The Labor Department announced Thursday night that it was taking steps to reverse an Obama-era rule requiring companies to disclose their initial contacts with outside consultants on how to respond to unionizing efforts.
The regulation, known as “the persuader rule,” has yet to take effect because of ongoing litigation. But the move to take new public comment on it marks a victory for business groups and a setback for organized labor. It also underscores the extent to which the department is starting to shift course under new Labor Secretary Alexander Acosta.
The regulation, which was finalized in March 2016, would require companies to report any “actions, conduct or communications” they’ve pursued to “affect an employee's decisions regarding his or her representation or collective bargaining rights.” The U.S. District Court for the Northern District of Texas issued a nationwide permanent injunction against the rule in November. And on Monday the Labor Department will publish a Notice of Proposed Rulemaking that will take public comment on rescinding the rule altogether.
Under the 1959 Labor Management Reporting and Disclosure Act, employers only need to report their contacts with outside groups during union organizing efforts if these consultants contact employees directly. But most never do such direct outreach, since that is often less effective than having a company's managers speak to workers themselves.
In the department’s online notice, officials wrote that a number of factors prompted them to reassess the rule. These included conflicting court interpretations of the issue, the need to conduct further analysis of the statute and assess the impact on firms and attorneys seeking legal assistance, and the “resource constraints” the department already faces when it comes to policing employers.
“Manufacturers are pleased the administration is working with us to address this harmful regulation,” Rosario Palmieri, vice president for labor, legal and regulatory policy at the National Association of Manufacturers, said in a statement Friday.
In an interview earlier this year, Palmieri said it was unfair to make an employer disclose when it “seeks advice from an association or law firm on union organizing.” He added, "The old standard was unless you hired a law firm, consultant or trade association, you didn’t have to report it."
But Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, said Friday that the old standard “had a loophole that you can drive a truck through” because outside firms focus on providing strategic advice. Noting that such consultants operated openly rather than behind the scenes in the late 1950s, she said, “The landscape has evolved, and so in a fully functioning government, those regulations should catch up with a changing landscape.”
Shierholz, who served as the Labor Department's chief economist from 2014 to 2017, said that “the primary reason” that the average median wage in the United States has risen less than 7 percent in the last four decades is "because of the decline of unions." Reversing this regulation, she said, would further contribute to that decline.
AFL-CIO spokesman Josh Goldstein also criticized the proposal, saying in a statement, “Corporate CEOs may not like people knowing who they’re paying to script their union-busting, but working people do.”