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Law360 (November 17, 2020, 1:41 PM EST) --
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| Jessica Summers |
Of course no administration is ever able to accomplish every item on its wish list and the president's capacity and motivation to act is inevitably impacted by the external factors of the times. This will be particularly true for Biden as he takes office amid a pandemic and recession.
There is virtually no doubt that COVID-19 will be the Biden administration's top priority on day one. The Biden transition team has already made very clear that, among many other things, we can expect to see a swift push for the Occupational Safety and Health Administration to issue mandatory safety guidelines and pressure for Congress to take action to provide for more enhanced unemployment benefits and emergency leave rights — if they have not yet done so.
Beyond the anticipated COVID-19-specific actions remains the larger question of what we can expect to see as to the broader workplace priorities that the Biden administration will bring with it.
At this point it looks likely that the Republicans will maintain control of the U.S. Senate. If so, Biden is going to face many of the same roadblocks that President Barack Obama did when it comes to pursuing progressive labor and employment priorities that require congressional action.
It is no surprise that many of the Biden campaign's workplace-related objectives are reminiscent of priorities on which the Obama administration was unable to gain the necessary traction. For example, increasing the federal minimum wage, restricting the use of noncompete agreements and mandatory arbitration clauses, and expanding union and collective bargaining rights. The Obama administration increased the minimum wage for federal contractors but was unable to get a larger minimum wage increase through Congress.
As the Biden administration is likely to be navigating a divided Congress, to prognosticate about what we might see in the pipeline we really need to divide the president-elect's priorities between those that will require congressional action and those that can be accomplished through administrative action alone.
Looking first to the priorities that would require congressional action, even if Republicans maintain control of the Senate, it will still be by a very close margin. This leaves an opening for Congress to act on certain items that have traditionally been part of the Democratic Party platform but that have been gaining more bipartisan support of late.
Federal paid family leave clearly fits this bill. Greater White House interest combined with growing bipartisan support and the increased attention that the pandemic has shed on leave rights makes this issue ripe for action.
In recent years, a number of Republican lawmakers have introduced or supported legislation that would provide for some form of federal paid family leave. But the knotty details — in particular, the funding mechanisms — have prevented such proposals from garnering the support they need to pass.
While the Trump administration lent nominal support to the notion of paid leave — and approved paid leave for federal employees and emergency paid leave under the Families First Coronavirus Response Act — it never endorsed or introduced any specific proposals. That the Biden administration is expected to take a much more active leadership role in this space and that they will have a preexisting level of support to build on, makes paid leave proposals much more likely to gain traction in Congress than many of the president-elect's more traditionally partisan objectives.
If Congress and the administration strike the right balance, passage of paid leave legislation is a move that could be embraced by both employers and employees. In the absence of federal action on this issue we have seen many states and localities stepping up to the plate to pass their own paid leave laws. This has left many employers trying to comply with a multijurisdictional patchwork of laws, and favoring federal action where they may not have previously done so.
Turning then to those items that can be accomplished by administrative action alone — whether through the regulatory process or an executive order — prioritizing will be the name of the game. Over the last four years, the Trump administration was effective at utilizing the regulatory process to turn the tables on a number of key issues in the employment law space.
A perfect example of this is the rules that apply to determine when entities will be considered joint employers. The new Biden administration will likely have to split its focus between rolling back Trump administration actions and introducing new initiatives. When it comes to deciding what to tackle first, again setting aside COVID-19-specific actions, independent contractor classification rules are sure to be high on that list.
The growth of the gig economy and high-profile litigation and action in states like California has made the issue of independent contractor classifications a critical concern for workers and businesses across the country, and one that a progressive administration will be virtually unable to ignore. Even if Biden doesn't have the votes in Congress to implement a federal independent contractor standard, the administration will still have significant ability to change the dynamic in this area through the regulatory process.
Specifically, the test that the U.S. Department of Labor applies to classify workers for the purposes of federal wage and hour laws, the Fair Labor Standards Act, is a matter of regulatory interpretation and is not set by statute. Given that the vast majority of American employers are subject to the FLSA, the DOL has significant power in this space, particularly when it comes to efforts to limit the use of independent contractors.
Interestingly, in what will now be one of its final actions under the leadership of the Trump administration, the DOL has been working on regulations to make it easier for businesses to classify workers as independent contractors for the purposes of federal wage and hour laws. The public notice and comment period for the proposed rules closed just before Election Day and there has been no indication that the DOL will not be moving forward to finalize the rules before Inauguration Day.
Regardless, we can expect to see the DOL, and perhaps also the IRS, under the leadership of the Biden administration to move on this same issue but in the opposite direction.
Biden has made it clear that he supports much stricter standards for independent contractor classifications — such as the so-called ABC test currently in use in California and other jurisdictions. By setting a stringent standard for the independent contractor test applied by the DOL or the IRS, the Biden administration will be able to significantly move the needle in this area without congressional action.
This is because when it comes to classifying a worker as an independent contractor or an employee, businesses generally use a single classification for all purposes and therefore typically follow the most restrictive test that applies to them in any area for all jurisdictions. In other words, even if a state law's test for when an individual can be classified as an independent contractor for the purposes of unemployment or state wage and hour laws are more lenient, if the federal test is more restrictive, businesses will have little choice but to follow the federal test in order to ensure across-the-board compliance.
For businesses that rely on the use of independent contractors this could mark a very significant shift. Thus, it is expected that many organizations will vigorously oppose such a change.
While Biden's regulatory priorities also include changes to the federal overtime rules, given the huge list of items the new administration is going to be tackling, this issue may take a back seat to other priorities. While it was smaller than the increase that the Obama administration attempted to implement — which the Trump administration declined to defend in federal court — the DOL under Trump did implement an increase to the overtime thresholds.
Thus, a Biden administration might choose to prioritize further increases behind those items that have remained entirely untouched during the Trump era.
The bottom line is that there is always some level of whiplash when control of the administration changes parties and this will be no exception. Particularly given the ideological divide between the outgoing and incoming administrations on workplace issues, employers should be prepared to navigate a new dynamic.
However, particularly for those employers with employees in locations where state and local governments have stepped up in the face of federal inaction on issues like paid leave and independent contractors, uniformity derived from federal action may prove to make things easier rather than more complex.
Jessica Summers is a principal at Paley Rothman.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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