DOL Persuader Rule Permanently Blocked By Texas Judge

November 17, 2016Articles

A federal judge in Texas has issued a permanent injunction holding that the Obama administration’s so-called “Persuader Rule” is unlawful and unenforceable. In an order issued Wednesday, U.S. District Judge Sam Cummings of the Northern District of Texas granted the permanent injunction and a motion for summary judgment by plaintiffs challenging the rule. The lawsuit was brought in March by the National Federation of Independent Businesses and other business trade groups alleging the Persuader Rule violated the First and Fifth amendments, the Administrative Procedure Act, the Labor-Management Reporting and Disclosure Act (LMRDA) and the Regulatory Flexibility Act. Texas and nine other states later intervened in the case. The Persuader Rule, if implemented, would require reports from employers and their advisors, including lawyers, about the types of services they offered and amount of fees charged. The requirements would be added to duties already imposed under the federal Labor Management Reporting and Disclosure Act.

The Persuader Rule was halted by a preliminary injunction in June, which is currently on appeal to the 5th Circuit. In the November 16 order, Judge Cummings rejected the government’s motion to set aside a preliminary injunction from an earlier ruling, holding that, “The court is of the opinion that the Department of Labor’s persuader advice exemption rule … should be held unlawful and set aside.” The ruling further noted that, “The court’s preliminary injunction preventing the implementation of the rule should be converted into a permanent injunction with nationwide effect.”

If the Fifth Circuit has not ruled on the interlocutory appeal prior to January 2017, it is likely that the Trump administration will withdraw the appeal of the preliminary injunction ruling and allow Judge Cummings’ permanent injunction to stand, thus invalidating the rule.

Contact your Dinsmore attorney with questions on the Persuader Rule.