From JDSupra, Michael Lotito and James Paretti, Jr. discuss what to expect in a Biden administration. They say its too early to tell if the Department of Labor’s new standard for classifying independent contractors will be challenged or repealed by Congress under the Congressional Review Act (CRA). Michael and James write:
In November 2020, Littler’s Workplace Policy Institute (WPI) published its Election Report, a deep dive into the myriad labor and employment policy questions potentially in play depending on the outcome of the election. The detailed report explored possible outcomes depending upon the results of the presidential election and congressional races. With the inauguration of President-elect Joseph R. Biden, Jr. imminent and Democrats now poised to take control of the Senate, WPI offers the following insights on what may be expected on the labor and employment front in the weeks and months to come.
A Historically Closely Divided Congress
As predicted in our Election Report, the question of which party would control Congress (or whether control would be different in the House and Senate) was not clear for weeks. In the immediate aftermath of Election Day, Republicans held 50 Senate seats, with 48 seats in the Democratic column (including two Independent senators, Bernie Sanders of Vermont and Angus King of Maine, who align themselves and caucus with Senate Democrats). Both Senate seats in Georgia remained in play, with no candidate getting a majority of votes (as required under Georgia state law), and runoff elections were held on January 5, 2021.
Democrat challengers Jon Ossoff and Raphael Warnock defeated Republican incumbents David Perdue and Kelly Loeffler respectively, bringing the balance of power in the Senate to an evenly divided 50/50 split. Under the U.S. Constitution, the Vice President of the United States serves as President of the Senate, and casts a tie-breaking vote when the Senate deadlocks. This means that once the two Democratic senators from Georgia are seated, and former California Senator Kamala Harris is inaugurated as Vice President, she will become the tie-breaking vote, effectively giving control of the Senate (including the powerful position of Senate Majority Leader) to the Democrats (California Governor Gavin Newsom (D) has tapped the state’s secretary of state, Alex Padilla (D), to replace Harris in the Senate, maintaining the 50/50 balance).
Democrats saw a net loss of seats in the U.S. House of Representatives, but will still maintain control, albeit with a slim margin. The House currently comprises 222 Democrats and 210 Republicans, and several Democratic representatives will be leaving the House to take positions in the Biden administration, narrowing that margin even further.
These historically close margins in both chamber of Congress mean that for any controversial or partisan legislation to pass, it must enjoy the support of almost all congressional Democrats. While legislation can be approved by the House with bare majority support, things are more complicated in the Senate. Under current rules governing the use of the filibuster, most legislation must garner at least 60 votes to pass the Senate. It is unclear whether the filibuster rules will be revisited to eliminate the 60-vote requirement to pass legislation (as was the case for judicial and executive nominations), and a number of Democratic senators have indicated that at this time they do not support eliminating the 60-vote filibuster threshold. Only time will tell whether that question is revisited.
The 50/50 split in the Senate means that key committees will likely include an equal number of Democratic and Republican senators, although chaired by the Democrat. While details of how these “power-sharing” arrangements are still being finalized, we expect that the Senate’s rules will include some provision for bringing legislation from a deadlocked committee to the Senate floor.
It is also possible to move certain legislation relating directly to taxes and revenue through the Senate with a simple majority through an annual process known as budget reconciliation. The rules governing whether a given piece of legislation qualifies for inclusion in reconciliation are arcane and complex, but in general provide that a bill that is not directly related to tax and revenue, but only produces an incidental budgetary effect, may be stricken from any reconciliation package. Put more simply, policy proposals that are not primarily budget-driven in nature are unlikely to qualify for expedited budget reconciliation treatment.
Finally, given the control of both houses of Congress, it is possible that the Congressional Review Act (CRA) may be invoked to repeal, among other things, labor and employment regulations adopted in the late days of the Trump administration. Under the CRA, a majority of both the House and Senate may vote to revoke key rules and regulations adopted near the end of an outgoing administration. If revoked by way of the CRA, a regulation is deemed null and void, and importantly, the department that issued the stricken regulation is prohibited from promulgating new regulations on the topic that are “substantially similar” to those repealed. To date, given the somewhat limited use of the CRA, courts have not had the occasion to opine on what the contours of that “substantially similar” prohibition.
Secretary of Labor
On January 7, 2021, President-elect Biden announced that he had chosen Marty Walsh (currently the mayor of Boston, Massachusetts) to be his nominee for U.S. Secretary of Labor. Walsh forged his early career in the labor movement, serving as a union official and ultimately leading Boston’s Building and Construction Trades Council. In 2014, he was elected mayor of Boston, a position in which he currently serves. Walsh’s nomination for labor secretary was largely supported by organized labor, most notably the AFL-CIO, and he is reported to be a close personal friend of President-elect Biden. That said, although unabashedly pro-labor, Walsh’s reputation is that of a consensus builder, and someone willing to engage stakeholders on both sides of labor and management.
The announcement of his nomination was lauded by the Greater Boston Chamber of Commerce, which noted his “unique ability to build bridges between labor and the business community.” A date has not yet been set for Walsh’s confirmation hearing in the U.S. Senate Committee on Health, Education, Labor, and Pensions, but Walsh’s nomination is expected to ultimately clear the Senate, potentially with some Republican support.
The U.S. Department of Labor (DOL) has significant regulatory authority over matters ranging from workplace safety through the Occupational Safety and Health Administration (OSHA) to the classification of workers as employees or contractors under federal wage and hour law. The DOL would also likely be charged with administering any executive orders relating to labor and employment policy issued by President Biden.
In addition to changes at the DOL, when the new administration takes office, it will designate Democratic chairs of independent agencies, such as the National Labor Relations Board and Equal Employment Opportunity Commission. Notably, while these bodies will now be chaired by a Democrat, both currently have Republican majorities, and may continue to be Republican-majority for a significant period of time.
Biden’s COVID-19 Stimulus Plan
It is likely that the first legislative business in the new Congress will be additional economic relief to address the public health and economic devastation wrought by the COVID-19 pandemic. Prior to his inauguration, President-elect Biden released an outline of his proposed package of COVID-19 stimulus relief, which includes a number of labor and employment proposals. Some relate directly to the pandemic, while others are more attenuated, and reflect long-standing Democratic policy priorities. Key labor and employment provisions in Biden’s COVID-19 proposal include:
- Expansion and extension of unemployment insurance (UI) benefits through September 2021, including a $400/week federally funded “add on” to UI benefits, and UI eligibility for self-employed workers and others not traditionally eligible for UI benefits under state unemployment law;
- Renewal of the emergency paid sick and family medical leave mandates contained in last year’s Family First Coronavirus Response Act (FFCRA), and expansion of the law to require employers with 500 or more employees to provide leave (as well as elimination of the exemption for employers with fewer than 50 employees contained in the prior law);
- Calling on employers to provide “generous” back hazard pay to frontline and other essential workers (the scope of this proposal, as well as whether and how any costs will be borne by the federal government, is not year clear);
- Asking Congress to authorize OSHA to issue a national COVID-19 protection standard, with coverage including public workers (typically not covered under OSHA rules), and additional funds for OSHA enforcement and grant programs; and
- Increasing the minimum wage to $15/hour nationally, and eliminating the tipped minimum wage and sub-minimum wage for certain workers with disabilities.
Beyond COVID-19: Labor and Employment Priorities
The president-elect’s COVID-19 response package offers some clues as to issues likely to dominate the labor and employment agenda beyond the pandemic response. For example, many speculate that an increase in the federal minimum wage may not be included as part of a COVID-19 response package, but that the issue is likely to be given high priority for consideration in Congress on its own, or in combination with other labor or employment measures.
Similarly, President-elect Biden will have at his disposal the use of presidential executive orders, which have increasingly become a preferred means of making policy for both Democratic and Republican presidents when they are unable to move larger initiatives through Congress. Upon his inauguration, the new president is empowered to both repeal prior administration’s orders and issue new ones. For example, it is widely expected that in his first days in office, President-elect Biden will use executive orders to revisit a number of his predecessor’s policies concerning immigration. He is also likely to revisit Executive Order 13950, which sought to regulate the content of diversity and inclusion training programs used by federal contractors. While that order was enjoined nationally by a federal court in December, we expect it will be formally repealed shortly after the new administration takes office.
Employers doing business with the federal government should pay special attention, as administrations of both parties have used executive orders to impose restrictions and requirements on federal contractors as a condition of doing business with the government. The Office of Federal Contract Compliance Programs is generally charged with administering these orders.
The call for renewal and expansion of the FFCRA temporary paid sick and family leave requirements also suggests that the issue of paid leave—whether in the form of sick leave, family/medial leave, or other forms of paid time off—will likely be given close attention in the next Congress. Incoming Chair of the Senate Committee on Health, Education, Labor and Pensions (HELP Committee) Patty Murray (D-WA) has long been a supporter of mandating that employers provide workers with paid leave. Under her leadership, we expect the HELP Committee will look closely at proposals to impose leave mandates on a broad range of employers.
We also expect that an examination of federal wage and hour laws relating to controversial matters such as employee/independent contractor classification, joint-employer status, and the sub-minimum wage for tipped employees, will be on the new Congress’s agenda. In the prior administration, the DOL issued a series of regulations relating to these matters. In January 2020, the DOL revised its regulations regarding the circumstances under which one employer can be deemed the “joint employer” of another company’s workers under federal wage and hour law. That regulation, which was enjoined by a federal district court last fall, is likely to be revisited in the Biden administration.
Similarly, in January of this year, the DOL issued its final regulation regarding the classification of workers as either employees or independent contractors under federal wage and hour law. It is not clear if that regulation too will be subject to legal challenge, or whether Congress will attempt to repeal it by way of the CRA discussed above. As a candidate, President-elect Biden expressed his strong support for proposals to adopt the so-called “ABC test” for determining whether a worker should be classified as an “employee” for purposes of federal law. Under the ABC test, many workers who currently are classified as independent contractors would likely be re-classified as employees under federal minimum wage and overtime laws.
Finally, we expect that the new Congress will give close attention to efforts to reform the National Labor Relations Act (NLRA). In the last Congress, the so-called “PRO Act” passed the House, but stalled in the Senate. As detailed on pages 11-14 of WPI’s Election Report, the PRO Act represents the most sweeping changes in federal labor/management relations law in decades. Among its most sweeping provisions, the PRO Act would:
- Expand the liability of “joint employers” under the NLRA to include companies that “indirectly control” another company’s workers;
- Dramatically limit the definition of “independent contractor” under the NLRA by way of the ABC test discussed;
- Revise the definition of supervisor under the NLRA such that fewer workers would be classified as supervisors and be ineligible to organize;
- Expand the scope of unfair labor practices, and increase penalties for NLRA violations; and
- Override state “right-to-work” laws adopted in more than half of U.S. states.
Given the controversial nature of many of these proposals, and razor-thin margins in Congress, it is unlikely that the PRO Act will be taken up entirely as written. Far more likely is that certain provisions may be taken out of the bill and debated separately, or attached to other labor and employment legislation. As discussed in the Election Report, as control of the National Labor Relations Board switches to Democratic (as is anticipated by the end of the year), a new Board could address a number of these items in its decisions and/or rulemakings.
While COVID-19 will continue to dominate the legislative and policy landscape for the immediate future, it is clear that the new administration and congressional Democrats will give significant attention to labor and employment matters in the weeks and months to come. The success of these efforts remains to be seen, but there will surely be no shortage of debate and discussion of issues of direct concern to all employers. Littler’s WPI will continue to keep you apprised of developments as they occur.