The transition of power from the Trump administration to the Biden administration is likely to bring a number of changes that will impact employers. This alert will discuss the changes that have already gone into effect as well as those that are predicted to occur in the near future.
Federal Minimum Wage
President Biden has called on Congress to increase the minimum wage on a federal level. At the end of January, Congressional Democrats introduced the Raise the Wage Act. This bill would gradually increase the minimum wage employers must pay workers under the Fair Labor Standards Act (“FLSA”) from the current $7.25 per hour to $15 per hour. The first step would be the largest, increasing the minimum wage by $2.25 on the bill’s effective date, with $1.50 increases for the following three years and a final $1 bump in 2025. The U.S. House of Representatives passed similar legislation in 2019, but it stalled in the Republican-controlled Senate. Currently, the Raise the Wage Act has not yet passed.
The federal minimum wage has remained $7.25 since 2009. Under the FLSA, an employer must pay employees at the federal minimum wage, although states may set a minimum wage higher than the federal level.
President Biden also proposed an increase in the minimum wage to $15 in his most recent COVID-19 relief package. However, it is unlikely that this increase will be in the final proposed relief package. When asked to comment, the President stated that he “put it in, but [he] doesn’t think it’s going to survive” and likely will not be in the next COVID-19 stimulus.
Paycheck Fairness Act
Congressional Democrats announced at the end of January that they are renewing their push for the Paycheck Fairness Act. This Act would amend the Equal Pay Act to make employers liable for pay gaps between men and women unless they can justify the disparity. President Biden and Vice President Harris have also highlighted the bill and indicated that gender equity efforts are a priority for the administration.
The Equal Pay Act currently outlaws paying men and women differently for the same work, with the exceptions that employers may pay workers at different rates if they do so based on: (1) seniority, (2) merit, (3) the quantity or quality of the employee’s work, or (4) “any factor other than sex.” The Paycheck Fairness Act would narrow a defense for employers based on the last factor. The last exception would apply only if the employer can show the disparity isn’t “based on or derived from” existing gender-based pay gaps, is related to the job in question and necessary for the business, and if employers can fully account for any difference in pay between workers of different genders.
It is not yet certain whether this bill will pass.
Paid Leave Proposal
Democrats in Congress have put forward legislation for a national paid leave program that would set workers up to receive a portion of their pay while taking time off for health conditions, pregnancies, childbirth, the care of a family member, and other reasons. Lawmakers from both parties have previously pushed for paid leave legislation. After granting emergency paid sick leave in response to COVID-19, this legislation seeks to expand the paid leave and make it more permanent.
The U.S. Department of Labor already administers the Family and Medical Leave Act, which allows eligible employees of covered employers to take 12 weeks of unpaid leave for certain family and medical reasons without losing their jobs. However, not all workers are eligible and FMLA is unpaid. Under the new proposed national paid leave program, employees could receive up to 66% of their monthly wages while taking as much as 12 weeks off due to health conditions, pregnancy, childbirth, child adoption, family member’s injury or sickness, and reasons related to service members’ deployment.
Versions of this legislation have been introduced in 2013, 2017, 2019, and 2020. Lawmakers are optimistic that this is an item that will pass in the near future given the current political climate and the state of the pandemic.
Department of Labor
Proposed Rule on Independent Contractors and Tips
The US DOL is seeking to push back the effective date for rules about independent contractor classification and tipped workers by 60 days and have asked for public comment on the delays. DOL filed notices with the Federal Register which indicated that the delays were necessary so that the Biden administration could review the regulations.
The independent contractor rule was set to go into effect on March 8, and it was set to be the agency’s first generally applicable guidance on the distinction between independent contractor and employee. The public comment period on the delay of the independent contractor classification rule is open until February 24. If delayed, the new effective date will be May 7, 2021.
The rule regarding tip regulations under the FLSA was set to go into effect on March 1. This rule amended the FLSA to prohibit employers from keeping tips their employees receive, even if the employers have a tip credit system. It also formalized WHD guidance on whether employers could take tip credits from employees who did both tipped and nontipped work. The public comment period on the delay of this rule’s effective date is also open to the public until February 17. If delayed, the new effective date will be April 30, 2021.
DOL Shuts Down Tip Line for ‘Divisive’ Workplace Training
Following former President Trump’s issuance of Executive Order 13950, which labeled discussions about unconscious bias, critical race theory, white privilege and intersectionality “race and sex scapegoating” and systematic racism trainings “divisive,” a phone and email tip line was created to encourage federal workers to report certain diversity programs. President Biden rolled back the executive order, stating that it was “damaging” and “limited critical diversity and inclusion training in the workplace.” DOL has also shut down the phone and email tip lines as well as canceled investigations resulting from the passage of EO 13950.
DOL Retracts Opinion Letters
The DOL withdrew three opinion letters issued during the Trump administration that expressed the agency’s view on how labor law applied in various situations. The retracted opinion letters are:
- An opinion letter on tip pooling based on the new tip pooling rule not yet in effect;
- An opinion letter on classification of food product distributors based on the independent contractor rule not yet in effect;
- An opinion letter on classification of tractor-trailer truck drivers based on the independent contractor rule not yet in effect.
Once these pending rules go into effect, DOL is likely to release opinion letters to help clarify how the new rules apply to common situations.
Predicted Future Changes
Other topics that the Biden administration is likely to make a priority over the next few years include:
- Broader anti-discrimination laws;
- Possible changes to the ADEA to increase protections for older employees;
- Increased restrictions on non-compete agreements;
- Overtime rule changes;
- Enhanced pay transparency to prevent wage theft;
- Pro-employee/union legislation.
Currently, the Biden administration has not made progress toward the six topics listed in this section, but it is predicted that it will in the near future. Employers should stay up-to-date on changes in the law as a result of the change of administration.