The Labor Department released a long-awaited rule change Wednesday that is expected to force many business-side labor lawyers to drop the practice.
Union groups praised the decision as a blow against union-busters, while business groups slammed it as unfairly tilting the playing field in workplace organizing fights.
Dubbed the “Persuader Rule,” the change requires lawyers to publicly disclose all consulting for businesses on matters relating to union organizing, including the financial details. Previously, the consulting could be done privately, provided the lawyers only gave management legal advice and never interacted with the workers.
Labor Secretary Tom Perez said that lawyer-client confidentially should not extend to businesses resisting union-organizing drives.
“Workers should know who is behind an anti-union message. It’s a matter of basic fairness. This new rule will allow workers to know whether the messages they’re hearing are coming directly from their employer or from a paid, third-party consultant … As in all elections, more information means better decisions,” Perez said.
The rule change reinterprets the Labor Management Reporting and Disclosure Act, the main union anti-corruption law. Because the change is a reinterpretation of an existing law, the department can do it without receiving congressional approval.
Kelly Kolb, vice president for government affairs at the Retail Industry Leaders Association, said the move was little more than gift to unions.
“The Department of Labor’s rule is designed to discourage employers from taking the reasonable step of hiring outside counsel to ensure that they are complying with labor laws. Labor law is complex, and many businesses rely on the support of outside counsel to ensure that their actions during an organizing campaign comply with the morass of rules and regulations. By undermining the advice exception, [the Labor Department] is putting employers in a no-win situation where seeking the guidance they need will almost certainly be used against them by organizers.”
The change is expected to mostly affect smaller law firms where labor consulting is one of the services they provide. Those firms typically want to avoid the spotlight. Larger firms that specialize in consulting for big businesses aren’t expected to be as affected because most are engaged in enough direct contact with the workers that they were already divulging the information under the previous rule.
“The [Labor Department’s] just-released ‘Persuader Rule’ is an unprecedented intrusion into the attorney-client relationship,” said Michael Lotito, co-chairman of the Workplace Policy Institute at management-side law firm Littler Mendelson.
Perez, on the other hand, characterized the change as closing a “loophole.”
Joshua Parkhurst, a New York union-side lawyer, argued it was a reasonable change since the management-side firms typically circumvented the old rule by providing their clients with scripts to work from. “The fact that the ‘persuader’ does not directly interact with the worker should not exempt the employer from disclosure,” Parkhurst said.
The labor-backed nonprofit activist group Jobs with Justice praised the change. “This important rule will certainly improve the climate for women and men who come together for a fair return on their work. Greater transparency of union-busters has impacts for everyone who cares about employers diverting critical resources away from their mission in order to interfere with their employees’ rights.”
The Labor Department signaled that it was going to rewrite the rule in 2011, and it was initially set to be released in 2014. The new version will be officially published Thursday in the Federal Register and go into effect July 1.
The assumption among labor lawyers is that the rule was delayed because administration lawyers were trying to craft a version that could withstand legal challenges regarding its infringement of attorney-client privilege. In a 2011 letter, then-American Bar Association President William Robinson told the Labor Department that his organization could not reconcile its own professional conduct rules for lawyers with what the administration would require them to disclose.
“No rational governmental purpose is served by this overly broad requirement,” Robinson said.
