The U.S. Department of Labor (DOL) will see significant changes under the new Biden administration. The nature and degree of the changes, however, will depend heavily on how President Joe Biden fills senior roles not only at the agency but also in the White House’s domestic policy counsel. Nonetheless, many changes will take time because rescinding regulations and putting new policies in place are huge tasks for any administration.
Independent Contractor Standards Will Change
The DOL’s Wage and Hour Division (WHD) will receive special attention. The top goal will be to pull back the current administration’s independent contractor rule proposed by the division in September and set to go final by the end of the year.
The interpretation has been seen as employer-friendly, and the new administration will look to make the test harder for employers to designate workers as independent contractors. While the current administration’s rule has cleared the internal rulemaking process ahead of inauguration day, the Biden administration will have several tools to rescind or weaken its reach.
An interesting development arises, however, with the passage of California’s proposition providing independent contractor status to app-based ridesharing and delivery drivers. Although Proposition 22 would have no direct legal effect on the federal Fair Labor Standards Act (FLSA), employers will try to convince the administration to take note of the complexities associated with the change in status resulting from California’s proposition. Employers also can expect changes to the joint employer rule, which will likely make it easier for the WHD to prove joint employer status.
Overall, a push by the Biden administration to change the independent contractor standards could have a large effect on gig economy employers. The changes will likely make it more difficult to establish independent contractor status under the FLSA.
To the extent the new administration’s leaders lean toward progressive ideas, the California test under Assembly Bill 5 will be on the table. Centrists may seek a middle status, however, that classifies workers as independent contractors but allows them to not trigger employee status if they receive some form of benefits from the putative employer. In any event, as noted above, the current administration’s test is likely dead.
The changes won’t occur swiftly. The Trump administration used various mechanisms from rulemaking to opinion letters to solidify its agenda. Writing new rules and subregulatory guidance will take at least 6 to 12 months.
Moreover, the outgoing administration’s broad use of opinion letters represented a large-scale effort to solidify employer-friendly positions. The new administration won’t necessarily withdraw all opinion letters. Rather, the new leaders may take a careful approach, and some less controversial positions may remain.
OSHA Will Take Center Stage
The COVID-19 pandemic has brought workplace safety to the forefront. The Trump administration has received significant criticism over its enforcement of Occupational Safety and Health Act (OSH Act) regulations.
The new administration will take a more enforcement-minded approach to workplace safety issues. The effort may include hiring more inspectors, issuing more citations, and seeking higher penalties against employers. The Occupational Safety and Health Administration’s (OSHA) efforts, however, will face headwinds as it’ll take time to hire more inspectors and instill a more enforcement-minded culture at the agency.
Additionally, the OSH Act regulations themselves make enforcement difficult. Most coronavirus-related violations would be cited under the vague General Duty Clause requiring a workplace “free from recognized hazards.” As inspectors will take a harder line, the vague standard will present compliance challenges for employers as well as the enforcers.
OFCCP Will Reframe Its Compensation Program
The current administration doubled down on pay compensation cases and obtained large settlements with federal contractors. Notably, most of the large settlements involved technology and financial services companies. At the same time, the Office of Federal Contract Compliance Programs (OFCCP) suffered two significant losses related to its approach to enforcing pay discrimination.
The high-stakes question for the OFCCP and contractors has been whether the government could employ highly aggregated models that included employees who weren’t similarly situated and then use statistical controls to account for job similarity. The contractor community has long believed the agency can’t mix dissimilar groups.
In both cases, the administrative law judges sided with the contractor community, which represents a strong repudiation of the agency’s compensation approach. Several options exist for the agency to move forward including:
- Continuing to bring large-scale compensation cases;
- Reducing the size of the cases; or
- Referring the cases to the U.S. Department of Justice.
The new administration will likely change or withdraw the early resolution procedures directive. The directive allows the OFCCP to resolve violations with a contractor early in the review process with an agreement to monitoring for 5 years. While the agreements have resulted in large settlements for the agency, the new administration will likely take aim at the 5-year pass contractors receive on reviews.
OLMS May Bring Up Persuader Rule Again
The Office of Labor-Management Standards (OLMS) is tiny compared to the DOL’s other agencies, but it plays a key role in enforcing the reporting and election obligations for unions. In Republican administrations, the OLMS tends to increase the reporting burdens on unions while they’re usually reduced under Democratic administrations.
During the Obama administration, however, the OLMS took a higher profile with the release of its persuader rule, which required employers to disclose how much they pay their lawyers and consultants to respond to organizing efforts. A federal district court judge shot down the rule, and the current administration rescinded it in 2018. Nonetheless, as unions played a large role in the recent presidential election, a chance exists the agency will take up the rule a second time.
Ann Marie Painter, Jill L. Ripke, and Christopher Wilkinson are attorneys with Perkins Coie LLP. You can reach them at firstname.lastname@example.org, email@example.com, or firstname.lastname@example.org.