject to the new disclosure requirements under the Labor-Management Reporting and Disclosure Act (“LMRDA”). It is possible that the courts could issue opposite rulings, resulting in the LMRDA being enforceable in some jurisdictions and delayed in others. Regardless of how the courts rule, we can expect further legal challenges to this controversial rule.
Stay tuned to this blog for additional developments on this and other topics.