Mark Pulliam Nov. 2, 2016, 10:59am


This column first appeared Nov. 2 on Library of Law and Liberty.

In prior posts (here and here), I looked at the pro-union agenda of the Obama administration’s National Labor Relations Board, and the anti-employer policies undertaken by the Equal Employment Opportunity Commission, Occupational Safety and Health Administration, and Department of Labor. The leadership of the Department by Thomas Perez deserves a closer look, for Secretary Perez has brazenly promoted the objectives of organized labor at the expense of the rule of law.

This is about what was expected of Perez, who, as head of the Civil Rights Division of Eric Holder’s Justice Department, oversaw—among other things—the dismissal of charges of voter intimidation by the militant New Black Panther Party.

While at Justice, this longtime advocate of “disparate impact” theory (treating random statistical imbalances the same as intentional discrimination) also worked behind the scenes to induce the city of St. Paul, Minnesota to drop an appeal pending before the U.S. Supreme Court in a Fair Housing Act case because Perez feared (incorrectly, it turns out) that the Court would rule that disparate impact did not apply in such cases. In exchange, Perez secured the agreement of Justice officials not to intervene in a pending whistleblower case against St. Paul under the False Claims Act. Controversy regarding thissordid quid pro quo did not prevent him from being confirmed in 2013 as Hilda Solis’ successor as Secretary of Labor—although the House Oversight Committee concluded that Perez “manipulated justice and ignored the rule of law.”

Two of Perez’s top initiatives at Labor have been nefarious schemes to assist labor unions in their organizing efforts. The first, a DOL guidance issued to implement an Executive Order misleadingly entitled “Fair Pay and Safe Workplaces” (No. 13673), effectively makes companies ineligible for federal government contracts if they are merely alleged to have violated various employment laws, including the National Labor Relations Act. If a company is named in such an administrative proceeding, non-final “notices” and “complaints” are treated as “administrative merits determinations” for purposes of disclosure by a bidder seeking a federal contract.

By way of example, if an employer targeted by a union-organizing campaign lawfully resists unionization but is the subject an “unfair labor practice” (ULP) charge (which unions routinely file during organizing campaigns) for which a regional director of the NLRB issues a complaint, the ULP must be disclosed by the employer as part of a contract bid—and must do so even if the ULP is unrelated to the federal contract, and even if the ULP proceedings have not yet run their course. The DOL guidance deems a mere agency accusation—prior to a hearing!—to be an “administrative merits determination”! Depending on the number and severity of alleged violations, the employer can be disqualified as a contract bidder. The apparent goal of this scheme is to blacklist employers who resist unionization, by vastly increasing unions’ leverage associated with filing unmeritorious ULP (and other administrative) charges.

When employers raised due process objections to treating non-final notices as “merits determinations,” Labor brusquely disregarded them:

[A] narrower definition of administrative merits determination would … exclude all those initial agency determinations that a contractor is actively contesting. Excluding these determinations would in many cases result in a particularly long delay between the prohibited conduct and the obligation to disclose. For example, contested OSHA citations frequently take years to become final. In the interim, a contractor with many OSHA citations could secure Federal contracts without any consideration of those citations. (Emphases added.)

So much for the presumption of innocence. As reported in the Wall Street Journal, a federal judge in Texas recently enjoined this outrageous guidance on the grounds that it constitutes a denial of due process.

As egregious as Labor’s “blacklisting rule” is, the Department’s recent amendments to the so-called “Persuader Rule” are even worse. As part of the Landrum-Griffin Act in 1959, federal law requires consultants and contractors to publicly disclose their “persuader” activities, which means work done for an employer to influence its employees’ decision whether or not to join a union. “Persuaders” were depicted as shadowy “management-hired labor spies and undisclosed middlemen who engaged in espionage and deceptive persuasion.”[1]

The statute, however, specifically exempts from the disclosure obligation any person who merely “give[s] advice to such employer” and for “any information . . . lawfully communicated to [an] attorney by any of his clients in the course of a legitimate attorney-client relationship.”[2] This understanding—that “persuader” disclosure exempted attorneys who did not directly interact with employees—went unchanged for over 50 years, until the Obama administration.

Labor has issued hotly contested regulations that directly contradict the statutory language and require employers to disclose the existence and content of attorney-client communications if a lawyer gives advice to an employer regarding how to respond to a union organizing campaign, even if the lawyer never had any contact or communications with the employer’s employees. This is an astonishing assault on the attorney-client relationship, and a blatant attempt to inhibit employers’ ability to oppose union organizing campaigns.

Not surprisingly, the new “persuader” regulations have generated substantial controversy. In the words of a former Solicitor of Labor:

The new rule has drawn criticism from across the legal and political spectrum, from the U.S. Chamber of Commerce to the attorneys general of ten states (who intervened in the Texas case) to the American Bar Association (ABA). And with good reason: The rule is a trifecta of executive overreach, simultaneously violating separation of powers, disrupting the federal–state balance, and abridging free-speech and due-process rights under the First and Fifth Amendments.

And not only have the persuader regulations been challenged in court, on June 27, 2016, a federal district court in Texas preliminarily enjoined them—on a nationwide basis. Even though the case involves federal labor law, Texas Attorney General Ken Paxton (and the attorneys general of nine other states) intervened in the case, brought by the National Federation of Independent Business and other business groups, because states have a sovereign interest in regulating the practice of law within their borders, including the preservation of the attorney-client relationship.

The text and legislative history of the Landrum-Griffin Act (sometimes referred to as the Labor Management Reporting and Disclosure Act) make unmistakably clear that “persuader activities” subject to disclosure do not include ordinary legal advice provided to employers. The new regulations contemptuously disregard the clear meaning of the statute.

For over 50 years, beginning with President Kennedy’s Solicitor of Labor, Charles Donahue, Democratic and Republican administrations alike have honored the express terms of the statute. The Labor Department’s LMDRA Interpretive Manual, incorporating Donahue’s interpretation, states:

We have concluded that such activity can reasonably be regarded as a form of written advice where it is carried out as part of a bona fide undertaking which contemplates the furnishing of advice to an employer. Consequently, such activity in itself will not ordinarily require reporting unless there is some indication that the underlying motive is not to advise the employer. In a situation where the employer is free to accept or reject the written material prepared for him and there is no indication that the middleman is operating under a deceptive arrangement with the employer, the fact that the middleman drafts the material in its entirety will not in itself generally be sufficient to require a report. (Emphasis added.)

This interpretation was upheld following judicial review, in an opinion written by Justice Ruth Bader Ginsburg when she served on the D.C. Circuit.[3]

Congress has not changed the LMDRA. Organized labor, tired of losing union elections, desires to tilt the playing field in its favor. Obama’s Labor Department compliantly obliged, repudiating over half a century of consistent federal policy, and in the process violating the legal profession’s duties of confidentiality, loyalty, and candor.

The 10 states that intervened in NFIB v. Perez chillingly suggested in their motion for summary judgment that “Perhaps curtailing the ability of employers to seek advice from attorneys was the intent of DOL all along.”

The arrogance of the Obama administration has never been more manifest. Its abuse of executive power is so unremitting that David Bernstein’s masterful catalog of its misdeeds, Lawless, comprehensive when released in 2015, already needs a sequel.

[1] Wirtz v. Fowler, 372 F.2d 315, 324 (5th Cir. 1966), overruled on other grounds, Price v. Wirtz, 412 F.2d 647, 648 & n.3 (5th Cir. 1969) (en banc).

[2] 29 U.S.C. sections 433(c), 434.

[3] Int’l Union, United Auto., Aerospace & Agr. Implement Workers of Am. v. Dole, 869 F.2d 616, 618–20 (D.C. Cir. 1989).

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