The Biden Administration has made it clear that it intends to reverse many of the Trump Administration’s regulatory initiatives. During his campaign Biden touted himself as a champion of labor, and his administration’s actions immediately after assuming power suggest that he intends to keep this campaign promise. This article summarizes some of the actions already taken and those contemplated by the new administration.
EXECUTIVE ORDERS. In his first week in office the Biden Administration signed 22 Executive Orders (EO’s), significantly more than his predecessors, and shows no signs of slowing the pace down. Some of those affecting employers are discussed below.
Freeze on Proposed and Pending Regulations. President Biden’s first EO called for an immediate withdrawal of administrative agency rules not yet published in Federal Register so they can be reviewed and approved by the new administration. The Administration also asked federal agencies to consider postponing the effective date of pending rules published in Federal Register for 60 days and opening a 30 public comment period.
As a result of this action, the following Trump Era workplace regulations are in jeopardy:
- The DOL’s Independent Contractor Rule: The Trump Administration’s Department of Labor (DOL) recently issued an employer-friendly rule (effective March 2021) that would have made it easier for employers to classify workers as independent contractors under the Fair Labor Standards Act using the “economic realities” test. The Biden Administration will likely dump that test in favor of the employee-friendly “ABC” test that presumes a worker is not an independent contractor unless i) the employee is free from control by the employer, both contractually as well as in practice; ii) the work is outside employer’s usual course of business; and iii) the worker is customarily engaged in an independent business. As a result of this anticipated change, many more workers who are part of the “gig economy” will be deemed employees entitled to all the benefits of the employment, and employers will take on significantly more liabilities inherent in the employer-employee relationship.
- Joint Employer Rule: In January of last year the Trump Administration’s DOL finalized a joint employer standard that made it harder to establish joint-employer status of companies using temporary employees of another employer. That rule has been challenged in several jurisdictions and one district court struck the rule down. The Biden Administration will likely abandon the defense of these challenges and revise the rule to make it far easier to meet the joint-employer standard.
- Tip-Sharing Rule: The Trump DOL’s tip-sharing rule that would allow “back of the house” workers to share in gratuities under the FLSA. The final rule prohibits management from keeping any portion of tips regardless of whether the employer takes the tip credit. Eight states and DC challenged, claiming in would lower wages for tipped workers, a situation the Biden Administration will likely seek to prevent.
EO Mandating a $15 Minimum Wage for Federal Workers. While this only impacts the federal public sector, raising the bar at the federal level will undoubtedly turn up the heat on state and local governments to follow suit.
Increased Workplace Safety During Pandemic. This EO mandates OSHA to consider whether emergency temporary standards for COVID-19, such as masks, are necessary. If deemed necessary, these new safety standards must be issued by March 15, 2021, thereby dispensing with the public comment period. In addition, OSHA must issue revised guidance to employers on workplace safety during the pandemic and launch an outreach campaign to inform workers of their rights to workplace safety.
EO Providing an Expansive Definition of “Equity”: This EO defines equity as “the consistent and systematic fair, just, and impartial treatment of all individuals,” including:
- individuals who belong to underserved communities, such as Black, Latino, Indigenous and Native American persons, Asian Americans and Pacific Islanders, and other persons of color.
- Persons identifying as LGBTQ
- Disabled persons
- Religious minorities
- Persons living in rural areas; and
- Persons otherwise affected by persistent poverty or inequality.
The EO directs all agencies to review equity within their ranks and deliver an action plan within 200 days “to address unequal barriers to opportunity.” The Administration also announced a Build Back Better by Advancing Racial Equity Across the American Economy Plan that will require “rooting out discrimination in the workplace so people can earn what they deserve, support their families, and build wealth.”
Gender Discrimination EO: Ensuring that the federal government interprets Title VII as prohibiting sexual orientation and gender identity discrimination, consistent with the US Supreme Court’s ruling last July.
Immigration: Rescinding the Trump Administration’s EO’s, Biden issued EO’s reinstating the DACA program and putting an end to travel restrictions on 13 Muslim-majority countries.
OTHER INITIATIVES. Other actions by the Biden Administration that may impact employers include the following:
Pro-Union efforts by the Administration
- Appointment of Marty Walsh, long time labor advocate, as secretary of the DOL
- Appointment of a majority of the National Labor Relations Board members and reintroduction of labor-friendly Obama-era regulations
- Support for Protect the Right to Organize (PRO) Act, which:
- Bans mandatory “captive audience” meetings by employers
- Preempts state “right to work” laws
- Mandates binding interest arbitration
- Permits secondary boycotting
- Implements a “card check” option, permitting union recognition by showing a majority of members signed authorization cards and dispensing with the traditional secret ballot
- Reinstates the “ambush election” rules
- Expands personal liability for unfair labor practices in violation of the National Labor Relations Act
- Allows a private right of action for unfair labor practices
Support of the Paycheck Fairness Act. In an effort to attain pay equity, this legislation would require employers to show the existence of bona fide job-related factors other than sex to account for any wage differential between individuals holding comparable positions. This is a significantly higher standard than currently exists under the federal Equal Pay Act, which permits the employer to point to “any factor other than sex” to justify the pay disparity. The act would also ban consideration of salary history when establishing compensation rates for new hires.
Employment Agreements. The Administration has announced its support for many pro-employee initiatives that will restrict employer’s ability to enter freely inter into employment contracts. These legislative initiatives include:
- banning employers from requiring employees to sign mandatory arbitration agreements
- prohibiting the inclusion of class-action waivers in employment agreements
- banning employee non-compete and non-solicitation agreements
12 weeks of Paid Family Leave. Similar to laws already in existence in many states, the Administration intends to champion a federal paid family leave mandate.
Increasing the salary thresholds for overtime exemptions under the FLSA. Currently, only employees making $35,568 or more can qualify for exemption from the FLSA’s overtime requirements (assuming the duties test is also met). The Obama administration proposed raising this amount to $47,476, and the Biden Administration will likely favor a similar increase.
Proposed accelerated pathway to citizenship for roughly 12 million undocumented workers. The Administration’s plan calls for:
- Expedited green card eligibility for Dreamers
- Clearing the current visa backlog by eliminating per-country visa caps
- Increasing the total annual ceiling of employment-based immigrants, with doctoral degrees in STEM exempted from the total
- Incentivizing higher wages for H-1B workers so as to not displace US workers
- Increasing penalties for employers of seasonal workers who violate labor laws
Temporary subsidies for COBRA coverage. Biden has announced a proposal for subsidized COBRA coverage through 9/30/21 with 11% tax credit for premiums. At present it is unclear whether government will pay 100% or a lesser amount.
Unemployment. The Administration will ask the DOL to consider clarifying that workers who refuse to work in unsafe conditions can still receive unemployment insurance, making it easier for employees with COVID-related absences to secure benefits.
Given the very slight Democratic majority in Congress, some of the more aggressive legislative initiatives may not be able to garner sufficient support in Congress to pass. The Lindabury team will keep you informed of further legislative and regulatory developments on the employment front as they occur.