Labor Department Defends Expansion Of “Persuader” Rule

Date: May 03, 2016 Last Edit: May 10, 2016

Business Groups Suing Department For Mandating Expansion Of Disclosures

The Labor Department recently issued its final rule expanding the scope of persons and activities covered by the so-called “persuader” rule. The changes mean that employers of all sizes along with any consultants that they hire must “file reports not only for direct persuader activities – consultants talking to workers – but also for indirect persuader activities – consultants scripting what managers and supervisors say to workers.” NFIB objects to the changes and has filed suit in Texas, citing the rule as unconstitutional. Additional business groups have filed a suit in Federal court in Little Rock, Arkansas. The Arkansas Democrat Gazette reports that the Labor Department last week issued a 64-page response to the suit defending the expansion. In its response the Labor Department said the rule “requires reporting and disclosure of information under certain circumstances, but does not prohibit or require any particular behavior,” and therefore is not, as business groups argue, a violation of business owners’ First Amendment rights or a violation of attorney-client privilege. Similar suits were filed in other states, the Gazette reports.

What Happens Next

The Labor Department said the rule was set to take effect April 25, but would only apply to any “arrangements, agreements, and payments made on or after July 1, 2016.” In the Arkansas case, Judge Kristine Baker has scheduled a hearing for May 9 in order to consider business groups’ request for an injunction blocking implementation of the rule pending the outcome of litigation.

What This Means For Small Businesses

Small businesses bear the brunt of time and costs associated with new regulations like the so-called “persuader” rule. In a recent press release discussing NFIB’s lawsuit, NFIB Small Business Legal Center Executive Director Karen Harned explained, “Unions pay people whose full-time job is to organize workers. Small employers have businesses to run. They don’t have in-house lawyers or compliance officers to guide them through the process or navigate the complicated rules governing union organizing.”

Additional Reading

Law 360 examined the potential outcomes of the Labor Department’s attempt to expand the scope of the “persuader” rule.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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