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Biden-Harris administration is changing the employment landscape
18/05/2021
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US Department of Labor, Washington, DC
Authors
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Susan Harthill
Susan Harthill is a partner at Morgan Lewis & Bockius and a former deputy solicitor for national operations at the US Department of Labor
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Elizabeth Goldberg
Elizabeth Goldberg is a partner at Morgan Lewis & Bockius with a focus on Employee Retirement Income Security Act (ERISA) matters
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Eleanor Pelta
Eleanor Pelta is a partner at Morgan Lewis & Bockius and a specialist in immigration and nationality law

 

Early policy changes from the Biden-Harris administration have ushered in a more pro-employee approach to workplace issues. While much attention has been paid to issues like a $15 minimum wage and support for unions, the administration also has addressed multi-employer plans, diversity training, and immigration laws. We break down a few of the proposals that could alter the landscape for employers.

ESG and ERISA fiduciaries

A number of issues in the ERISA fiduciary space have already garnered the new administration’s attention, and there are certain clues about how a Biden Department of Labor (DoL) may impact the regulation and enforcement of ERISA’s fiduciary standards. In the final weeks of 2020, the DoL finalised two regulations on ERISA fiduciary duties: Financial Factors in Selecting Plan Investments (the ESG rule), and Fiduciary Duties Regarding Proxy Voting and Shareholder Rights (the proxy voting rule). But in early March, the department issued an enforcement statement announcing that it will not enforce either of the two new rules.

For those plans that were under a current DoL investigation related to environmental, social, and governance (ESG) usage, the department’s announcement probably signals the end of its current enforcement effort in this area. This development is also viewed as a sign that the Biden DoL will prepare a new set of regulatory interpretations in these two areas. However, it may be some time until the department proposes such new guidance. There is also some uncertainty because a non-enforcement policy does not remove either rule.

Pooled employer plans (PEPs) are a new form of multiple-employer plans that were made available by the 2019 SECURE Act (with broad bipartisan support), facilitating the operation of 401(k) plan arrangements for groups of unrelated employers. The effective date for the PEP rules was 1 January 2021. In 2020, the DoL adopted a regulation on the registration of pooled plan providers, the entities that sponsor and administer PEPs, and also requested comments on prohibited transaction issues for PEP arrangements. We expect that during 2021 the DoL will continue to issue guidance on the many operational questions arising with PEPs.

The DoL has also announced that it will have a continued focus on investment advice fiduciary standards, with a particular focus on advice to plan participants and retail investors, also known as the “fiduciary rule.” In February 2021, the department allowed one component of the Trump-era interpretation of the fiduciary rule, PTE 2020-02, to become effective. But a few weeks later, the DoL issued FAQs on the fiduciary rule that stated it will be taking further action in this space, including by (1) amending the investment advice fiduciary regulation, (2) amending PTE 2020-02, and (3) amending or revoking other available exemptions. As a result, it is expected that the Biden DoL will focus on continuing to issue rules that impact the fiduciary rule standards and, as the Obama DoL did, will seek to expand the scope of the definition of “fiduciary” to cover more forms of investment advice.

Then in April, the DoL issued a set of FAQs on the fiduciary rule and PTE 2020-02. In the FAQs, the department further stated that they will engage in more rule-making in the area. The DoL also signalled its intent to be aggressive in this area, noting, for example, that it expected to conduct investigations on the application of the fiduciary definition standards.

We expect that the DoL will continue its robust enforcement efforts, including a possible new focus on data and cybersecurity. In fact, the department recently issued new sub-regulatory guidance on the topic, which could be a further signal that investigations could be coming.

Enforcement efforts could also include the continuation and possible expansion of the “missing participant” investigations and possible DoL and US Securities and Exchange Commission (SEC) coordinated enforcement efforts on the new investment advice exemption and Regulation Best Interest. Another area the DoL could prioritise is whether health plans and administrators are complying with parity requirements related to mental health benefits (including whether there is compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA)).

Finally, in recent weeks, the DoL has identified that it is interested in evaluating the appropriate use by ERISA plans of private equity investment options. This is an area the department has taken interest in before but without significant enforcement and regulatory efforts. This could change under a Biden DoL.

Major labour and employment updates

President Biden has issued several key executive orders and the DoL has been active with rule-making and guidance to implement the administration’s employee-friendly agenda. As expected, the DoL has also taken steps to reverse Trump administration policies and realign with Obama-era policies.

Significant executive orders started on day one, with the rescission of a Trump executive order that had placed ambiguous restrictions on federal contractor diversity training. This provided immediate relief to federal contractor employers from reviewing, amending, and potentially suspending diversity training. The Office of Federal Contractor Compliance Programs (OFCCP) followed the executive order by halting investigations into employee complaints regarding diversity training and by closing a hotline that received such complaints.

President Biden also issued an executive order instructing the Occupational Safety and Health Administration (OSHA) to determine by 15 March whether to issue an Emergency Temporary Standard (ETS) regarding covid-19. Employers have been awaiting the issuance of an ETS and this delay has caused some confusion as to whether OSHA intends to do so, but on 26 April, Labor Secretary Marty Walsh indicated that the rule is under final review at the White House and should be issued within two weeks, another date which has come and gone.

President Biden’s instruction to all agencies to freeze and review proposed regulations and regulations that were not yet effective has also impacted some DoL and Equal Employment Opportunity Commission (EEOC) rules. This included the Wage and Hour Division’s independent contractor rule: DoL first delayed the effective date and has now withdrawn the rule. Other DoL rules are in litigation and subject to review and rescission, such as the joint employer rule and the OFCCP’s religious exemption rule. The EEOC released new proposed rules on the application of the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) to wellness programmes on 7 January 2021. Those rules were also pulled back from publication in the Federal Register by the Biden-Harris administration’s regulatory freeze.

Beyond executive orders and rule-making, the DoL has issued sub-regulatory guidance that may have slipped under the radar of some observers. Examples include a new set of FAQs posted on Wage and Hour’s website that include new covid-19-related guidance, and reinstating the agency’s approach to seeking liquidated damages in pre-litigation investigations. The department’s enforcement of these and other policies will be bolstered by the infusion of $200m in appropriated funds under the American Rescue Plan Act. Congress earmarked this additional money for certain DoL agencies “to carry out covid-19-related worker protection activities, and for the Office of Inspector General for oversight of the Secretary’s activities to prevent, prepare for, and respond to covid-19.”

Immigration

The Trump administration had implemented more than 1,000 immigration-related changes, radically altering the current immigration system. These changes were undertaken through executive actions, policy memoranda, and regulations. In a sharp about-face, the Biden-Harris administration quickly announced a series of immigration-related short-term and long-term measures favouring immigration. This included a freeze on all published regulations not effective on 20 January 2021; withdrawal of all regulations not published by 20 January 2021; the introduction of immigration legislation; and the appointments of new heads of immigration agencies.

President Biden revoked the Trump administration’s travel and immigration restrictions on a group of 13 countries, most of which are predominantly Muslim or African. He also ordered the departments of Justice and Homeland Security to take “all appropriate actions” to safeguard the Obama-era Deferred Action for Childhood Arrivals programme that offers works permits and deportation relief to more than 640,000 undocumented immigrants brought to the United States as children (so-called “Dreamers”).

In addition, after the US District Court for the Northern District of Illinois lifted its stay and vacated the Trump administration’s public charge rule, the US Citizenship and Immigration Services (USCIS) announced on 9 March that it would no longer apply the rule. The public charge rule essentially instituted a wealth test for individuals seeking lawful permanent residence, and required highly burdensome documentation of financial resources for applicants. The Biden-Harris administration announced that it would no longer defend the public charge rule in court, and USCIS has since formally withdrawn the rule. In addition, on 14 May the new administration formally rescinded the Trump administration’s policy of barring immigrants who could not demonstrate a certain level of health insurance.

President Biden rescinded Presidential Proclamation 10014, the prior administration’s ban that suspended the issuance of certain green cards overseas and barred entry into the US of certain groups of immigrants. As a result, US consular posts have begun to prioritise the scheduling of immigrant visa appointments for certain family-based applicants as well as employment-based applicants.

The administration allowed Presidential Proclamation 10052 (PP 10052) to expire as of 31 March. PP 10052, implemented by the previous administration in June 2020, had suspended the issuance of certain nonimmigrant or temporary visas in several categories. The expiration of PP 10052 means that individuals who were previously subject to the proclamation will no longer be prohibited from applying for a visa in certain categories, nor will such applicants be required to seek National Interest Exceptions (NIEs) to that specific proclamation.

This should be beneficial for companies and employees seeking to resume global mobility. However, it is important to note that regional covid-19-related travel restrictions are still in force, with the latest travel restrictions extended to India in early May. Therefore, notwithstanding the expiration of PP 10052, many US consular posts in countries subject to the travel restrictions are not scheduling visa issuance appointments unless they have determined that the applicant will meet the stringent requirements for an exception to the travel restrictions. As a practical matter, this situation continues to be challenging for businesses that seek to transfer highly skilled employees from abroad.

Finally, on 27 April USCIS reinstituted its longstanding deference policy, which had been rescinded under the Trump administration. The deference policy requires immigration adjudicators to give deference to prior decisions in the same visa matter, absent fraud or material changes. The reinstitution of the deference policy will increase stability and predictability in the immigration decision-making process and ensure that key talent can expect visa extensions for the same occupation and the same employer to be approved.

Plan ahead

With so many of the Biden-Harris administration’s initial actions aimed at addressing workplace issues, employers should be prepared for additional changes on the federal level. That could take the form of eliminating the previous administration’s rules and policies or the continued use of executive orders and agency directives. Many of these proposed changes could take several months to implement and take effect, but employers may want to develop a plan now to review their policies and practices.