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Your Workplace Under Biden

Client Alert

This is my favorite recurring post – Predictions of How a New Administration Will Affect Your Workplace. Four years ago, we accurately called the emasculation of the 2016 proposed FLSA Overtime Rules (the salary exemption threshold was set at $35,568 in 2019, rather than $47,476 as proposed), we forecasted a conservative shift of the NLRB and its results (a roll-back of employee rights, social media policy evaluations, and joint employer rules), and we nailed the likelihood of multiple conservative appointments to the United States Supreme Court and its long-term effects (although I completely failed to predict that my ND classmate Amy Coney Barrett would fill the final vacancy during the Trump administration).

This time, the L+E Practice of BMD has decided to make it a group effort at predicting what will happen, what will probably happen, and what might happen under President Biden. As always, please save this in your important files and pull it out four (or eight) years from now to judge our accuracy.

First, a disclaimer from Russell Rendall - The success or failure of legislative predictions will depend on the Senate. Republican control of the Senate will be a significant check to either a quick or a comprehensive overhaul of labor and employment laws. Nonetheless, the President will have the ability to implement regulatory measures. 

What Will Happen? (Near-term planning)

  • COVID-19 Leave Expansion
  • Increase in national minimum wage
  • Wage and Hour investigations
  • Empower Union Organization
  • OSHA Investigations and Citations will increase

COVID-19 Leave Expansion to 100% of Wages for Duration of Time Away from Work

The FFCRA with its Emergency Paid Sick Leave (EPSL) and its Expansion of the Family and Medical Leave Act (EFMLA) are set to expire at the end of 2020. There is talk of an extension of the FFCRA provisions in a new stimulus bill.  Biden’s COVID-19 leave plan will expand the FFCRA provisions as follows:

  • 100% wage coverage up to $1,400/week
  • Paid leave for duration of mandatory quarantine or isolation (not limited to 14 days).
  • Expansion of coverage to Domestic Workers, Caregivers, Gig Economy Workers, and Independent Contractors[1]

Employers will continue to receive tax deductions/reimbursements for COVID-related paid leave. 

Minimum Wage Increase to $15/hour

Listed as his top workforce priority is increasing the federal minimum wage to $15.00/hour and eliminating the tipped minimum wage. This was a top priority for Biden as Vice President, which resulted in state and local increases.

Wage and Hour Investigations

If you want to know how President Biden feels about wage and hour issues, he wears it on his sleeve (or posts it at https://joebiden.com/empowerworkers/). Relying on a publication from the Economic Policy Institute, Biden asserts that employers steal about $15B each year “from working people just by paying workers less than the minimum wage. On top of that, workers experience huge losses in salary caused by other forms of wage theft, like employers not paying overtime, forcing off-the-clock work, and misclassifying workers. At the same time, these companies are raking in billions of dollars in profits and paying CEOs tens and hundreds of millions of dollars. “

The Department of Labor is a Cabinet-level department. We expect Biden will immediately provide increased funding and aggressive directives for investigative units in federal labor and employment agencies. 

What does this mean for employers? It means that now is the best time to make sure that your wage and hour practices (overtime, classifications, regular rates of pay, etc.) are in compliance.

Empower Union Organization

Again, through the Department of Labor, the President can issue directives to streamline the union organizing process, and to impose severe penalties for employer interference, including threatening individual liability. While we expect these measures will happen in the near-term, we do not expect that it will have a major impact on employers. In reality, these measures will provide limited empowerment to existing unions, but should not result in any widespread union organization activities.

OSHA Investigations and Citations

President Biden will appoint a permanent Assistant Secretary of Labor over OSHA and will be appointing two Commissioners. As Stephen Matasich, BMD’s OSHA leader, points out, OSHA will have an increased budget and staff to investigate and cite COVID-19 issues, as well as violations under the General Duty Clause. OSHA has been too quiet for too long, and a significant wave of enforcement is on its way under new leadership. 

What Will Probably Happen? (Mid-range planning)

  • Prohibition on Arbitration Agreements
  • Elimination of Non-Competes/Restrictive Covenants
  • Modified Independent Contractor test

Arbitration Agreements Under Attack (Again)

Biden wants to ensure workers can have their day in court by ending mandatory arbitration clauses. It was a focus of his efforts as Vice President. Our evaluation is that this will be difficult for him to accomplish through legislation and after the Supreme Court decision in Lamps Plus Inc. v. Varela. However, there has been a surge of state cases determining that arbitration agreements are unenforceable due to improper or unclear terms. It is imperative to keep arbitration agreements up to date, and to replace any agreements with impermissible terms.

Elimination of Non-Compete Agreements

On October 25, 2016, the Obama Administration issued a “Call to Action” urging states to eliminate or reduce the use of restrictive covenants in employment agreements. Even though this was not a law or even an executive order, it has been disruptive over the past four (4) years, particularly to our multi-jurisdictional clients. Restrictive covenants are disfavored by states and state courts, and employers should not use a “one size fits all” set of agreements and policies.  Biden has promised to take the Call to Action from his final months as Vice President and introduce it as a workplace platform for his presidency. For employers, this means that restrictive covenants should be written precisely and, when possible, substituted for non-solicitation, non-disclosure, and non-circumvention terms. 

Independent Contractor Status

As president, Biden has promised to work with Congress to establish a federal standard modeled on the ABC test for all labor, employment, and tax laws. Under the ABC test, a worker is an employee, and not an independent contractor. That worker can only be classified as an independent contractor if the hiring entity proves all three (3) of the following:

  • 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.

The words may seem innocent enough, but the ABC test originated in California. Ask almost any California employer about the effects of the ABC test, but first make sure you clear the rest of your day for the sobbing.

For clarification, Biden has promised to establish a standard “model” on the ABC test, and not the actual ABC test. Expect a push for a consistent test for independent contractor status.

What Might Happen?

  • National Paid Leave
  • Shift back to employee-friendly NLRB
  • Revisit FLSA overtime thresholds

National Paid Leave

Since the Obama administration, there has been growing support for a national paid leave plan.  Even during the 2016 campaign, Donald Trump and Hilary Clinton agreed upon an expansion of paid leave under the FMLA.[2]  In April of 2020, the FFCRA emergency paid leave opened the door to nationwide leave for small businesses. In October of 2020, Trump approved parental leave for federal employees. A permanent national paid leave plan for all (most) employers is a possibility, and some legislation is already in process. As with any legislative effort, employers will have plenty of lead time. Please bookmark this BMD page and check back for updates as the legislation develops.

Employee-Friendly NLRB

Truth be told, this wasn’t much of a prediction. Each president appoints the National Labor Relations Board, which can have up to 5 members to hold 5-year, non-overlapping terms, with one Board member rotating off each year. When Trump took office, the Board was 2-1 Democrat, with 2 open seats. His appointments gave Republican control, which led to employer-friendly decisions. When Biden takes office, the Board will be 3-1 Republican, with 1 open seat for appointment. In August of 2021, the term of a Republican appointee will expire. At that time, Biden can appoint a second member and make the composition 3-2 in favor of Democrat appointments. Again, check back in over the summer, but we anticipate that the major cases to be decided will focus on the scope and definition of “Protected Concerted Activity” between employees. Other matters for the Board will focus on are the Persuader Rules and the determination of “supervisory status.”

Revisit FLSA Overtime Thresholds

This issue may be too low in our prediction chart. In 2016, Biden led the effort to revamp the FLSA and increase the overtime salary exemption threshold from $23,660 to $47,476. The DOL’s regulations were set to go into effect in 2017 until being blocked by a federal injunction.  Rather than contesting the injunction, the Trump administration then decided it would not defend the rule changes. Instead, it implemented a reduced salary exemption threshold of $35,568.

When addressing the proposed changes for clients back in 2016, we found a wide swath of exempt employees in the $38k-$45k salary range, which would have caused significant overtime disruption if the rules went into effect. 

The opinions in this article are for informational purposes only and should not be construed as legal advice. They’re predictions!

For any additional information, please contact Jeffrey C. Millerjcmiller@bmdllc.com, Russell Rendallrtrendall@bmdllc.com, Stephen Matasich  - sematasich@bmdllc.com or any member of the BMD L+E Team: 

 

[1] The Biden COVID Plan does not identify who would pay the Independent Contractors

[2] Not to keep touting our predictions, but we did let employers know that Trump would not ultimately create a paid leave plan because VP Pence and GOP lawmakers opposed it as an improper expansion of government.


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