Commentary

Court Liberates Employers from Red Tape, Strikes Down Another Unlawful Labor Rule

By Trey Kovacs | December 14, 2016 | 11:22am EST
President Obama listens as Labor Secretary Thomas Perez, right, speaks during a conversation at the White House Summit on Worker Voice in 2015. (AP Photo/Andrew Harnik)

On December 12, 2016, the federal Northern District Court of Texas put the final nail in the coffin of the Department of Labor’s misguided persuader rule. The lawsuit brought by the National Federation of Independent Business argued that the rule violated free speech and undermined attorney-client privilege. Thankfully, the Court agreed and set aside the rule as unlawful in a November ruling. 

In short, the persuader rule imposed onerous reporting and public disclosure requirements on employers that contract with labor relations consultants for advice on how to respond to union organizing campaigns. Previously, employers only had to disclose hiring labor consultants when they directly come into contact with employees.

Small to mid-size employers would bear the brunt of the harm from the rule. These companies are far less likely to have inside-counsel to guide them through the dos and don’ts of what actions an employer may take during a union organizing campaign. And legal counsel during an organizing campaign is even more necessary now because of the recent regulatory changes made by the National Labor Relations Board that impose extremely short deadlines to file motions during union elections.

With less access to outside counsel – which was a certainty because many labor law firms had already claimed they would refuse to supply their services that would trigger reporting requirements as stated in the Judge’s order – small businesses would have a difficult time achieving compliance with the new union election rules.

Further, the rule added to the already huge regulatory costs imposed by labor agencies. Research from the National Association of Manufacturers estimates that labor regulations imposed $80 billion in costs and over 400 million paperwork hours on employers. Regulation Rodeo, a project of the American Action Forum, pegs the cost of the persuader rule at $1.2 million annually and adds over 10,000 paperwork burden hours.

In the upcoming year, the Trump administration and Congress have the opportunity to pare back other burdensome labor rules that do more harm than good, which the court’s haven’t got to yet.

Moreover, they are in luck. The Competitive Enterprise Institute recently released its Agenda for Congress that provides a roadmap to liberate workers and employers from unnecessary red tape. 

Trey Kovacs is a policy analyst with the Competitive Enterprise Institute, a public policy non-profit group in Washington, D.C.

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