By Kevin Bogardus and Ben Goad - 02/12/14 06:00 AM EST
Business groups are fighting to stop an Obama administration regulation that would force companies to disclose when they employ legal consultants behind the scenes during union organizing campaigns.
The groups are up in arms about a forthcoming “persuader” rule from the Labor Department that they say could have a chilling effect on the legal world and scare firms away from representing them.
“I think the unions’ end goal here is to take the employer out of the process.”
Under current rules, employers are only required to disclose the hiring of outside firms on union elections when the consultants make direct contact with employees.
But that would change under a new Labor Department regulation due out as early as next month. First proposed in June 2011, the revised regulation would require employers to disclose any work by consultants on union election strategy.
Labor advocates allege that the consultants train supervisors how to push back on union organizers, and say firms in the “union avoidance” industry should be exposed to public scrutiny.
“It’s a sensible proposal to close a union-busting loophole that companies have been able to hide behind,” said Josh Goldstein, an AFL-CIO spokesman.
Business groups see the rule as another example of the Obama administration tipping the scales toward unions.
The National Labor Relations Board (NLRB) has just reissued a rule that would speed up union elections, which industry groups call an “ambush” election order. The enactment of that rule, coupled with more disclosure of consulting contracts, has business lobbyists fearing the worst.
“When the first ambush reg came out, it came out at the same time that the persuader reg came out. The reason is the two work together to stop an employer to make its case during an union organizing campaign,” said Randy Johnson, the Chamber of Commerce’s senior vice president for labor, immigration and employee benefits.
Union supporters say anti-organizing efforts, including ones at nonprofit groups and government contractors that might use taxpayer funds, have gone unreported. They say the public should know if companies and groups are using funds to stop an organizing drive.
“You are an employer, you hire a consultant, you can spend $3 million on a campaign where the consultant is just talking to you and laying out strategies on what need you do to stop union organizing,” said Erin Johansson, research director for Jobs With Justice, a workers rights advocacy group. “They are plotting out a whole campaign and, as long as they are not talking to any of the employees, the employer doesn’t have to disclose any of it.”
Business groups also warn the proposal’s new reporting requirements would be burdensome. The Labor Department estimates that the rule would cost filers more than $825,000 in compliance costs, but the Chamber rejects the assessment, saying the rule’s first-year cost burden on the economy would be at least $910.1 million.
Consequently, many groups are already considering going to the courts to stop the Labor Department.
“If it moves forward as it was originally proposed, we are definitely considering legal action,” said Thurman of the Associated Builders & Contractors.
Johnson said the Chamber had already retained counsel in preparation for a lawsuit, “but we have see in what’s in the final rule before making a final decision.”
The Associated Builders & Contractors lobbied lawmakers to include a rider in the omnibus spending bill that would have prevented the Labor Department from implementing the persuader rule but to no avail. Thurman said the group would request a meeting with the Office of Information and Regulatory Affairs to discuss the proposal once it comes under White House review.
The Labor Department said in late November it was on track to complete work on the regulation by next month. When the agency first proposed narrowing the statute’s exemption for consultants giving advice to employers, it argued increased disclosure is needed to protect worker rights.
“The current interpretation of ‘advice’ has resulted in significant underreporting of employer and consultant persuader agreements,” the department said at the time. “Better disclosure is critical to helping workers make informed decisions about their right to organize and bargain collectively.”
Under the draft rule, reportable activities would be expanded to include communications between employers and third-party consultants or lawyers that “directly or indirectly” involve worker persuasion, “regardless of whether or not the consultant has direct contact with workers.”
As proposed, the regulations would reverse “over 50 years of consistent interpretation” of the Labor-Management Reporting and Disclosure Act, said Michael Lotito, an employment and labor attorney and co-chairman of Littler Mendelson’s Workplace Policy Institute.
Lotito, who represents businesses, said the regulations conflict with lawyer-client privileges.
The American Bar Association, in a comment filed in September 2011, also raised “serious concerns” about the proposal. The lawyer group said the rule would have attorneys “report sensitive and confidential client information that has not previously been subject to disclosure.”
Lotito said the rule could present attorneys with a choice between reporting details about their communications with employers, which could draw reprisal from their applicable bar associations, or declining to comply and risking civil or criminal penalties.
“The lawyer is between a rock and a hard place,” Lotito said.
He said many lawyers might choose to drop that aspect of their business for fear of reprisal and argued unions only want the information to use “as part of a narrative to attack the organization.”
Johansson disagreed, saying the proposal “doesn’t prevent them [employers] from doing anything.”
“This is just reporting. … I don’t think employers are going to stop hiring law firms to stop union organizing. They will just have to report those relationships.”