Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Last week, President Biden marked his 100th day in office. This Lightbulb illuminates some of the more important developments affecting wage and hour law taken during the first 100 days of the Biden administration.
- Fight for $15. A top Biden administration priority remains increasing the minimum wage to $15. On April 27, President Biden issued an executive order requiring federal contractors and subcontractors to pay a minimum hourly wage of $15 (effective January 22, 2022) for workers employed in the performance of federal contracts or subcontracts. Thereafter, the minimum wage will be increased based on changes in the Consumer Price Index (or additional legislation changing the minimum wage). The executive order also includes a provision to phase out the tip credit for tipped employees while performing work under federal contracts or subcontracts. This follows the failure to get the proposal included in President Biden’s $1.9 trillion coronavirus relief bill. The administration can be expected to continue fighting to raise the minimum wage for all workers.
- Senate Confirmations. At day 100, the Senate had confirmed 28 nominations, but only one at the U.S. Department of Labor (DOL), Boston Mayor Marty Walsh as secretary of labor. In contrast, both Presidents Obama and Bush had three DOL-confirmed positions filled by their 100th day. As an avid supporter of the $15 minimum wage, Secretary Walsh will help implement the Biden administration’s policy changes, including those related to wages. Pending confirmation includes California Labor Commissioner Julie Su for deputy labor secretary, Rajesh Nayak, former deputy executive director at the National Employment Law Project, for assistant secretary of policy, and Elizabeth Watson as DOL’s top liaison to lawmakers. Biden has also put forth nominations to fill three court of appeals positions and nominated 10 people for district court judgeships.
- Wage and Hour Division (WHD) Personnel. President Biden intends to nominate Dr. David Weil as the next wage and hour administrator. Dr. Weil served in this capacity under Obama and was the author of the controversial Administrator Interpretations on Independent Contractors and Joint Employment, which were withdrawn under Trump. Dr Weil’s return to the head of the WHD will merely bolster the administration’s focus on these issues. Since Inauguration Day, Jessica Looman has been serving as the WHD’s principal deputy administrator, and she remains the senior-most official within the WHD.
- American Rescue Plan. The Biden administration’s crowning achievement within its first 100 days was the passage of this $1.9 trillion “relief package.” The package provides $200 million to the DOL, half of which must go to OSHA. WHD investigators are down approximately 25% from when Trump took office. The WHD has indicated between these extra funds and extra appropriations, the WHD seeks to make up this shortfall in investigators from which employers should expect more enforcement actions. The program also seeks to reimburse employers with less than 500 employees for paid sick leave related to COVID-19, including time to obtain vaccinations.
- Pre-Litigation Liquidated Damages. On April 9, 2021, the WHD issued Field Assistance Bulletin (FAB) 2021-2, rescinding FAB 2020-2 (June 24, 2020). The rescinded FAB had instructed WHD not to assess pre-litigation liquidated damages (i.e., a 100% penalty on wages owed) when certain conditions existed, such as no clear evidence of bad faith or willfulness, existence of bona fide disputes of unsettled law, or matters involving complex exemption issues. The new guidance reinstates prior policy of pursuing pre-litigation liquidated damages but still requires solicitor’s office approval.
- Independent Contractor and Joint Employment Rule. The Biden administration quickly proposed new rules that merely rescind the Trump Independent Contractor and Joint Employment rules. As the rules merely rescind and do not propose a new test, enforcement will revert to the Obama-era interpretation that limits workers’ ability to choose to work as independent contractors and hold more employers jointly and severally liable as joint employers.1
- Tip Rule. Certain portions of DOL’s tip rule (published December 30, 2020) were delayed until December 31, 2021, while DOL seeks additional information and considers changing those provisions. Specifically, two parts related to the DOL’s ability to assess civil monetary penalties and the part addressing the 80/20 or dual-job rule (i.e., where employees perform both tipped and non-tipped duties) have been delayed. The remainder of the rule went into effect.
- Helping Employees Understand Their Rights. DOL launched new initiatives to inform essential employees of their Wage and Hour rights as well as protections for all employees during the pandemic.
- Withdrawing Opinion Letters. In the final weeks of the Trump administration, the WHD issued a flurry of opinion letters. Since Inauguration Day, the WHD has already withdrawn three of those opinion letters: FLSA2021-4 (addressing restaurant tip pools); FLSA2021-8 (addressing the independent contractor status of distributors); and FLSA2021-9 (addressing the independent contractor status of motor carriers). The WHD explained that the issuance of these opinion letters was premature as they relate to the new tip and independent contractor rules that had not yet gone into effect. More recently, the WHD withdrew two opinion letters issued in 2019: FLSA2019-6 (addressing the independent contractor status of service providers in the so-called “gig economy”) and FLSA2019-10 (addressing whether time spent in a truck’s sleeper berth during multi-day long-haul trips is compensable). Going forward, most employers should not rely on these withdrawn opinion letters as a defense to liability. The WHD is expected to continue withdrawing opinion letters and other sub-regulatory guidance, especially any issued during the prior administration. In his prior stint, Dr. Weil chose to issue administrator interpretations rather than opinion letters. If confirmed, we expect WHD will revert to that practice and reinstate or issue similar ones regarding independent contractors and joint employment.
- End of the PAID Program. On January 29, 2021, the DOL abruptly ended the Payroll Audit Independent Determination (PAID) program. The PAID program began in March 2018 as a pilot program to allow employers an alternative method to rectify overtime and minimum wage violations of the Fair Labor Standards Act (FLSA). Under the PAID program, employers were able to self-report a wage violation, submit a calculation of back wages to the DOL, and enter into an agreement to pay 100% of back wages owed over a two-year period. In turn, the DOL would supervise and approve the payment and provide a release as to the reported issue. During the Trump administration, the WHD touted the success of the PAID program, noting that it took half the resources of other compliance actions and yielded ten times the back wage recovery per staff hour. Nevertheless, the program has ended.
Littler’s Wage and Hour Practice Group will continue to monitor developments affecting wage and hour law in the Biden administration. Likewise, employers should remain vigilant with respect to any wage and hour practices adopted in reliance on regulations and guidance issued during the prior administration.
1 Biden has extended the current effective date of the independent contractor rule (published January 7, 2021) to May 7, 2021 meaning the rule rescinding the rule will likely be finalized today or tomorrow or it will be further extended.