Change in Administration May Impact Recent DOL and EEOC Guidance

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Spilman Thomas & Battle, PLLC

In January, just prior to the inauguration, the Trump administration issued guidance and rule changes on a variety of issues, including the Independent Contractor Test and Religious Discrimination Guidance. Many recent changes implemented by the Trump administration at the Department of Labor and Equal Employment Opportunity Commission are now on hold and more changes are expected. On January 20, 2021, the Biden administration instructed the heads of executive departments and agencies, including the EEOC and DOL, to essentially press pause on all rulemaking that was underway. Since that time, the DOL has rescinded three opinion letters because they were based on rules that have not yet gone into effect. One of these opinion letters addressed whether a restaurant may institute a tip pool under the Fair Labor Standards Act that includes hosts and hostesses (for whom a tip credit is not taken). Additional opinion letters issued under the Trump administration may also be withdrawn as the DOL aligns itself with the priorities and goals of the Biden administration.
 
The pause on rulemaking also may affect a new final rule announced by the DOL on January 6 that was slated to take effect on March 8, 2021, and was intended to clarify the standard for whether a worker is classified as an employee versus an independent contractor under the FLSA. The final rule underscored that the distinction between employees and independent contractors is based on their economic reality: a worker who is in business for him or herself, as opposed to being economically dependent on the potential employer, is an independent contractor. The final rule also would allow employers to offer health, retirement, and other benefits to independent contractors under certain circumstances. Because the Biden administration is taking time to review all pending rules, this rule likely will not take effect on March 8 and may not go into effect at all. We will provide further updates when the Biden administration takes further action.
 
Also in limbo is the EEOC's approved revisions to its Compliance Manual Section on Religious Discrimination. While this Manual lacks the force and effect of law, it does provide useful guidance about what EEOC investigators are trained to look for and consider and contains helpful examples. Last updated in 2008, the 2021 update is notable in part because it is the only Compliance Manual that was updated under the Trump administration. Among other things, the Manual discussed protections available to employees against religious discrimination and contained an expanded discussion of defenses available to religious employers.
 
The Manual's revisions were approved by the Commission in a 3-to-2 vote along party lines. The two dissenting Commissioners were Charlotte A. Burrows and Jocelyn Samuels, now the Chair and Vice Chair of the EEOC, respectively. We will continue to monitor whether the change in administration impacts this guidance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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