LUBBOCK, Texas (CN) — Ten states cannot block a U.S. Department of Labor rule that requires employers to reveal names of anti-union consultants, because the new rule does not violate attorney-client privilege, the Labor Department says.
Effective in April, the Labor Department's "persuader rule" under the Labor-Management Reporting and Disclosure Act requires employers to report the hiring of consultants - who are often attorneys - aimed at dissuading employees from organizing.
Five business groups sued the Labor Department in Federal Court in April, claiming their members will not be able to get confidential legal advice and that their right to communicate with employees about unions will be impeded.
They say the law for decades exempted consultants from being reported if they have no direct contact with employees and the employer is free to take or reject their recommendations.
Led by Texas, 10 states intervened on the plaintiffs' behalf last month. Attorney General Ken Paxton said the rule change makes it "more difficult and expensive" for small businesses to get legal advice.
The states contend they alone have the "absolute authority" to regulate the practice of law and that this is a case of federal overreach, in violation of the Tenth Amendment.
On June 9, the Labor Department filed a brief in opposition to Texas' request for a preliminary injunction, saying the rule is "consistent with traditional protections" for attorney-client privilege.
"Additionally, intervenors fail to show that the rule conflicts with any of their laws regarding the confidentiality of information related to an attorney's representation of a client," the 25-page brief states. "Rather, the law of each of the ten states either expressly or implicitly permits disclosure of such information to the extent necessary to comply with another law, such as the rule."
The Labor Department cites Fifth Circuit rulings that have "repeatedly rejected attempts to extend the traditional protections afforded to privileged attorney-client communications to cover information not traditionally considered privileged, such as the basic fact of legal representations or the name of a client."
It disputes the states' federal overreach argument, saying the rule does not violate the Tenth Amendment because "it does not commandeer states or state officials to administer" federal programs.
"Rather, the rule only requires covered private entities to disclose information under prescribed circumstances," the brief states.
"The agency's mission, and the public interest, would be thwarted if intervenors' request for a preliminary injunction were granted," the Department of Labor says.
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