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DOL, NLRB’s Regulation Renaissance Will Spell Trouble for American Business

November 22, 2013 J

By Casey Given

Last summer saw two major developments in labor policy that could spell trouble for American businesses come the turn of the new year. On July 18, the Senate confirmed Assistant Attorney General Thomas Perez to be the next Secretary of Labor. Famous for helping pass a living wage law in Maryland (and infamous for other schemes as well), Mr. Perez and has unleashed a litany of new rules since assuming office and has his sights set on even more.

As if that wasn’t bad enough for business, the Senate confirmed three new nominees to the National Labor Relations Board (NLRB) just 12 days after Perez’s appointment. The NLRB has been a lightning rod for controversy under the Obama administration, having issued a number of rules perceived as slanted towards union interests by the business community. Adding to the strife, the Board’s quorum was called into question in 2012 after President Obama appointed three nominees to the Board during an intrasession recess of the Senate, thereby intentionally circumnavigating the confirmation process. As a result, the validity of hundreds of the Board’s rulings over the past two years currently hinge on a Supreme Court case to be heard in January.

Regardless of the result, the newly appointed NLRB seems poised to impose a host of regulations on labor relations. Combined with the efforts of Perez’s Department of Labor (DOL), the two bureaus could deliver a one-two punch to the American economy. Two rules currently on their radar already have businesses shaking in their boots.

On Constitution Avenue, DOL is looking to finalize a rule expanding employers’ reporting requirements for seeking legal counsel related to labor issues. Under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), employers are required to disclose their dealings with labor consultants who contact their employees in attempt to persuade them whether to unionize or not. Popularly known as the “persuader rule,” LMRDA has historically only applied to consultants that contact employees so the federal government can ensure workers are not fed false information. But now under Perez’s leadership, DOL seeks to expand the persuader rule for any consultant a business seeks help for its labor relations – even if they make no communication with employees.

As it stands now, the regulation is under final review and Perez has hinted that it will likely be imposed early in the new year. If it takes effect, the expanded persuader rule would tilt collective bargaining in unions’ favor even further by discouraging businesses to be fully informed of their legal rights. After all, doing so would subject them to even more costly regulations. It’s one thing for the federal government to take an interest in ensuring American workers are not misinformed about the costs and benefits of collective bargaining. But LMRDA protects against such fraud as it stands now. Consequently, expansion of the persuader rule would only continue DOL’s regulatory stymie of American commerce.

As if that wasn’t bad enough, NLRB has another trick up its sleeve on K Street. Last May, the District Court for the District of Columbia invalidated a December 2011 rule that eliminated the requirement for workforces to wait 25-30 days before voting to unionize. Unfortunately, the rule was invalidated for procedural reasons – namely, that only two NLRB members voted to instate it, thus falling short of the required quorum of three. Fast forward a half-year later, NLRB has its sights set on re-proposing the rule now that June’s confirmations have cleared up any doubt about its quorum.

This logic behind the longstanding 25-30 day waiting period is to give both labor and management sufficient time to state their case for or against unionization, as well as to give workers sufficient time to contemplate their vote. If this “ambush election” rule had gone into effect, unions could have held elections in as little as 17 days after filing petition.

Sadly, these two rules are just the beginning of what is bound to be a tough three years for the American business community in terms of regulation.  If DOL and NLRB truly care to keep both labor and management fully informed of their rights, the two bureaus should avoid implementing the persuader and ambush election rules for the sake of fair and transparent labor relations.

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