It's About To Get Harder For Companies To Hide Union-Busting

Under a new Labor Department rule, companies will have to disclose more of their dealings with union-avoidance consultants.

03/23/2016 12:01 am ET | Updated Mar 23, 2016
Molly Riley/ASSOCIATED PRESS
The Department of Labor says that between 71 to 87 percent of employers hire consultants to help manage union avoidance campaigns. "This rule will pull back the curtain on the consultants who craft the employer's message," said Labor Secretary Thomas Perez. 

A lot of U.S. companies pay top dollar just to keep labor unions out of their workplaces. It's hard to know exactly how much -- or who -- they pay, because the reporting standards aren't all that strict. But that's about to change.

On Wednesday, the Labor Department announced a final version of its contentious "persuader" rule. Persuaders are lawyers and consultants hired by companies to discourage workers from unionizing. The art -- sometimes subtle, sometimes not -- is known as "union avoidance." Unions, though, have a more derisive term for it: union-busting.

Employers are already required to report to the federal government any direct work these consultants do on their behalf -- that is, any talks or presentations the consultants personally deliver to workers. However, consultants can also advise company supervisors on what to say to workers and how to say it, thus bypassing the reporting requirements with behind-the-scenes work that doesn't have to be disclosed.

Until now. Under the new rule, employers and their contractors will have to acknowledge any indirect "persuading" that was done and the fee structure for it. For example, if a lawyer helps a company craft a video presentation that paints unionizing as a bad idea, or drafts a speech for a manager, then both parties will have to inform the agency that they had a relationship and report how much money changed hands.

In a call with reporters ahead of the rule's announcement, Labor Secretary Tom Perez said the idea behind the rule was basic transparency. If an employer's message during a union campaign is being shaped by outsiders, he said, then the employees who will be voting in the union election have a right to know that.

"Informed decisions are the best decisions," Perez said. "This rule will pull back the curtain on the consultants who craft the employer's message."

According to the Labor Department, employers have been capitalizing on a "huge loophole." The agency says that between 71 to 87 percent of employers hire consultants to help manage union avoidance campaigns, yet the agency gets "very few reports" on that work because consultants consider it exempt from reporting.

The new persuader rule has been in the works for about five years -- a fairly long time, even by the standards of federal rule-making, which can often get bogged down in seemingly endless review.

Business lobbies have opposed the rule, since employers would rather not make such disclosures. The American Bar Association has also objected to the rule on the grounds of attorney-client privilege, but the Labor Department says companies won't have to report the substance of their discussions with lawyers -- only that lawyers were consulted.

In a statement Wednesday, the Retail Industry Leaders Association, a trade lobby for large retailers, said the rule would discourage employers from taking the "reasonable step" of hiring outside consultants to deal with union drives.

"[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 group said.

Not surprisingly, unions and worker groups have pushed hard for the new rule. During the George W. Bush years, the Labor Department expanded financial reporting requirements for unions, and likewise, unions have sought to expand reporting requirements for corporations during the Obama years.

Michael Wasser, senior policy analyst at the worker group Jobs with Justice, said it's important for employees to know who's trying to sway them.

"There's an irony here. It's a standard talking point for management in any union campaign to say, 'We just want employees to know they're making an informed decision,'" Wasser said. "The reality is that under the current rule, they aren't making an informed decision, because the company isn't disclosing this third party who's making these claims and running this campaign that's influencing workers' decisions."

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