Business & Lobbying

Union ‘persuader’ rule to offer rare look inside DC consulting


A new rule issued by the Obama administration is cracking open the door, ever so slightly, to greater disclosure of advocacy efforts in Washington.

The Labor Department finalized the union “persuader” rule on Wednesday, requiring third-party lawyers and outside consultants to disclose when they are paid to advise businesses on resisting union-organizing campaigns. The rule takes effect on July 1.

{mosads}The rule covers activities like conducting union-avoidance seminars, providing materials for employers to distribute to workers and writing talking points. 

“I suppose this new rule gets the camel’s nose under the tent in expanding disclosure for consultant activity outside the lobbying realm,” said Kenneth Gross, the head of the political law practice at Skadden, Arps, Slate, Meagher & Flom. 

“That having been said, the new labor rule relates to a specific substantive area and does not mean we are going to see a rash of these types of disclosure requirements throughout the administration,” he added.

Still, the incremental move toward disclosure by consultants — even in the narrow context — is significant.

Registered lobbyists in Washington often lament that while their activities are heavily regulated, other professionals in the advocacy industry do similar work without any disclosure requirements at all.

Craig Holman, a lobbyist at public interest group Public Citizen, says the Labor Department’s persuader rule could show the value in expanding advocacy disclosure beyond registered lobbyists.

It “has relevance to the utility of disclosure” that’s currently required under the Lobbying Disclosure Act, which sets the legal definition of what lobbying and lobbyists are, Holman said.

He pointed to a 2011 proposal from an American Bar Association Task Force that recommended expanding federal laws to cover the disclosure of other paid activities that support lobbying campaigns — including polling, strategic advice and public relations work.

Holman and Thomas Susman, the director of the governmental affairs at the American Bar Association, have been on Capitol Hill to find lawmakers willing to turn the proposal into legislation. 

While many observers say a major overhaul of lobbying laws is unlikely to happen without a major scandal, election-year rhetoric about K Street could propel the issues to the forefront.

The Labor Department has no specific threshold for what will trigger disclosure under the new rule — for example, a number of contacts or size of the workforce of the employer — but the activity must have an “object to persuade” one or more employees about joining or forming a union.

A version of the persuader rule has been around for decades, but employers and counsel had only been forced to disclose their relationship when consultants advocated directly to employees. 

Copies of the disclosure forms appear on the Labor Department’s website, available to search by consultant or firm in a drop-down menu. 

A study cited by the Labor Department says that 71 percent to 87 percent of employers “hire persuaders when faced with a union organizing campaign, with most of these agreements not currently being reported.” 

Businesses are incensed by the regulatory effort, one lawyer says, because the rule pries into internal corporate affairs. 

“This [rule] gets into the heart of business matters, as opposed to maybe some more government-facing advocacy,” said Jason Abel, an of counsel at Steptoe & Johnson that handles political law.

Other lobbying requirements aim to disclose communications between policymakers on Capitol Hill and in the executive branch, rather than between private interests.

“This [rule deals with] private engagements, and that’s a very big difference,” Abel said. “That’s why you see some rather significant concern from business.”

The rule has already drawn threats of lawsuits from powerful groups, including the U.S. Chamber of Commerce, the International Franchise Association and the National Association of Manufacturers, which say that it violates an employer’s First Amendment free-speech rights.

The American Bar Association is reportedly concerned that the rule could violate attorney-client privilege. The Labor Department, however, denies that charge. 

Holman, of Public Citizen, said that the rule is also likely to survive legal challenges arguing that it prohibits an employer’s ability to exercise free speech.

“This should certainly be able to withstand a First Amendment challenge. It is simple disclosure of paid consultants directly involved in a specific union organizing campaign,” he said. 

“The notion that lawyers have a right of absolute confidentiality in conducting union persuader activities is no more valid than the argument that lawyers have a right of confidentiality when conducting lobbying activities.”

Rep. John Kline (R-Minn.), the chairman of the House Education and Workforce Committee, said the rule is unfair because it does not address disclosure on similar items for unions. 

However, unions with an annual income of $250,000 or more are already required to disclose any payments $5,000 or more to a single entity, including law firms and consultants. The information needed includes the name of the recipient, the amount paid and the purpose of the payment. 

For the larger unions, these annual reports — which also disclose payments to officers and employees — can run into the hundreds.

Rick Berman, the president of Berman & Co., called the new Labor Department rule a “gift to unions from the Labor Department.” 

“This is something that isn’t designed to give employees information, it’s designed to give union leadership information,” said Berman, who also serves as the executive director of the Center for Union Facts, a group critical of union leaders.  

The rule’s intent is to “chill relationships between employers and their consultants,” he said.

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