Texas, 9 other states, join lawsuit against Department of Labor

By Jamie Kelly | May 27, 2016

LUBBOCK—A federal judge has allowed a coalition of 10 states, including Texas, to join a lawsuit filed by five business-rights organizations against the U.S. Department of Labor (DOL) opposing the DOL’s new interpretation of a law that would require businesses to disclose contacts with attorneys regarding union organization.

In a statement issued after the judge ruled the states could intervene and join the case, Texas Attorney General Ken Paxton decried overreach by the federal government.

“This is yet another example of the Obama administration sticking its nose where the federal government doesn’t belong and threatening the ability of small business owners to prosper, grow and create new jobs,” Paxton said

In March, the National Federation of Independent Business, the Texas Association of Business, the Lubbock Chamber of Commerce, the National Association of Home Builders and the Texas Association of Builders filed suit against the DOL for its new rule regarding so called “indirect persuaders,” meaning consultants who offer companies and managers plans, scripted conversations or other materials regarding employee unionization campaigns, but who don’t have direct contact with employees.

The rule is a stricter interpretation of the 1959 Labor-Management Reporting and Disclosure Act (LMRDA). The DOL has long required companies to report the work of any direct persuaders—those who come into contact with employees directly. The law includes an exemption for advice from consultants, and the DOL contended in a March summary that the exemption had been construed too broadly, allowing employers to keep private work with consultants who led seminars about countering union organization, gave managers materials about organizing to be given to employees and other actions.

The plaintiffs contend that the DOL’s new rule runs counter to exemptions in the law, that the DOL is improperly trying to amend the law without involving Congress, and that because it would require them to disclose work with attorneys it also violates the rights of states to regulate attorney-client privilege. Other claims include violations of First Amendment free-speech rights and Fifth Amendment due process rights.

In seeking to intervene and join the suit, the coalition of states, led by Paxton and Alabama Attorney General Leslie Rutledge, also argued that the DOL’s new rule improperly usurps the rights of states to regulate the practice of law. Congress never mentioned that the law overrides or preempts those rights, the states argued in their complaint, and thus the DOL overstepped its jurisdiction with the new rule.

“(T)he new interpretation and final rule invades, by its very language, confidential communications between an employer-client and its attorney, including circumstances where the attorney does not, in any way, communicate directly to employees or employee representatives,” the complaint filed by the states reads. “This imposes upon an attorney’s well-grounded duties of loyalty and confidentiality, and can impair the attorney-client and work-product privileges.”

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Organizations in this Story

National Federation of Independent Business Texas Office of the Attorney General U.S. Department of Labor

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