Beltway Buzz: 2021 Labor and Employment Forecast

The results of the 2020 national elections are (mostly) in. Former vice president Joseph Biden is now President-elect Joseph Biden. Democrats have managed to hold the U.S. House of Representatives, but they will be working with the slimmest House majority in years. Control of the U.S. Senate is still not known at this time, though Republicans enjoy a 50–48 majority as we await two runoff elections in Georgia scheduled for January 5, 2021. If Democrats win both of those races, they will seize control of the upper chamber, as the vice president (who under the Constitution of the United States also serves as president of the Senate) can provide a tie-breaking vote in the event of a 50–50 deadlock. Any other outcome in Georgia will tilt the Senate balance in favor of Senator Mitch McConnell (R-KY) and the Republicans.

While the results of the congressional elections may put a damper on a robust Democratic legislative reform agenda, the Biden presidency will still bring a dramatic shift to the federal labor and employment policy landscape. The 180-degree turn in regulatory employment policy priorities that will likely result will undoubtedly create uncertainty for employers, which are already dealing with a pandemic and an unstable economy. Set forth below are the major labor and employment policy changes to anticipate for 2021.

I. Executive Actions

The quickest and easiest way for newly sworn-in President Joe Biden to initiate policy changes will be by rescinding certain executive orders issued by then former president Donald Trump and issuing his own executive orders. Revoking myriad Trump executive actions relating to immigration will top the list, including those relating to refugees and asylees, certain COVID-19–related travel restrictions, and the ban on certain nonimmigrant visas (Presidential Proclamation 10052 of June 22, 2020). In turn, Biden is likely to reinstitute the Deferred Action for Childhood Arrivals (DACA) program, as well as the temporary protected status of certain eligible nationals.

In the employment law space, Biden is expected to revoke President Trump’s Executive Order on Combating Race and Sex Stereotyping, which is opposed by civil rights groups and members of the business community. It is very possible Biden may follow this action with a proactive requirement on federal contractors to require diversity and inclusion or implicit bias training and programs. Additionally, Biden may also attempt to resuscitate a version of former president Barack Obama’s Fair Pay and Safe Workplaces executive order.

II. Congress: A More Modest Agenda

Leading up the election, there was much speculation regarding whether the Democrats would abandon the legislative filibuster in the event that they took control of the Senate. Such a move would allow senators to pass legislation with a simple majority vote (51 votes), rather than the 60-vote threshold that is currently required. Eliminating the filibuster would be a monumental and historic change to the way bills are drafted and passed in Congress. In this scenario, a Senate without the filibuster would enable Democrats to expand the number of seats on the Supreme Court of the United States and to pass legislation dealing with the COVID-19 crisis, voting rights, gun control, climate action, LGBTQ rights, and more.

The elections and political aftermath, however, have created a situation in which the filibuster will more than likely survive. At best, the Democrats would have 50 senators in 2021. A tiebreaking vote by a Vice President Kamala Harris would, therefore, appear to give the Democrats the necessary votes to scrap the filibuster, but Senator Joe Manchin (D-WV) has already stated that he will not vote to eliminate the filibuster, and others in the Senate Democratic Caucus have expressed similar concerns. Thus, with the filibuster likely remaining intact, Republicans will be better able to thwart the Democrats’ legislative efforts, even if the Democrats win both Senate races in Georgia. Similarly, if Republicans prevail in one or both of the Georgia races, Senate Democrats will be able to filibuster Republican bills. (The White House and House of Representatives would also obviously work as a check on the Senate.)

A. Potential Employment-Related Legislation

Of course, this is not to say that the chances of employment-related legislation being enacted are nil. If the political winds blow in just the right way, there is a possibility that one or some of the following bills could be enacted into law.

COVID-19/Economic Relief. As cases of COVID-19 continue to surge and state governments consider reinstituting more lockdown restrictions, there will be continued pressure on Congress to pass an economic stimulus package. Republicans and Democrats are in agreement about the need for funding to combat the virus (e.g., money for vaccines, testing, etc.), assist schools and childcare providers, and provide for a certain amount of expanded unemployment insurance. Like everything else in Congress, however, the devil is in the details regarding particular issues. More polarizing are the Republicans’ demand for liability protections from COVID-19–related lawsuits, as well as the Democrats’ demand for language requiring the Occupational Safety and Health Administration (OSHA) to develop a COVID-19–specific emergency temporary standard. It is unclear whether either side is willing to compromise on these issues.

Pregnancy Accommodation. The proposed Pregnant Workers Fairness Act (H.R. 2694) would clarify protections for pregnant workers under federal discrimination laws and would require employers to provide reasonable accommodation—such as more frequent restroom or water breaks—to those employees. The bill passed the House of Representatives in September 2020 by a vote of 329–73 (including 103 Republicans) and enjoys the support of the business community.

Paid Leave. The political debate surrounding federal paid family/sick leave legislation has evolved dramatically over the last several years. While Democrats have long supported such legislation, Republicans have only recently started to come on board with the concept (though they still have concerns about cost, scope, the need for preemption, etc.). Three recent developments have pushed the debate forward: (1) the increasing patchwork of state and local paid leave law requirements, (2) the new paid family leave benefit for federal government employees beginning in 2021, and (3) the paid family and sick leave provisions of the Families First Coronavirus Response Act (FFCRA) that provided a glimpse of a national requirement. Legislation in 2021 will remain a challenge, but the parties are inching—perhaps incrementally—closer.

Multiemployer Pension Fix. It is getting harder and harder for legislators to keep kicking the can down the road with respect to the multiemployer pension crisis. Accordingly, there is some bipartisanship on this matter in that there is recognition by both parties of the problem. Some combination of premium increases and loans is the compromise position. There could be some action on this issue during the lame-duck session of Congress following the elections, but it could also slip to 2021.

Immigration. On July 10, 2019, the House of Representatives passed the Fairness for High-Skilled Immigrants Act of 2019 (H.R. 1044) by an overwhelming vote of 365–65. The bill would eliminate the 7 percent per-country cap for employment-based immigrant visas. Proponents of the bill have so far been unsuccessful in passing the bill in the Senate via unanimous consent.

B. Employment-Related Activity in the U.S. House of Representatives

Though their majority will be slim, House Democrats will likely reintroduce and seek to advance multiple employment-related bills in 2021. In response, Republicans and the business community will try to peel off a number of Democrats to spoil any potential floor votes. Expect action on the following issues:

COVID-19/Economic Relief. If negotiations break down on a bipartisan economic stimulus, Democrats in the House will likely proceed on their own and move on the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which passed the House of Representatives twice in 2020. Among other provisions, the HEROES Act would:

• extend Pandemic Unemployment Assistance (for those workers who do not traditionally qualify for unemployment insurance (UI), such as independent contractors); Pandemic Extended Unemployment Compensation (providing an additional 13 weeks of benefits); and the Federal Pandemic Unemployment Compensation (FPUC) program, which provides displaced workers with $600 per week on top of their weekly UI benefits;
• require OSHA to issue an emergency temporary standard for certain at-risk industries; and
• extend the FFCRA emergency family and sick leave provisions for the remainder of 2021 and apply them to all employers, regardless of size.

Protecting the Right to Organize (Pro) Act. The Protecting the Right to Organize Act passed the House of Representatives in early 2020. It will be the top labor policy priority for congressional Democrats. The bill would:

• codify Browning-Ferris Industries (joint employer);
• codify Specialty Healthcare (gerrymandered units);
• codify Purple Communications (email access);
• codify the 2014 “ambush” election rules;
• codify the 2016 “persuader regulation”;
• prohibit right-to-work laws;
• provide for “stealth” card check;
• codify California’s controversial AB 5 on independent contractors into the National Labor Relations Act (NLRA);
• provide a private cause of action for unfair labor practices (ULPs);
• restore and codify the Board’s failed “notice posting” requirement;
• allow for new civil penalties, including liquidated damages;
• require binding arbitration for first contracts;
• overturn the Supreme Court of the United States’ decision in Epic Systems, effectively prohibiting employment arbitration agreements;
• prohibit employers from permanently replacing strikers; and
• allow for secondary boycotts.

Worker Flexibility and Small Business Protection Act. Introduced in Congress in September 2020, this bill has not yet gone through the legislative vetting that the PRO Act has. But the bill could quickly draw the attention of congressional Democrats, as it dramatically amends federal employment laws, with a particular focus on independent contractors and temporary workers. The bill would:

• codify California’s “ABC test” for independent contractors as part of most federal labor and employment laws;
• greatly expand joint-employer tests throughout labor and employment laws, and extend liability to certain owners, officers, and shareholders;
• create a “standalone violation” for incorrectly classifying a worker as an independent contractor, rather than an employee;
• set unique wage and hour standards for certain “transportation and network dispatching workers”;
• require temporary employees to be paid the same as “direct” employees and require that temporary employees be converted to “direct” employees after one year of service;
• amend the Fair Labor Standards Act (FLSA) to include a “private attorneys general” provision;
• require an employer with 100 or more employees to file with the U.S. Department of Labor (DOL) a “supply chain responsibility plan” describing its processes for ensuring that its suppliers and vendors do not violate labor and employment laws in the United States and abroad; and
• require an employer to publicly post on its website and main entryways its labor and employment law compliance record and “rating” over the last three years, including through the use of emojis.

Paycheck Fairness Act. Among other provisions, the Paycheck Fairness Act would amend the Equal Pay Act of 1963 by replacing the “factor other than sex” defense with a “bona fide factor” defense that must be “job-related” and “consistent with business necessity”; would provide for uncapped compensatory and punitive damages; would require the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP) to develop mechanisms for the collection of employee compensation data from employers; and would enact prohibitions on the use of, or inquiry into, applicants’ pay history.

Immigration. The last time Democrats controlled the Senate they passed bipartisan comprehensive immigration reform. Biden has vowed to take another crack at this and promises that he will “commit significant political capital to finally deliver legislative immigration reform.” It is also possible that Democrats will focus on targeted relief measures for Dreamers and/or temporary protected status (TPS) recipients.

Raising the Minimum Wage. The House passed the Raise the Wage Act in 2019. The bill would gradually increase the federal minimum wage over a six-year period to $15 per hour. The bill also indexes the minimum wage to inflation and would phase out the separate minimum wage for tipped employees. While a long shot—especially if the COVID-19 pandemic continues and the economy remains on shaky grounds—it is possible that Senate Republicans would be willing to cut a deal if the terms and legislative package were right.

III. U.S. Department of Labor

A. Who Will Be in Charge?

There is a saying in Washington, D.C., that “personnel is policy.” Whomever Biden nominates to run the various labor and employment related agencies will have an enormous influence on federal labor and employment policy. Democrats may have learned a lesson from former president Obama’s appointment of Congresswoman Hilda Solis to helm the DOL during his first term. Solis did not come into the job with much labor and employment experience and did not advance Democrats’ agenda as quickly as they would have liked. Indeed, the DOL’s regulatory machine really did not hit its stride until former president Obama’s second term, when Thomas Perez became secretary of labor. Thus, look for Biden to appoint a secretary of labor who is aggressive, savvy, and experienced.

The process of taking over functions at the DOL has already begun. Biden announced his “agency review teams” to begin evaluating agency operations in anticipation of the shift in executive power in January 2021. The labor review team (overseeing the DOL, the National Labor Relations Board, and the EEOC, among other agencies) includes many familiar faces from the Obama administration. Individuals such as Jenny Yang (former EEOC chair), Seth Harris (former DOL deputy secretary and acting secretary of labor), and Patricia Smith (former DOL solicitor) will likely join others from organized labor, academia, and progressive think tanks in beginning the initial overhaul of the DOL. This group will likely influence the selection of Biden’s DOL nominees and may even be candidates themselves.

Expect the DOL of the Biden administration to be aggressive from the start, in terms of both regulatory actions and enforcement proceedings. Clawing back some of the initiatives of the DOL of the Trump administration will, of course, be a priority. But beyond that, expect this DOL to go on the offensive with an agenda that is even more progressive than that of the Obama administration’s DOL.

B. Occupational Safety and Health Administration

The ongoing COVID-19 pandemic has thrust OSHA into the spotlight, and workplace safety will likely be the priority of the Biden DOL. First and foremost, this likely means quickly putting forward a nominee to be assistant secretary of labor for occupational safety and health. Additionally, expect OSHA to begin developing a COVID-19–specific emergency temporary standard right away. Enforcement is likely to tick up, too, especially with regard to COVID-19–related complaints. Finally, while it was not abandoned entirely by the current OSHA, a Biden OSHA can be expected to return to a much more aggressive “regulation by shaming” campaign through the use of conclusory press releases.

C. Wage and Hour Division

In addition to an aggressive enforcement strategy, the Wage and Hour Division (WHD) of the DOL will undoubtedly pursue a robust regulatory agenda that could potentially be described as “repeal and replace.” The agenda will likely include the following initiatives:

• Joint Employer. The Trump DOL’s joint-employer regulation under the Fair Labor Standards Act has been enjoined by a federal court. Whatever the legal status of the regulation, a Biden DOL is expected to “repeal and replace” the rule with a broader and more amorphous joint-employer standard.
• Independent Contractor. Similarly, if the Trump administration finalizes an independent contractor regulation, it will quickly be targeted for reversal. Senate Democrats may try to repeal it by using the Congressional Review Act (though they are unlikely to have the votes and doing so would severely limit Democrats’ ability to promulgate their own version of an independent contractor regulation). If Congress does not act, the incoming administration will rescind the regulation via rulemaking. The Biden DOL may then proceed to issue its own version of an independent contractor standard, but the controversy surrounding AB 5 in California may give them pause.
• Overtime. A federal court ruling in late 2016 blocked the enactment of the Obama administration’s overtime rule. Although the Trump DOL finalized its own overtime rule in September 2019 that increased the salary basis threshold, the level probably will not satisfy a Biden DOL, which most likely will want it to be at $47,000 or higher and may also look to make changes to the duties test.
• Opinion Letters. Opinion letters offer a way for stakeholders to seek assistance from the DOL when confronted with difficult questions as to the application of federal wage and hour law. In 2010, the Obama administration ended the opinion letter process in favor of sweeping Administrator’s Interpretations. The opinion letter program was reinstated in the current administration, but may be jettisoned in a Biden DOL.
• PAID Program. A Biden WHD can be expected to do away with the Payroll Audit Independent Determination (PAID) program that encourages employers to self-report wage and hour violations.

D. Office of Federal Contract Compliance Programs

In 2019, OFCCP hauled in a record-breaking $40 million plus in legal settlements with federal contractors. That figure does not tell the whole story of the OFCCP in the Trump administration, but is indicative of an aggressive enforcement philosophy that carried over from the Obama administration (despite welcome efforts towards compliance assistance and transparency). Expect a Biden OFCCP to push this enforcement posture even further, particularly when it comes to alleged compensation discrimination (though whoever is running OFCCP in 2021 will have to work around a 2020 high profile ruling against OFCCP that calls into question the agency’s statistical analyses).

Additionally, OFCCP will likely pursue the following changes:

• Roll back policies and processes established pursuant to President Trump’s Executive Order on Combating Race and Sex Stereotyping.
• Implement affirmative diversity and inclusion obligations pursuant to a potential executive order.
• Rescind any regulation relating to religious organizations with federal contracts.
• Restart the 2014 compensation data collection tool proposal. This regulation never got off the ground and was overtaken by the 2016 wage and hour data collection changes to the EEO-1 form. In part because the EEOC will have a Republican majority through at least mid-2022, OFCCP may seek to revive this proposal.

IV. National Labor Relations Board

Republicans will maintain a majority at the NLRB at least into the summer of 2021, though Democratic member Lauren McFerran will assuredly be named chair in early 2021. She could look to slow down the issuance of case decisions, and especially rulemakings, until reinforcements arrive. Of course, if Republicans retain a majority in the Senate, Majority Leader Mitch McConnell will have a say in who gets confirmed to the Board and when.

Once Democrats gain a majority on the Board, it will come as no surprise that they may seek to roll back current Board policies and return to policies that favor unions. Assuming that Congress fails to enact the PRO Act, a Board with Democrats in the majority may attempt to enact the legislation administratively, where possible. Other action items for a Democrat-controlled NLRB include:

• Joint Employer. In February 2020, the Board issued a final rule that reestablished the direct and immediate control standard that existed for decades prior to the 2015 Browning-Ferris Industries (BFI) A new Board can be expected to undo this rule and issue its own rule that cements BFI via regulation.
• Election Procedures. A new Board may look to restore all elements of the “ambush” election rules that went into effect in 2015 but which were amended in 2019.
• Employee Choice Regulations. A new Board will reverse 2020 final rule changes to the Board’s standards on blocking charges, voluntary recognition, and Section 9(a) bargaining relationships in the construction industry.
• Other Changes. Over time, expect a Board dominated by Democrats to address the following issues via case law or regulation:
• • Fractured bargaining units (Specialty Healthcare)
  • Employee use of email (Purple Communications)
  • Independent contractors
  • Graduate students
  • Contract bar
  • Secondary activity
  • Employee discipline
  • Dues checkoff
  • Arbitration deferral

V. Equal Employment Opportunity Commission

Recent appointments to the EEOC will give the Commission a Republican majority through at least mid-2022. Further, Republican-appointed general counsel, Sharon Fast Gustafson, will remain in office until 2023. But as with his likely selection of an NLRB chair, Biden can be expected to name a Democratic commissioner (likely Charlotte Burrows) as the chair. In this scenario, Burrows will control the agenda, meaning that the EEOC will try to finalize a conciliation regulation prior to January 20, 2021. Further, the odd dynamic of having a chair who is in the minority will undoubtedly influence, and likely delay, the Commission’s position on a pending National Academy of Sciences analysis of EEO-1 pay and hours worked data, as well as the development of a rule on employer-sponsored wellness programs.

Of course, in Democratic hands, the Commission can be expected to explore ways to collect compensation data from employers. Additionally, a Commission with Democrats in the majority could revoke a September 2020 opinion letter clarifying EEOC’s interpretation and enforcement of “pattern or practice” litigation under § 707(a) of Title VII of the Civil Rights Act of 1964. The letter confirms that when pursuing § 707 pattern-or-practice cases, the EEOC must follow the same administrative prerequisites as when pursuing § 706 cases on behalf of individual employees, such as the requirement of an underlying charge of discrimination and engaging in conciliation.

VI. Immigration

Chances are that a Biden presidency will be friendlier to business immigration needs than the current administration, but this does not mean that there won’t be any challenges for employers that supplement their work forces with high-skilled foreign labor. Biden has a populist/protectionist streak and his campaign website states the following:

Biden will work with Congress to first reform temporary visas to establish a wage-based allocation process and establish enforcement mechanisms to ensure they are aligned with the labor market and not used to undermine wages. Then, Biden will support expanding the number of high-skilled visas and eliminating the limits on employment-based visas by country, which create unacceptably long backlogs.

Thus, employers should not expect all scrutiny of the high-skilled nonimmigrant visa programs to disappear with a Biden victory. That being said, expect a Biden administration to:

• restore DACA and TPS programs;
• reaffirm the rule allowing employment authorization for certain H-4 spouses of H-1B nonimmigrants;
• rescind (or not defend) the U.S. Department of Homeland Security’s rule on Strengthening the H-1B Nonimmigrant Visa Classification Program and accompanying DOL wage rule;
• rescind the Inadmissibility on Public Charge Grounds final rule;
• evaluate and possibly rescind current travel bans, although the COVID-19 travel bans may take time to rescind as the situation evolves;
• rescind the proposed “duration of status” rule for nonimmigrant academic students, exchange visitors, and representatives of foreign information media; and
• rescind the proposed rule on the collection and use of biometric data in the enforcement and administration of immigration laws.

The Buzz will be off next week for the holiday. We will return on December 4, 2020.