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DOL, Independent Agency Regulations Frozen by Biden Memo

Jan. 22, 2021, 11:00 AM

The Biden administration’s move to freeze pending Trump-era regulations halted a high-stakes Labor Department rule that would make it easier for businesses to designate their workers as independent contractors, and forces other federal workplace agencies to address rules that didn’t take effect before Inauguration Day.

The order, signed by President Joe Biden’s chief of staff on Jan. 20, immediately bars further advancement of rules that hadn’t been published in the Federal Register. A Biden-designated agency head must review or approve the rule before it can move on. Any rules sent for publication in the Federal Register also must be pulled back.

Biden also put the brakes on rules that published in the Federal Register but had not yet gone into effect. That includes the DOL’s independent contractor rule previously slated to take effect March 8, which would have far-reaching effects in the gig economy and other industry sectors. A newly finalized rule from the U.S. Equal Employment Opportunity Commission is also at the same stage.

The order advises agencies to “consider postponing the rules’ effective dates for 60 days” from Jan. 20, and to assess whether to open a 30-day public comment period on any delayed rules.

The memo doesn’t specifically address regulations from independent agencies such as the EEOC or the National Labor Relations Board, and some regulatory experts were split on whether those agencies should, or will, comply.

“It would be highly irregular and inappropriate for independent agencies to act in clear defiance of the memo, and so I would expect agencies to subject any rules that are published but not yet taken effect to further review pursuant to the memo,” said Amit Narang, who focuses on the federal regulatory process for Public Citizen, a consumer advocacy group.

He said independent agencies also are expected to “claw back” any rules that have been sent for publication to the Federal Register, but not yet published, per the memo’s instructions.

Former NLRB officials said that agency doesn’t have to defer to the White House on its regulatory actions. William Gould, a former Democratic board chairman, and Jerry Hunter, a former Republican general counsel, said the NLRB’s independence extends to its rulemaking power.

DOL Disruption

Other late-term DOL regulations that unions and worker advocates opposed are also now subject to review.

The department in December finalized a regulation that would allow businesses to pay tipped workers the lower minimum wage of $2.13 per hour, rather than the standard of $7.25, for hours spent on tasks that don’t generate gratuities. This rule, long sought by the restaurant industry, isn’t set to take effect until March 1 and on Tuesday it was challenged in court by attorneys general from eight states plus Washington, D.C.

If the states convince a judge to vacate the rule, the Biden administration wouldn’t need to undergo a new rulemaking process to reverse the regulation. But with the outcome of that lawsuit unclear, the department at least could halt the Wage and Hour Division from enforcing the rule on March 1.

Immigration Impacts

Several immigration proposals to overhaul various visa programs also missed the deadline for publication in the Federal Register, rendering them moot.

The Department of Homeland Security released a rule Jan. 15 that would have put additional requirements on H-1B employers who contract those workers out to third parties.

A final rule to expand biometrics requirements for individuals seeking immigration benefits also missed publication after it cleared the White House office of regulatory review Jan. 14.

Foreign students also caught a break from the flood of midnight rulings released by the Trump administration. DHS in September released a proposal that would give foreign students and exchange program participants on F and J visas two- to four-year time limits before requiring them to apply for an extension, rather than the current “duration of status” policy.

A number of other immigration rules also missed the cut, teeing up the Biden administration to reexamine other H-1B and H-2A regulations.

Independent Agencies Pause

The EEOC’s five-member leadership panel recently approved two regulations that are now in limbo.

The first rule would give employers more information from the agency during the conciliation process, an alternative route to litigation for solving workplace bias claims. It was published in the Federal Register on Jan. 13 and is slated to take effect Feb. 16.

The commission also approved a rule banning federal workers who serve as union representatives from using “official” paid time to work on their coworkers’ discrimination complaints, an action that drew pushback from unions. The EEOC approved the change Jan. 7, but it wasn’t published in the Federal Register before Jan. 20.

“Any final rule that has not been published in the Federal Register yet can be considered dead if the Biden administration does not want it to go through. That seems to be relevant to the official time rule,” James Broughel, a senior research fellow with George Mason University’s Mercatus Center, said in an email. “The Biden team can simply hold off publishing it, in which case it lacks legal force. I don’t believe that the fact that the rule comes from an independent agency should make a difference.”

He said publication in the Federal Register determines a rule’s legality, even though the commission voted to advance the rule.

The NLRB, which is still controlled by a Republican majority, has a few items left on its ambitious Trump-era regulatory agenda.

The board has yet to finalize regulatory proposals that would limit the information employers must give unions before elections and take away unionizing rights from university students working as teaching and research assistants.

To contact the reporters on this story: Paige Smith in Washington at psmith@bloomberglaw.com; Ben Penn in Washington at bpenn@bloomberglaw.com; Genevieve Douglas in Washington at gdouglas@bloomberglaw.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

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