House Panel Addresses Labor Department's Persuader Rule

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Tyrone Richardson

April 27 — Lawyers and human resources consultants told a House Education and the Workforce subcommittee April 27 that the Labor Department's persuader rule could chill free speech and leave workers less informed about union activities.

The two hours of testimony followed Rep. Bradley Byrne (R-Ala.), a member of the House Committee on Education and the Workforce, submitting a joint resolution April 15 calling for a Congressional Review Act challenge of the DOL rule (73 DLR A-9, 4/15/16).

The rule, which took effect April 25, expands the reporting requirements under Section 203(b) of the Labor-Management Reporting and Disclosure Act.

That includes mandating an employer to disclose the hiring of a third-party attorney or other consultant to prevent its employees from organizing, if the consultant engages in persuader activities that go beyond the plain meaning of advice. Disclosure is mandated even if the consultant has no direct contact with the workers (56 DLR AA-1, 3/23/16).

The rule applies to agreements made on or after July 1. It has prompted several law firms and industry advocates to file lawsuits to block it (79 DLR A-8, 4/25/16).

When the rule was unveiled in March, Secretary of Labor Thomas E. Perez said it “pulls back the curtain” on union-busting activity.

Some management lawyers and advocates for employers have criticized the rule, dubbing it one-sided and the latest effort to tilt policies in favor of unions. They say its effect is compounded by other new rules, such as shortened union election processes (37 DLR A-13, 2/25/16).

The April 27 subcommittee hearing included testimony from Joseph Baumgarten, a labor lawyer with Proskauer Rose LLP; Wm. T. (Bill) Robinson III, a lawyer with Frost Brown Todd LLC and a former president of the American Bar Association; Jonathan Newman, a lawyer with Sherman, Dunn, Cohen, Leifer & Yellig P.C.; and Sharon Sellers, who testified for the 275,000-member Society for Human Resource Management.

Another Attack on Employers?

Rep. David P. Roe (R-Tenn.), the subcommittee's chair, touted the importance of the testimony, saying the rule could encroach on attorney-client privileges. He said the rule is the Obama administration's latest attack on employers.

“This new regulatory scheme may boost union dues, but will do absolutely nothing to boost our economy or expand opportunities for the middle class,” he said. “Under the guise of promoting fair and democratic union elections, the persuader rule upends half a century of labor policy by changing the interpretation of the well-established advice exception of the Labor Management Reporting and Disclosure Act.”

But Rep. Jared Polis (D-Colo.), ranking member of the committee, argued that the persuader rule was needed to help “level the playing field” in organizing and collective bargaining. He also held up a large stack of papers required to be filed by unions, compared with a few pages to be filed by employers.

Polis said the persuader rule addresses a loophole in the interpretation of the LMRDA, which led to employers only reporting direct persuader activities, such as when a consultant or lawyer directly addressed employees.

“Employees should be able to know who is behind the propaganda given to them during union organizing efforts,” Polis said. “Under the final persuader rule, the curtain will be pulled back, and workers will be able to learn how much money their employer is spending on outside union-avoidance consultants, just as employers can already examine the expenditures of unions and their consultants in their organizing efforts.”

Silence Employer Speech?

Baumgarten criticized the rule as being too vague. He also said it could make companies unprepared for union actions, particularly small companies that usually don't employ in-house counsel. That could result in employers battling unions without proper advice and perhaps violating labor laws.

“It will also, without doubt, result in many employers declining to ask for such advice,” he said. “By thus chilling employers’ free speech, the rule will preclude employees from hearing the ‘other side' of the story,” he said. “As a result, the employees will be deprived of an opportunity to discover their employer’s views, and they will be less informed about the important choices they face—be it during union organizing or during the ratification process.”

Sellers said the vagueness of the rule could have some of SHRM's members forced to over-disclose information just to avoid being in violation.

Sellers is president of SLS Consulting LLC in Santee, S.C.

“I, for example, will either have to report my services or choose not to serve my clients,” she said. “In addition, some employers will likely avoid the reporting obligation by deciding to not train on labor relations, which will result in a significant disservice to the managers within the organization.”

Persuader Called ‘Transparency Rule.'

Newman lauded the persuader rule as a “transparency rule” that forces companies to clarify if their talking points have been sculpted by an outside consultant. He also argued that the rule does not affect attorney-client privilege because it requires disclosure of an activity but not specific content.

“It does not limit or prohibit the activities of labor consultants, but instead ensures that, consistent with the LMRDA, indirect persuader activity is reported and transparent,” he said. “As Justice Brandeis famously said, ‘sunlight is said to be the best of disinfectants; electric light the most efficient policeman.' ”

Robinson cautioned that the new rule gives the DOL authority to delve into confidential conversations between an employer and its attorney if it deems the discussions to be persuader activity.

Byrne said the focus of the rule is to silence employers from speaking to their employees.

“Unions don't want employers talking to employees about this, and who loses in that environment—employees,” he said. When unions organize, they only tell employees “the good parts of what they do, and they never tell the employees the other side of the story—never,” he said.

Byrne added that it's the responsibility of the employer to talk about the other aspects of having a union, such as the potential to have no voice regarding union dues or going on strike.

If the employer can't get legal advice to know what to tell employees, “then the employer is not going to say anything,” Byrne said, and that's what the unions want with this rule—“for employers to say nothing.”

To contact the reporter on this story: Tyrone Richardson in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Request Labor & Employment on Bloomberg Law