The Department of Labor (DOL) on Wednesday finalized a long-awaited rule that will force employers to disclose outside consultants they hire to counter workers' union organizing efforts.
Under the so-called persuader rule, which was first proposed in 2011, employers will be required to report any actions, conduct or communications that are undertaken to — explicitly or implicitly, directly or indirectly — affect an employee’s decisions regarding his or her representation or collective bargaining rights.
“Workers should know who is behind an anti-union message. It’s a matter of basic fairness,” Secretary of Labor Thomas PerezThomas E. PerezClinton’s top five vice presidential picks Government social programs: Triumph of hope over evidence Labor’s 'wasteful spending and mismanagement” at Workers’ Comp MORE said in a statement.
The Labor Department said the rule will close a longstanding loophole in the Labor Management Reporting and Disclosure Act that allowed employers to hire consultants and create strategies against union-organizing campaigns — in some cases, even scripting managers’ communications with employees — without disclosing any information.
Prior to the rule, employers were only required to disclose hiring an outside firm if the consultants made direct contact with employees.
Business groups, which have long opposed the rule, were quick to blast the Labor Department's move.
The National Retail Federation (NRF) fears the new rule will have a “chilling effect” on free speech, preventing employers from speaking on labor issues or seeking legal counsel.
“DOL’s new rules would trigger reporting requirements for any communications that could even indirectly persuade workers regarding collective bargaining,” David French, the NRF’s senior vice president for government relations, said in a statement.
“NRF is concerned that the new standard will discourage employers from seeking advice of counsel in a broad swath of areas that have nothing to do with traditional persuader activities.”
The Associated Builders and Contractors said they also worry employers will be deterred from openly discussing the pros and cons of unionization with their employees.
Labor attorneys were also quick to criticize the rule on Wednesday.
Michael Lotito, who co-chairs the Workplace Policy Institute at law firm Littler Mendelson, called it an ”unprecedented intrusion into the attorney client relationship” in a statement and promised to challenge the rule in court.
“While technical in nature, the purpose will be to restrict the ability of employers, especially small employers, to obtain the kind of confidential information they need to respond to our ever changing labor laws,” he said. “It will be challenged with great vigor.”
Beth Milito, senior legal Counsel at the National Federation of Independent Business Small Business Legal Center, said the rule places attorneys in a catch-22.
“The Department of Labor would require an attorney labeled as a persuader to disclose their other clients, which is a breach of confidentiality,” she said. “They have to realize that this would make it virtually impossible for most lawyers to offer advice to business owners.”
The final rule will apply to contracts beginning on July 1.
This story was updated at 1:17 p.m.