Persuader Rule Challenge Moves Forward in House

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By Chris Opfer

May 18 — Republicans' largely symbolic bid to stop the Labor Department's “persuader” rule moved forward May 18, as a House committee approved a resolution (H.J.Res. 87) challenging the controversial regulation.

The Committee on Education and the Workforce voted 21-10 along party lines to advance the resolution. It would stop the rule (RIN 1245-AA03), which the Labor Department finalized in March (56 DLR AA-1, 3/23/16), from going into effect pursuant to the Congressional Review Act.

The persuader rule has drawn the ire of the business community, management-side lawyers and congressional Republicans because it requires employers to disclose information about attorneys and consultants hired to sway workers against unionization. Opponents say those new obligations threaten attorney-client privilege by extending to activities that go beyond advice, even if the third party doesn't have direct contact with workers.

“The Obama administration, at its very end, is working around Congress and unilaterally rewriting the law,” resolution sponsor Rep. Bradley Byrne (R-Ala.) said during the session to mark up the measure. “The invasive and costly requirements under this new rule will severely limit the ability of small businesses in Alabama and across the country to get the legal advice they need and deserve.”

The resolution is largely symbolic; it isn't likely to attract the Democratic support needed to overcome a filibuster in the Senate, and President Barack Obama is nearly certain to veto the resolution if it reaches his desk.

Legal Challenges Pending

Opponents' best bet to slow down or stop the rule is probably through the courts. Legal challenges to the rule are already pending in Minnesota, Arkansas and Texas.

A number of law firms are alleging in the Minnesota lawsuit that the new rule infringes on their duty to protect business clients' privileged or confidential information (Labnet Inc. v. Perez, D. Minn. , No. 16-cv-844) (89 DLR A-9, 5/9/16). They say the DOL's interpretation of the Labor-Management Reporting and Disclosure Act violates the law's plain text by expanding the scope of activity considered “advice.”

Businesses and industry groups argue similarly in the Arkansas litigation that the Labor Department's interpretation runs counter to the LMRDA and is “arbitrary and capricious” under the Administrative Procedure Act (Associated Builders and Contractors of Ark. v. Perez, E.D. Ark., No. 16-cv-169) and Texas (Nat'l Fed'n of Independent Bus. v. Perez, N.D. Tex., No. 16-cv-66) (79 DLR A-8, 4/25/16).

The rule's supporters, including the committee's ranking Democrat Bobby Scott (Va.), said during the committee markup that it simply gives workers better information in deciding whether to form a union.

“The persuader rule is about transparency,” Scott said. “Thanks to the rule, the curtain will be pulled back and working men and women will be able to see their employers' arrangements with union avoidance consultants.”

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com