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Biden DOL Explores Redo of Obama Union-Avoidance Reporting Rule

April 28, 2021, 1:44 PM

The U.S. Labor Department is mulling a return to an Obama-era regulation that would give the public unprecedented transparency into employers’ reliance on outside consultants and attorneys to help them oppose union organizing drives.

“We are definitely looking at the ‘persuader’ rule, no question about it,” Jeffrey Freund, director of the DOL’s Office of Labor-Management Standards, said in his first interview since he was appointed on Inauguration Day.

Freund, who joined the administration fresh off a 40-year career as a prominent union-side attorney, stopped short of committing to reissuing the deeply controversial rule, acknowledging the legal hurdles such a move would encounter.

The regulation, finalized in March 2016 and then nixed by the Trump administration, would’ve expanded requirements on businesses to disclose their hiring of advisers for union-avoidance efforts. Businesses facing an organizing drive routinely tap outside consultants for advice on how to mount an anti-union campaign. Worker advocates argue this practice amounts to union-busting and that the lack of stronger disclosure requirements gives an unfair edge to well-financed corporations—such as Amazon.com Inc., which defeated an organizing effort in Bessemer, Ala., this month.

The regulation, known as the “persuader” rule in reference to activity aimed at convincing workers to reject union representation, drew strong opposition from the American Bar Association and the business lobby, and has reemerged as a legislative issue. Congressional Democrats hope to codify it into law as part of the Protecting the Right to Organize Act, a sweeping bill to overhaul labor law that faces long odds in the Senate but has been endorsed by the Biden administration.

Freund’s office is reviewing the shorter-term regulatory pathway to revisit the rule, carefully factoring in unfavorable rulings from two federal judges in 2016.

“When and if we go down the persuader-rule road again, we want to try to manage the rule, I’m sure, as well as can be managed, given what we know the department faced in 2016,” Freund said.

Freund’s interest in the Obama administration’s rulemaking was a focal point in a wide-ranging interview in which he outlined an effort to pivot the DOL subagency away from Trump-era tactics that organized labor viewed as union harassment.

Union supporters demonstrate outside of an Amazon.com Inc. fulfillment center in Bessemer, Ala., last month, prior to a unionization vote.
Photographer: Patrick T. Fallon/AFP via Getty Images

‘Went to School’

The 2016 rulemaking would have closed a loophole in federal disclosure regulations that exempt businesses from filing publicly accessible financial reports detailing their hiring of third-party labor relations advisers.

Companies now don’t need to disclose that information as long as the outside advisers don’t directly engage with workers—a broad exemption that shields a workforce’s awareness of avoidance messaging when it’s relayed to them solely by their bosses.

The rule prompted three legal challenges from Republicans, business groups, and management law firms. Many opponents echoed the ABA’s concern that airing attorney communications with employers would destroy the lawyer-client relationship. Earlier this month, the ABA, which typically adopts a neutral posture on union-management disputes, urged congressional leaders to oppose the PRO Act due to its inclusion of provisions stemming from the rule.

In one of the Obama-era lawsuits, the U.S. District Court for the Northern District of Texas issued a nationwide injunction in June 2016, halting the rule before it was enforced. The Trump administration cited that opinion in rescinding the regulation.

“We went to school” on the judicial decisions in considering options, Freund said, suggesting that those rulings don’t foreclose a new version of the rule because they were never considered by a higher-ranking appellate court.

“We don’t have anything close to a final decision by a court of competent jurisdiction,” Freund added. “By saying that I don’t mean to suggest that the district court is incompetent. It’s just, it was a district court.”

Probes of Worker Centers

In another sign of the shift at the OLMS, Freund said the prior administration’s investigations of nonprofit worker centers would come to an end.

Under former President Donald Trump, the agency initiated investigations into whether certain nonprofit worker centers, which assist workers who aren’t part of a collective bargaining group, met the definition of a labor organization. The U.S. Chamber of Commerce, the National Right to Work Committee, and some GOP lawmakers maintain that worker centers are union fronts and should be subject to the same detailed financial reporting requirements as unions.

“The investigations are ongoing. They’ve consumed a fair amount of time and energy, and they will come to a conclusion one way or the other—hopefully sooner rather than later,” Freund said when asked about the status of such investigations.

Bloomberg Law disclosed the existence of two of those investigations—one, of a Minneapolis group called CTUL, which has successfully pressured Target Corp. and other retailers to contract with unionized janitors; and the other, of the Texas Workers Defense Project, which supports low-wage immigrants in the construction industry.

In the past, the agency wouldn’t confirm or deny the existence of an investigation to the public. Its policy also was to not inform the party that an inquiry had ended in its favor. The only way a worker center would learn of a final determination would be if the agency concluded they were in fact a union and would therefore be obligated to start filing disclosures—though OLMS has never publicly disclosed having taken this step.

Freund said that because the worker center cases were made public during the previous administration, he would communicate the outcome to the groups when the investigations wrap, regardless of the determination. He said a worker center should be told when an investigation determines they won’t be considered a union for reporting purposes, so they aren’t facing doubt and the lingering specter of possible noncompliance.

Freund added that he’s considering providing clarity for worker centers by publishing guidance on activities that would meet the legal definition of a labor organization. But he wants to first conclude active cases, which would inform potential guidance.

“I don’t want to get too far out over my skis,” Freund said, “but to the extent that we can be helpful to the community at large in knowing how to organize their conduct, I think we ought to think seriously about it.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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