December 17, 2021
The Biden administration’s 2021 Fall Regulatory Agenda includes significant proposed rulemakings on immigration, data privacy and AI, labor and employment, wage and hour, health care, workplace safety, and federal contracting, setting the stage for an ambitious and broad regulatory overhaul in several key areas impacting large employers.
NLRB Joint employer rule to expand liability on employers: The National Labor Relations Board estimates it will issue a proposed rule in February 2022 that will define joint employer status under the National Labor Relations Act. The proposed rule will likely impose liability on employers for the labor violations of franchisees, contractors, suppliers, and other similar third-party relationships, as long as the employer has indirect and unexercised control over the employees of the third party. The Board rescinded a Trump-era standard under which joint employer liability only existed where the employer exercised direct and continuous control in such situations.
DOL Rule on overtime and minimum wage exemptions may require employers to reclassify employees: The Wage and Hour Division anticipates it will issue a proposed rule in April 2022 which will likely increase the weekly salary threshold (currently $684) that determines which employees are exempt from overtime and minimum wage requirements under the FLSA. Depending on the increase, employers may be required to reclassify employees as non-exempt, and accordingly change compensation structures.
Federal contractor affirmative action obligations to increase: The OFCCP will issue several proposed rules, including a rule to “modernize” affirmative action programs and recordkeeping requirements under EO 11246 which may require more affirmative action obligations regarding the LBGTQ+ community, as well as a rule that will change procedures and enforcement of discrimination claims. Such changes may include evidentiary standards and conciliation procedures.
Mental health parity rules clarify employer plan responsibilities: DOL/EBSA will issue amendments to the final rules implementing the Mental Health Parity and Addiction Act (MHPAEA) in July 2022. The amendments are intended to clarify employer plan responsibilities under the law given updates in the Consolidated Appropriations Act of 2021. The Build Back Better "reconciliation" bill would also include civil monetary penalties for employer plans that do not meet parity requirements under the law.
Immigration changes signal potential difficulty in hiring high-skilled talent: The good news: the Biden administration is no longer defending an invalidated Trump-era policy that would have severely restricted employers’ ability to hire early- to mid-career workers on H-1B visas, and it is unclear whether we can expect a similar proposal in the future. However, several troubling rulemakings are expected regarding hiking wage requirements for H-1B workers and redefining the employee-employer relationship, which could potentially create joint employer confusion.
Employer data practices under microscope as Federal Trade Commission considers rulemaking: The FTC is considering rulemaking “to curb lax security practices, limit privacy abuses, and ensure that algorithmic decision-making does not result in unlawful discrimination.” The advance notice of proposed rulemaking comes after a group of Democratic Senators urged the Commission to “set clear safeguards on the collection and use of personal data in the digital economy.”
Outlook: With legislative avenues already largely closed, and midterm elections that could flip Congress to Republicans looming, employers can expect the Biden administration to work as quickly as possible in rolling out labor and employment policy changes through regulation and executive action.