SHRM to Congress: Throw Out the Persuader Rule

HR consultants’ business may suffer from rule

By Allen Smith, J.D. Apr 28, 2016
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Congress should bury the Labor Department’s persuader rule, which is confusing, requires the reporting of indirect communications between consultants and employees, and will lead to violations of the National Labor Relations Act, according to Sharon Sellers, SHRM-SCP, and president of SLS Consulting, headquartered in Santee, S.C.

The rule will make employers shy away from obtaining the input of HR consultants about the law, which would be an unintended consequence, she predicted during her April 27 testimony before the House Education and the Workforce Committee’s Subcommittee on Health, Employment, Labor and Pensions.

“Stringent reporting requirements may deter many employers from seeking out labor compliance information,” Sellers said, speaking on behalf of the Society for Human Resource Management (SHRM). “This is a serious concern for SHRM and its 275,000 members. That is why we support H.R. Res. 87.”

Sponsored by Rep. Bradley Byrne, R-Ala., and introduced April 15, H.R. Res. 87 would nullify the persuader rule.

Reportable Indirect Communications

The persuader rule, published in the Federal Register on March 24, requires consultants and attorneys to report to the Department of Labor (DOL) indirect as well as direct communications with employees about unions. For 50 years, only direct communications with workers had to be reported.

Reportable indirect communications may include:

  • The drafting of employers’ union-avoidance communications.
  • Training of employers’ supervisors.
  • Developing or implementing policies intended to change how employees feel about a union.

“Some employers will likely object to potentially showing up on a report and refuse to work with a consultant who provides labor consulting services,” Sellers noted. “Consultants will be placed in a challenging position to either abandon all indirect persuasion work for all clients or lose valuable clients.”

If employers receive less labor-related training, more supervisors likely will be unprepared for how to lawfully address union-organizing activity, resulting in more unfair labor practices charges, she cautioned.

When the subcommittee’s chairman, Rep. David “Phil” Roe, R-Tenn., asked Sellers why an employer would hire a consultant in the wake of this rule, Sellers said it was less likely an employer would contact consultants or labor attorneys. This is despite the fact that not seeking out answers to questions would put the employer at a disadvantage in a union campaign, Sellers observed.

Attorneys’ Concerns

HR consultants aren’t the only ones concerned about the rule; attorneys are as well.

Joseph Baumgarten, an attorney with Proskauer Rose in New York City, said that the rule won’t just affect employers facing union-organizing campaigns. It also “will fundamentally deprive unionized employers of their choice of counsel during the collective bargaining [agreement] (CBA) process,” he said in written testimony.

“To illustrate the irrational results of the rule, a lawyer can say to a client [the employer], ‘I can help you develop bargaining proposals. I can deliver those proposals for you at the bargaining table and I can explain them at the table. I can even work collaboratively with the union and its counsel to draft the collective bargaining agreement. However, although I may be the most knowledgeable person about the proposals and about the CBA, I cannot then help you write a letter to your employees explaining the basis for the proposals or urging ratification (or even suggest that such a letter be written); nor can I assist you in drafting talking points to be used when speaking to employees about what happens in the event of a work stoppage without becoming a ‘persuader’ that requires us both to report,” Baumgarten wrote.

He added that the DOL “understates the consequences of being deemed a ‘persuader’ under the rule.” Baumgarten also wrote, “Let me respond here to the department’s comment that the rule does not prohibit employers and consultants from engaging in any kind of activity—it merely requires that the activity be reported.” Lawyers may fear triggering the reporting obligation as to all of their clients, he noted. “Conversely, employers may eschew counsel for these types of communications if they have to report their agreements with counsel, as well as the fees and the details of such agreements.”

Rule’s Purpose

Jonathan Newman, an attorney with Sherman, Dunn, Cohen, Leifer & Yellig in Washington, D.C., who represents labor unions, countered that the rule would provide transparency and shed light on indirect persuasion. Up to now, as long as attorneys dealt with management, they could “slide out from scrutiny,” Newman said. The rule will “ensure employees are no longer in the dark.”

In his written testimony, Newman said the DOL rule will help inform employees that the employer has obtained a third party to orchestrate its campaign and that the message from their supervisors may not reflect the supervisors’ views. “Moreover, the persuader rule will enable employees to evaluate an employer’s claim of the alleged costs associated with union representation against the employer’s expenditures to retain a consultant to persuade employees to vote against union representation,” he wrote.

If an attorney confines him or herself to the traditional role of advice, the attorney need not file a report, Newman wrote. If the attorney acts as a labor consultant, developing and implementing the company’s anti-union strategy and campaign tactics, a report has to be filed, even if the communication is not directly intended for the employees. The rule closes the indirect communication “loophole,” he noted.

Attorney-Client Privilege

However, William Robinson III, an attorney with Frost Brown Todd in Florence, Ky., and a former president of the American Bar Association (ABA), said the rule is in conflict with the attorney-client privilege.

Robinson noted that the rule has already been challenged in several federal courts. 

But if those challenges fail, “What is certain now is that this new DOL rule will comprehensively undermine and effectively erase the time-honored purpose and historically protected value of attorney-client confidentiality,” Robinson said.

Roe introduced into the hearing record an ABA letter opposing the final persuader rule.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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