As President-elect Joe Biden begins to transition into the Oval Office, employers cannot help but look ahead to what the next four years may hold. Although a Biden administration may be limited in what it wants to do because of a possible Republican majority in the Senate, the campaign indicated on which it is likely to focus. Also, as happens any time the Presidency transitions from one party to another, presidential appointments to the administrative agencies such as the Equal Employment Opportunity Commission ("EEOC") and the National Labor Relations Board ("NLRB") could play huge roles.
Paid Leave (including the Families First Coronavirus Response Act)
If it does not occur before he takes office, expect the Biden administration to push hard to extend the Families First Coronavirus Response Act (which requires employers with fewer than 500 employees to provide their employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19) as that law is set to expire on December 31, 2020. A Biden administration is expected to push for mandatory paid leave policies, similar to what some states recently have enacted. President-elect Biden has said he supports converting the FMLA’s mandatory leave provisions from unpaid to paid.
Minimum Wage and Overtime
Expect a heavy push to increase the federal minimum wage. Biden campaigned to increase the minimum wage to $15 per hour. While a bump of that size is unlikely to pass the Senate, expect a push for some increase. Biden also supports indexing the minimum wage to the median hourly wage so that the minimum wage could potentially increase on a more regular schedule as wages increase. The Biden administration also may try to eliminate the “tip credit” (the ability to pay a reduced minimum wage to tipped employees) and may seek an increase in the minimum salary to qualify as an exempt employee under the FLSA. You may remember the Obama administration promulgated an overtime rule that set a threshold of $47,476 annual pay (or $913 per week) in order to qualify for an exemption. The rule was enjoined and the Trump administration substituted a smaller increase (minimum salary of $35,568 a year or $684 a week). In any event, expect more stringent enforcement of overtime requirements by the Department of Labor ("DOL").
Arbitration and Non-Competes
President-elect Biden supports passage of legislation that would prohibit employers from requiring employees to sign pre-dispute arbitration agreements as a condition of employment. Again, if Republicans maintain their Senate majority, this may never reach President Biden’s desk, but he is almost certain to sign such a bill if it did. Relatedly, the Biden for President website promised to “eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets, and outright ban all no-poaching agreements.”
Also, look for a closer examination of the definition of independent contractor. The Biden for President website praised states such as California that “have already paved the way by adopting a clearer, simpler, and stronger three-prong ‘ABC test’ to distinguish employees from independent contractors.” Under the ABC test, a worker is considered an employee and not an independent contractor, unless all three of the following conditions are met:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
What that means is that the DOL under President Biden would almost certainly withdraw the DOL’s proposed independent contractor rule, or if the rule is finalized before the end of the Trump administration, immediately would begin new rulemaking to rescind it.
While campaigning, Biden said he would apply a broader standard for who needs to be paid a “prevailing wage” and would strictly enforce their payment. This largely can be done by Executive Order, so expect to see a prevailing wage requirement apply to an even larger segment of government contracts, and perhaps more importantly, expect to see increased enforcement by the Office of Federal Contract Compliance Programs ("OFCCP") that contractors pay prevailing wage under the Davis-Bacon Act and Service Contract Act. He also will be very likely to revoke President Trump’s “Executive Order on Combating Race and Sex Stereotyping” that restricts the federal government, federal contractors, and certain federal grant recipients from conducting specific types of diversity and unconscious bias training.
President-elect Biden ran on a platform of strengthening worker organizing, collective bargaining, and unions. He has expressed strong support for the Protecting the Right to Organize ("PRO") Act, which would significantly change the union/employer dynamic (in favor of unions) by:
- Banning employer mandatory “captive audience” group meetings;
- Requiring immediate collective bargaining shortly after a successful union election and, if no agreement is reached, requiring binding interest arbitration of contract terms;
- Preempting states’ “right-to-work” laws;
- Allowing “unfair labor practice” claims to be brought as civil actions in court;
- Adding fines and liquidated damages (possibly six figures) as remedies for unfair labor practices; and
- Adding personal liability (even criminal liability) for unfair labor practices for corporate directors and officers.
Biden also pledged to reinstate and codify into law the Obama administration’s “persuader rule” requiring employers to report not only information communicated to employees, but also the activities of third-party consultants who work behind the scenes to manage employers’ anti-union campaigns and the Obama era’s NLRB rules allowing for shortened timelines of union election campaigns. As a senator, Biden co-sponsored the original Employee Free Choice Act, which allowed workers to form a union if a majority signs authorization cards empowering a union to represent them.
Importantly, as President, Biden will be able to appoint a majority of NLRB members, likely resulting in the overruling of many of the precedents issued during the past few years. After he has appointed a majority, it is likely that a Biden NLRB would reinstate the rulings from:
- Specialty Healthcare, which permitted the organization of so-called “micro-units” and allowed unions to target a smaller group of employees to organize at first;
- Purple Communications, which held that employees had a protected right to use their work email accounts for organizing purposes even if they were not allowed to use the email for other personal purposes; and
- Browning-Ferris Industries, which held entities could be joint-employer based on a reserved right to control employees or indirect control over employees as opposed to actually exercise direct control over the employees at issue.
Pay Equity Mandates
While campaigning, Vice President-elect Kamala Harris said she wanted to make the U.S. a worldwide leader in the fight for pay equity. Even if unable to enact legislation on this point, do not be surprised to see pay parity standards applied to federal contractors. For instance, the Obama-era requirement that pay data be disclosed by employers on EEO-1 reports is likely to reappear.
In all, expect a rollback of many of the Trump administration’s more employer-friendly policies and more stringent enforcement from all federal agencies (DOL, EEOC, OSHA, OFCCP, etc.), not the least of which is a heavy emphasis on OSHA to conduct more investigations and issue greater penalties for COVID-19-related violations.