Businesses brace for deluge of new regs from Biden's labor cops

D.C.’s slowest month is going to be one of the busiest for the nation’s labor cops.

President Joe Biden’s appointees are poised to dramatically reshape the work lives of tens of millions of workers and the businesses that employ them. The Department of Labor, National Labor Relations Board and Equal Employment Opportunity Commission — each operating on a separate track — are readying to push out new regulations and rules on everything from overtime pay to who counts as an employee.

The packed agenda will allow Biden to champion his pro-worker agenda as his re-election campaign heats up and the president works to tamp down grumbling from some segments of organized labor, most notably the United Auto Workers.

Employers are bracing for the deluge, as August shapes up to be the start of a critical stretch for the federal government’s top workplace enforcers.

“It’s coming, and it’s coming in a big way,” Ed Egee, a vice president at the National Retail Federation, told POLITICO.

Several of the policies being developed have been in the works since the early days of Biden’s term but are only now coming to a head.

After a lull in public activity that overlapped with former Labor Secretary Marty Walsh’s departure and Julie Su’s bruising confirmation effort to succeed him, DOL in recent weeks has picked up the pace of its rulemaking.

This summer the agency has proposed safety standards for coal miners’ exposure to hazardous silica dust, completed a requirement that employers using anti-union consultants disclose their federal contractor status, and sent over language for several regulations to the OMB’s Office of Information and Regulatory Affairs — typically one of the final hurdles before public release.

DOL also has several closely watched policies that have not yet been finalized, including a revamp of the regulations that govern prevailing wage standards for federally funded construction projects, commonly known as Davis-Bacon, that has idled for nearly a year and a half since the initial proposal was released in March 2022.

But above all, employers are bracing for the unveiling of new DOL rules potentially expanding overtime pay requirements for millions of workers and a tighter definition of which workers can be classified as independent contractors instead of employees.

Both will inevitably face court challenges — including some that may seek to invalidate DOL’s policies by contesting Su’s ability to serve as acting secretary — and have been the subject of intense lobbying from both business groups and labor unions.

Raj Nayak, DOL’s assistant secretary for policy, said its regulatory agenda is a “key part of our broader efforts to improve the lives for workers around the nation.”

“The rules are a key part of our broader effort to make real improvements in workers’ lives — to give them more money in their paychecks, make sure they come home from work safe and healthy, that all workers have real opportunities, and that they can rest at night knowing their pensions are protected,” Nayak said in a statement.

The regulatory rush is partly being driven by the calendar. NLRB, in particular, is facing a time crunch as Democratic board member Gwynne Wilcox’s term expires August 27.

“The board is going to have a very, very active month of August,” Michael Lotito, who represents businesses for the law firm Littler Mendelson. “If you're thinking about going on vacation in August, you're going to have to take some time to see what the board is up to."

Democrats currently have a 3-1 majority, but the board has historically refrained from issuing precedent-shifting decisions and taking other controversial actions without at least three votes in support. Chair Lauren McFerran, whom Biden tapped in 2021, is viewed outside the agency as an institutionalist unlikely to break from that precedent, so Wilcox’s absence could bring consequential actions to a halt.

An NLRB spokesperson declined to comment.

Biden has re-nominated Wilcox for another term. But with Congress in recess for the month, a lapse is virtually guaranteed, though it is an open question for how long that will be.

As such, the board is expected to hand down decisions on several high-profile cases in the coming weeks — as it did Wednesday when the Democratic majority altered the framework used to assess the legality of employee handbooks and other workplace rules.

Companies fear the move will lead to even boilerplate conduct policies putting them at risk of NLRB investigations.

The ruling “inserted instability and confusion into the workplace and created risks for employers attempting to implement common sense policies that protect workers, customers, and the community,” Kristen Swearingen, head of the business-backed Coalition for a Democratic Workplace, said in a statement.

The NLRB is also racing to finalize regulations for determining joint-employer status, or when a worker is subject to two or more employers linked together in some way.

The issue is of particular importance to the tech and fast-food industries, among others, as the initial proposal released last fall would make it easier for the NLRB to hold companies liable for labor law violations committed by their franchisees or contractors.

“We really question how that’s how that's going to be implemented,” the National Retail Federation's Egee said, adding that the group is prepared to go to court over the issue.

While DOL and the NLRB have garnered the bulk of the pushback from businesses under the Biden administration, the EEOC has struggled. Democratic appointees have yet to hold a majority on the five-member panel during Biden’s time in office — boxing in Chair Charlotte Burrows.

The Senate in early July voted narrowly to confirm Kalpana Kotagal, whom Biden nominated more than a year prior. Kotagal will swing the commission over to Democrats — once she arrives, that is.

Kotagal is still in the process of joining the EEOC and does not have an official start date, she wrote in an email Friday.

Burrows’ window of opportunity may be brief. The chair’s own term has expired, and she will have to vacate her seat at the end of the year if the Senate does not reconfirm her.

That leaves only a few months for EEOC Democrats to act before they may again face a 2-2 split in 2024.

Burrows has been a vocal proponent of enhancing pay data reporting requirements as a tool to measure — and combat — wage disparities. The business community bristled at a previous attempt by the Obama-era EEOC to collect this data through the EEO-1 form that tracks workforce demographics, arguing it was too onerous and of questionable utility.

“We are very much expecting to see a return to some type of compensation reporting requirements that they tried to do back in the Obama era,” said Marc Freedman, vice president of employment policy at the U.S. Chamber of Commerce. However, "there’s a real sort of uncertainty on how they proceed on that issue."

An EEOC spokesperson said it is continuing to review the recommendations from the outside analysis of the Obama EEO-1 policy it commissioned and that any future changes would receive ample opportunities for public notice and comment.

There are other factors bearing down on Biden’s labor agencies, namely Congress.

House Republicans have proposed steep budget cuts for all three, which if enacted would likely require trimming headcount and other reductions. On the other hand, Senate appropriators have proposed very slight funding cuts to DOL and EEOC while holding flat the NLRB, and lawmakers will have to meet over the coming months to hash out a spending deal.

Regulations completed late in a president’s term can also leave them vulnerable following the election cycle, either through use of the Congressional Review Act by a hostile majority or — in the event of a change in administration — by being kept from ever taking effect.

“Everybody watches the calendar, and everybody knows how long things really take,” said Patrick Pizella, a former deputy and acting Labor secretary during the Trump administration.

He also said there is an emphasis on trying to get rules completed before the last year of a term to avoid last-minute bottlenecks or competing with other agencies for the administration’s attention.

“There's a tendency for departments to think that they're the only department that has something before OIRA,” he said. “That's just not the case. Their bandwidth is limited like everybody else.”