Hitting the Ground Running: The First 100 Days of the Biden Administration, and Key Takeaways for Employers

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In September 2020, then-candidate Joe Biden promised organized labor that, if elected, he would be the “strongest labor president you’ve ever had.”  In his first 100 days in office, now President Biden has acted quickly and aggressively to make good on this pledge.  Some of these efforts have quickly come to fruition; the fate of others remains unclear and are likely to require congressional approval—no certainty in a Congress where both the House of Representatives and Senate are operating with historically narrow margins.  What is abundantly clear is that the new administration is committed to revisiting prior administration policies and moving decisively to advance its own pro-labor agenda, and in only 100 days, it has taken significant steps to do so.

Minimum Wage

The president has thrown his strong support behind efforts to increase the federal minimum wage to $15 per hour, and phase out the so-called “tipped minimum wage” for food service and hospitality workers, as well as the subminimum wage for certain workers with disabilities.  The U.S. House of Representatives has already passed a bill increasing the minimum wage, but the measure currently lacks the 60-vote supermajority necessary to clear the U.S. Senate under its regular legislative rules.  During consideration of the American Rescue Plan Act, the administration’s first major policy proposal providing and extending economic relief in response to the COVID-19 pandemic, Senate Democrats were unsuccessful in their attempt to include a minimum wage increase by way of fast-track “budget reconciliation” procedures, which require only a simple majority vote for approval.  While the minimum wage proposal was deemed ineligible for fast-track treatment due to Senate rules, it is unclear that an increase of this magnitude would have the unanimous support of all Senate Democrats (given the 50-50 split in the Senate, all 50 Democrats would need to support such a measure, assuming that all 50 Republicans opposed it, and Vice President Kamala Harris cast a tie-breaking vote in its favor).  Congressional leadership has vowed to return to this issue and is actively seeking a compromise that could enjoy unanimous Democratic support.

Executive Action

President Biden has also made skillful use of the broad executive power of the presidency to advance his agenda, and reverse policy positions taken by his predecessor. Almost immediately upon his inauguration, the president issued an executive order repealing the prior administration’s order which sought to limit federal contractors and recipients of federal grants from discussing “divisive” topics in workplace trainings on issues of diversity and inclusion, including what the prior order termed “stereotyping” and “scapegoating” on the basis of race or sex.  In its place, the White House issued its own executive order, noting  the Biden administration’s policy is “that the Federal Government should pursue a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.”  The order also directs the Office of Management and Budget and executive agencies to identify best practices for assessing equity issues in the federal government and responding to them. 

On the same day, the new president signed an executive order on “Preventing and Combatting Discrimination on the Basis of Gender Identity or Sexual Orientation.”  This order notes that insofar as Title VII of the Civil Rights Act of 1964, as interpreted by the U.S. Supreme Court in its Bostock v. Clayton County decision, prohibits discrimination on the basis of gender identity or sexual orientation, such discrimination is also prohibited under other federal laws relating to housing, education, and immigration, so long as they “do not contain sufficient indications to the contrary” (none appear to).  The executive order further directs the heads of all federal agencies to review existing regulations, orders, and guidance to ensure that they are consistent in their protection of LGBT status, and if necessary, take administrative actions to revise them accordingly.

Moreover, where legislative efforts have failed (or at least not yet succeeded), the president has shown little hesitancy to use the broad executive power of the presidency to advance his policy priorities.  For example, while efforts to increase the minimum wage have yet to pass Congress, on April 27, 2021, the president issued an executive order requiring contractors and subcontractors who do business with the federal government to pay their workers a minimum wage of $15 per hour, effective January 30, 2022 (and adjusted upward for inflation thereafter).  The executive order also phases out the so-called “tipped minimum wage” for restaurant and hospitality workers who are currently paid a lower cash wage supplemented by gratuities.

The president has also by way of executive order established a “Task Force on Worker Organizing and Empowerment,” which seeks to promote his administration’s “policy of support for worker power, worker organizing, and collective bargaining.”  Chaired by Vice President Kamala Harris and vice-chaired by Labor Secretary Marty Walsh, the Task Force is charged with identifying “policies, practices, and programs that could be used to promote worker power in areas of the country with hostile labor laws, for marginalized workers (including women and persons of color) and hard-to-organize industries, and in changing industries.”  The Task Force is also directed to identify statutory, regulatory, or other changes that would make policies and programs “a more effective means of supporting worker organizing and collective bargaining” and report to the president in 180 days with recommendations to promote these activities.

The PRO Act

The president has proposed a massive infrastructure package, which includes as its labor centerpiece the call for Congress to pass the “Protecting the Right to Organize” Act (the “PRO Act”).  By way of background, the PRO Act is the most dramatic rewrite of federal labor relations law in generations and encompasses more than 50 significant changes to current law that would overhaul the NLRA for the first time in more than 70 years.  Among its key provisions, the PRO Act would:

  • Effectively overturn state “right to work” laws;
  • Codify the “ABC test” to deem independent contractors “employees” covered by the NLRA;
  • Limit the ability of employers to contest union election petitions and allow unions to engage in coercive tactics long held to be unlawful;
  • Restrict the ability of employers to obtain labor relations advice;
  • Facilitate union organizing in micro-units;
  • Redefine the definition of “supervisor” to include more frontline leaders as “employees” covered by the NLRA;
  • Change the definition of “joint employment” and force businesses to alter their structures or face liability;
  • Give employees the right to utilize employer electronic systems to organize and engage in protected concerted activity;
  • Prohibit employers from using mandatory arbitration agreements with employees;
  • Force parties into collective bargaining agreements via interest arbitration; and
  • Expand penalties for violations of the NLRA.

Organized labor has made passage of the PRO Act its highest priority, going so far as to threaten that any Democratic member of Congress who does not support the bill will get no financial support from labor unions.  The bill was approved on a largely party-line vote of 225-206 by the U.S. House of Representatives on March 9, 2021 (one Democrat voted against the measure; five Republicans voted for it).  Even if an infrastructure package does not include all elements of the PRO Act, it is likely that funds under the bill would be conditioned on employers agreeing to project labor standards and neutrality agreements with respect to union organizing.  With only 13 percent of the private-sector workforce currently unionized, this means that a significant majority of non-union employers might be ineligible for infrastructure funds under the bill.

Administrative Action

Even prior to the confirmation of Marty Walsh (formerly mayor of Boston and president of the Boston Metropolitan District Building Trades Council, a union umbrella group) as secretary of labor, the Department of Labor (DOL or “the Department”) has taken swift and aggressive action to revisit Trump administration policies around a host of contentious topics, and will certainly seek to replace them with policies more in line with the current administration’s thinking.  Regulations the Department has proposed to roll back were generally considered more employer-friendly; it is likely that new rules will purport to be more favorable to employees.  It is also widely expected that the president will name David Weil, who was formerly administrator of the Wage and Hour Division during the Obama administration, to that post again.  Weil has strongly advocated that most workers should be statutory employees, and has been highly critical of the independent contractor model, particularly in the gig economy.  Among the most significant actions of DOL to date:

  • Proposed Withdrawal of Independent Contractor Rule.  In January 2021, prior to President Biden’s inauguration, DOL issued final regulations setting forth, for the first time by notice and comment rulemaking, standards for determining whether a worker is an employee under the Fair Labor Standards Act (FLSA) (and thus covered by, e.g., the FLSA’s minimum wage and overtime standards) or an independent contractor outside the coverage of the FLSA.  The rule, which codified and clarified the long-standing “economic realities” test for determining independent contractor status, was widely well-received by employers.  In March, DOL delayed the effective date of these regulations until May 7, 2021 (this delay is presently subject to legal challenge in federal court).  Subsequently, DOL proposed withdrawing the rule in its entirety; that proposal is still pending.  If the Department withdraws the rule prior to its effective date, it is unclear whether it will propose a substantive alternative or attempt to reinstate Obama-era sub-regulatory policies that sought to limit the classification of workers as independent contractors.
  • Proposed Rescission of Joint Employer Regulations.  In January 2020, DOL finalized regulations detailing the test for determining joint-employer status under the FLSA.  Under the FLSA, an employee of one company may be found to be the joint employee of a second, independent company, depending on the nature and extent of the control over the employee’s work exerted by the second business.  This may have significant consequences, as a joint employer can be held jointly and severally liable for FLSA wage and hour obligations to the employee (for example, payment of minimum wage, or payment of overtime to non-exempt employees).  The final rule established a four-factor balancing test, under which DOL will examine whether a putative joint employer: (a) hires or fires the employee; (b) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (c) determines the employee’s rate and method of payment; and (d) maintains the employee’s employment records.  The final rule likewise made clear that a “reserved” but unexercised right of control would generally be insufficient on its own to establish joint employer status.  In September 2020, the U.S. District Court for the Southern District of New York held that the rule was unlawful under the Administrative Procedure Act and enjoined the rule’s key provisions on a national basis.  The lower court’s decision is currently on appeal to the U.S. Court of Appeals for the Second Circuit, which recently denied DOL’s request to hold the litigation in abeyance pending a new rulemaking.  On March 11, 2021, DOL issued a notice of proposed rulemaking to rescind this regulation in its entirety, suggesting that the Department is contemplating reverting to its prior, broader interpretation, which held significantly more companies to be “joint employers” of other businesses’ workers.

Independent Agencies

The Biden administration has also taken quick action with respect to key personnel at non-cabinet agencies responsible for enforcement of labor and employment laws.  While the full extent of these actions has yet to be seen, it is clear that, where possible, the White House has attempted to replace key political appointees deemed insufficiently in line with the administration’s pro-labor policies.

  • National Labor Relations Board.  The National Labor Relations Board (NLRB or “the Board”) is charged with enforcing federal laws regarding collective bargaining and union organizing.  The five-member Board currently consists of one Democrat, three Republicans, and one vacancy.  Shortly after his inauguration, President Biden designated Democratic Board Member Lauren McFerran to chair the agency.  Chair McFerran is limited in her ability to move forward on policy matters that require Board approval, insofar as Republicans currently hold a majority on the Board and are expected to do so until August of this year, when a Republican member’s term expires.  When that vacancy (and the current vacancy) are filled with Democratic members, we can expect the agency to revisit decisions and regulations adopted in the prior administration, potentially reversing case law more favorable to employers and adopting more labor-friendly policies. 

Equally if perhaps not more important, less than half an hour after his inauguration, President Biden demanded the resignation of the Board’s general counsel (a Republican political appointee).When the general counsel declined to resign, he was fired that same day (marking the first time a sitting general counsel was removed prior to the end of their term), and shortly thereafter replaced with a career NLRB attorney in an acting capacity.The president has nominated a Democratic successor, whose nomination is expected to be considered by the U.S. Senate shortly.Insofar as the general counsel has significant authority over the prosecution of cases before the Board and in federal courts, and enjoys broad latitude in interpreting federal labor relations law, it is likely that we will soon see policy shifts far more friendly to organized labor.

  • Equal Employment Opportunity Commission.  The Equal Employment Opportunity Commission (EEOC or “the Commission”) finds itself in a position similar to the NLRB’s.  The five-member Commission is presently comprised of two Democratic commissioners and three Republicans.  The president designated Democratic commissioner Charlotte Burrows to chair the agency (and designated the other Democratic member as vice-chair), but the ability of the Commission to advance Democratic policy priorities is hampered by its Republican majority.  The Commission is expected to remain majority-Republican until mid- to late 2022.  Upon achieving a Democratic majority, it is likely that the Commission will seek to move forward on a number of high-profile issues, including reinstatement of the controversial Obama-era collection of employee compensation data classified by race, ethnicity, and gender; efforts to regulate so-called “algorithmic discrimination” and the use of technology and artificial intelligence in the workplace; and guidance on LGBTQ issues in the workplace, including questions left unanswered by the U.S. Supreme Court’s landmark Bostock decision, which held that Title VII’s prohibition of discrimination on the basis of “sex” similarly prohibits discrimination on the basis of sexual orientation and gender identity.  The Commission may also revisit enforcement guidance issued late in the Trump administration that critics felt was unfairly slanted in favor of religious employers and employees. 

Similar to the NLRB, the White House also asked for the resignation of the EEOC’s general counsel in January 2021, and removed her when she declined to resign (again, the first time in the history of the agency that a sitting general counsel has been removed before the expiration of their term).A career deputy currently serves as acting general counsel, and to date no nomination for a permanent replacement has been sent up to the Senate. It is likely that the general counsel’s office will begin to take a more aggressive approach to litigation than it did during the prior administration, but again, the three-member Republican majority may act as a “check” on any sea change in the agency’s litigation strategy.

Conclusion

President Biden and his Cabinet hit the ground running on day one of his administration, and show no signs of slackening their pace.  Indeed, insofar as Democratic control of Congress hinges on razor-thin majorities in both houses, the administration continues to press for quick action on legislative priorities.  This is in no small part due to the fact that mid-term elections are 18 months away, and a shift of power in even a single seat in the Senate (and a small number of seats in the House) would return the chamber to Republican control.  In light of these facts, it is clear that the administration will continue to move aggressively to adopt labor and employment policies in line with the president’s priorities, and will use every tool available to it to accomplish these goals.

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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