Episode 4 | Changing of the Guard, Part 1 - Employment Law Outlook Under the Biden Administration - A new presidential administration and a shift in control of the Senate mean changes in the legal landscape as well. This three-part will address the anticipated changes in the laws and regulations related to employment, health care and tax issues, and at the agencies responsible for enforcement of those laws.
In Part 1, Frantz Ward Partner Brian Kelly guides us through the outlook on the labor and employment front.
Podcast First Aired: March 2, 2021
Guest & Host
Chris Koehler: Hi, and welcome to the next episode of Frantz Ward's podcast series, Shoveling Smoke. I'm Chris Koehler, a partner at Frantz Ward, and I'm hosting today's discussion with my friend and colleague, Brian Kelly. Welcome, Brian.
Brian Kelly: Thanks for having me, Chris.
Chris Koehler: You may have heard that we have a new president and since almost no one wants to talk about politics these days, we are instead going to do a series of episodes that talk about the implications of the elections, what changes you can expect in the law, because we have a new administration, and a bit of shift in control of the US Senate.
Part one of this series today will focus on changes to labor and employment laws. Brian is here as the practice group leader of our labor and employment group. I've been practicing with Brian for almost 30 years, sad to say. And on a daily basis, I wear a path to his office, which is right next to mine, when I need to pick his brain on an employment issue. He is known throughout Ohio and even nationally as a leader in this area of law. Just last year, he was named a fellow of the College of Labor and Employment Lawyers. He also gives back frequently to the community. He's currently on the board of directors at an organization called Towards Employment. Brian, what is Towards Employment?
Brian Kelly: Well, Chris, thanks for asking. Towards Employment is just an incredible Cleveland nonprofit and what it does, is it serves young adults and even adults who have had some prior experience with the criminal justice system. As you'd expect, it's usually been some prior negative experience with the criminal justice system. And what Towards Employment does is works with individuals to help them overcome some of the barriers that are keeping them out of the workforce, or at least keeping them from finding a good job. And Towards Employment provides training to develop skills, which helps people get experience and even provides support like transportation, tools, uniforms, things like that. Towards Employment also provides people with legal help to get over obstacles like warrants, evictions, foreclosures, child support problems, debts, things like that. And eventually through all these steps, Towards Employment helps people with some problems in their past, not just find a job, but start on a career. And one thing that really makes the organization stand out is it works with local employers to place employees who it's trained and gotten ready for the workforce. In fact, it's had more than 300 employers it's connected with. Just a fantastic organization. If anybody would like to find out more about it, certainly check out the Towards Employment website or get in touch. Doing great things for people here in Cleveland.
Chris Koehler: Well, it sounds like a great way to mix your professional expertise with your desire to give back.
Brian Kelly: It is. There are plenty of people in our community and every community, that can be great assets for employers. And the mere fact that they might have had a hiccup in their past shouldn't keep them out of the workforce. It makes sense for the companies and for the individuals. And organizations like Towards Employment can help get people past some of the obstacles and even some of the stereotypes that have put things in their way before. I'm honored to get a chance to work with them.
Chris Koehler: Well, before we talk about the specific changes that are occurring or that you expect to occur in the near future due to the new administration, can you just provide a little background on how and why these changes occur? I mean, do our laws really change every four to eight years when there's a new administration?
Brian Kelly: We get that a lot. People are skeptical. They take a look at Washington or Columbus or wherever you may be operating and say, "Nothing really changes. It's one group of career bureaucrats and politicians taking over for another." But what we really see is that every new administration comes in and they're coming off a campaign where they've made a whole lot of promises to a whole lot of people. And every administration comes in, certainly hoping to do what it can to fulfill those promises. Of course, one thing that often gets in the way is an administration not having the power to do what it wants to carry out and implement change, and that can slow things down. But today we've got a new administration, of course, that controls not just the House and the Senate, but the White House as well. And so, where there have been difficulties in the past, this is going to be one of those situations that every four or eight years there are going to be a whole lot of changes. And we know from President Biden, from his campaign, that we can safely predict that he and his people are going to push hard for a few specific types of changes. They are absolutely going to try to hold companies responsible for their labor and employment violations. There've been some suggestions, maybe companies had a bit more of a free pass under the prior administration. And the new administration has made it clear that to the extent that has happened, it is going to change. The new administration has also made it clear, it's committed to protecting workers. And I say that, Chris, not just as far as protecting workers from injury, President Biden has made it clear that he's going to have his people protecting workers from discrimination, harassment, unsafe working conditions, unfair pay, all those types of things that the labor and employment laws can help people get past. Also, one thing we know is going to change with the new administration, is it's going to be much easier for unions to organize and keep new members. President Biden said on the campaign trail that he is a union man, and he will be a union president. So, I think to the extent your question is, do we really see changes every four to eight years? Not every four to eight years, but this is going to be one of those times when we will.
Chris Koehler: Let's talk specifics then. What specific changes do you think we can expect or have already been instituted, for that matter, on the employment front?
Brian Kelly: Well, we're just a couple weeks in and President Biden has certainly hit the ground running. One of the best ways to make change is of course, to change leaders, and President Biden came in and as all new leaders do, he replaced the heads of the agencies like the Equal Employment Opportunity Commission, National Labor Relations Board, OSHA, and he put leaders in who have a much more pro-worker mindset.
Chris Koehler: Brian, how much control does a leader of one of these organizations actually have?
Brian Kelly: Well, the leaders in these organizations, Chris, have a lot of control, because they get to set the agenda and these organizations make rules, they issue regulations. And if the leaders are pro-worker or pro-business, they can set the agenda for what the organization's going to consider and where they're going to push. Charlotte Burrows, for example, who's the new head of the Equal Employment Opportunity Commission, she has a strong history of a commitment to eliminating systemic discrimination. She's all about taking a look at problems that exist beyond the individuals who might be filing a charge or complaint, and taking a look at the systems. Lauren McFerran, the new head at the NLRB, same type of thing. She's been an advocate for organized labor for a lot of years, and she is going to push to make sure people have the right and the ability to organize without being retaliated against by their employers.
Chris Koehler: Who's the new head at OSHA?
Brian Kelly: Well, to the extent there's any question over whether some of these appointments are partisan, the new head at OSHA is a guy named Jim Frederick, who's certainly very qualified for the job, but Jim also spent 20 years working for the United Steelworkers Union and that'll certainly raise some skepticism. He's an ardent advocate for worker safety and I think he's going to do a very good job at OSHA.
Chris Koehler: What about on the immigration front, generally speaking?
Brian Kelly: Well, the immigration front obviously has been a political lightning rod and President Biden hit the ground running with that as well. He stepped right in and rolled back some of the immigration policies that the prior administration had. Specifically the policies that made it harder for employers to get and keep foreign workers, especially workers who need visas to work in the US. And I think from what we've seen through the immigration changes just in these first couple weeks, that the new administration is going to really get to work on clearing out the backlogs that we've seen with people trying to get green cards. There've been some promises about expediting green cards to people who fit within the dreamer category. And even for employers, it's going to be easier to pay higher wages for people who hold an H-1B visa, which should make it easier to get qualified people.
Chris Koehler: So, these changes at the top of the agencies that you just described, these can change the implications for employers and employees, even without an actual change in laws or regulations?
Brian Kelly: Well, they can. I mean, laws and regulations are different and people tend to confuse them sometimes, Chris.
Chris Koehler: What's the difference?
Brian Kelly: Well, a law is much broader. Congress, of course, enacts laws, the president signs off on them or vetoes them. And if a veto gets overridden, they go into effect anyways, but Congress makes broad laws. For example, in the wage and hour setting, Congress makes a law that says you have to pay overtime to certain people over 40 hours. That's a law. Regulations are rules that the administrative agencies then have to put together. So, in the overtime context, the US Department of Labor has to step in and make regulations. So, Congress says, "Pay people overtime." The Department of Labor comes in and says, "Okay, we are going to come up with the rules that say who gets overtime." And employers are familiar with executive and professional exemptions and things like that. So, they're very different.
Chris Koehler: So, let's start with regulations then, what changes can we expect from the Biden administration on the regulation side?
Brian Kelly: Well, the primary thing that we've seen right away is the Biden administration brought everything that was in the pipeline from the former administration to an absolute screeching halt. When these administrations change, although the clothes and some of the furniture have a nice, clean break at noon on January 20th, the regulations don't. There's a whole lot that EEOC, OSHA, DOL, that they've got in the works, that just hasn't quite been wrapped up. So, what President Biden did is he had his chief of staff come in and tell the heads of all the agencies to shelve and stop anything that was in process from the former administration. The suggestion was that most of the rules and regulations in the employment context were more business-friendly than the current administration was interested in.
Chris Koehler: Do you have specific examples of regulations that are being halted or that were halted and may change?
Brian Kelly: There are quite a few. You and I could spend all day talking about them. Just to cherry-
Chris Koehler: For the sake of our audience, let's not do that, but do you have a few?
Brian Kelly: To cherry pick that, since I mentioned Department of Labor and overtime rules, there were some steps the Department of Labor had taken through rulemaking, opinion letters, things like that, where they had issued guidance to people as to how overtime would be calculated in certain circumstances, how compensation should be handled. And when the new administration took over, the Department of Labor came in and rescinded all of these opinion letters. Not all of them, excuse me, all of the ones that had been recently issued. The Department of Labor also, which is of great interest to some companies, they withdrew a regulation that would've made it much easier for companies to classify workers as independent contractors, as opposed to employees, which was certainly something that's grown in popularity over the years. That new rule about independent contractors was supposed to take place coming up in just a couple weeks on March 8th, and now it is not going into effect and its future is very uncertain.
Chris Koehler: What about on the OSHA front, any regs on the OSHA front that have either been halted or are changing?
Brian Kelly: On the OSHA front, it's a little different, whereas we've seen in some areas what the Biden administration has done is to stop things that were in progress. On the OSHA front, what we've seen is the opposite, where the new administration is stepping into actually take action to protect workers. Most significantly and most at the forefront, would be some of the COVID-related measures that OSHA's taken. People may have seen in the headlines recently that OSHA has come in and they've been specifically directed to issue COVID-related standards that employers have to comply with. So, steps employers have to take in their workplaces to protect their workers from COVID and COVID-related illnesses. And although the initial focus is expected to be on healthcare and essential workers, we have every reason to believe that that'll expand well beyond that and OSHA will be seeking to have employers in all business sectors have to have COVID-related procedures in place.
Chris Koehler: Has the Department of Labor had any changes?
Brian Kelly: Well, we get a lot of questions about Department of Labor and whether they're going to change the overtime rules. We saw a few years ago near the end of President Obama's administration, there was a big push to increase the minimum salary that people had to get to be considered exempt. Exempt, meaning that the workers you don't have to pay overtime to. And that was rolled back. There was a slight increase. The new head of the Department of Labor, President Biden appointed Marty Walsh, who's the former Mayor of Boston. Secretary Walsh is expected to be very progressive. And on the overtime front, he has indicated that it's very likely the Department of Labor will now push again to raise that minimum salary up, perhaps even back up to the $47,000 per year level that had been proposed under President Obama, which would mean that virtually no employees could be deemed exempt and free from overtime, unless they made at least $47,000 a year.
Chris Koehler: You mentioned earlier that President Biden is outspoken as a union guy, any changes on the union front?
Brian Kelly: Well, under the former administration, a number of rules were passed that made it easier for companies to resist unions. So, when a union comes knocking, files a petition, and says, "We want to have a vote to represent your employees." Some rules are put in place that made it easier for the companies to fight back. President Biden's appointee to lead the National Labor Relations Board is expected to press very hard and expected to be successful getting rules in that are going to make it much harder for employers to campaign against the union and lobby their employees to vote from bringing one in. In fact, for some federal contractors, it's quite possible there's going to be a rule that prohibits them from even speaking out against a union, if their workers express intention to organize. So, labor relations is going to get tricky for a couple years, at least.
Chris Koehler: So, it sounds like what you've just described on the regulation side is something that the new administration can do relatively easy without much pushback. It sounds to me like actually implementing new laws or enacting new laws might be a little harder, maybe not given the fact that all three houses are under one control, but are there any new laws we can expect to see, or at least be attempted to be pushed through Congress?
Brian Kelly: Yeah, we're already seeing some of that and it's not going to be the free-for-all that some people had suggested simply because the Democrats have control of the House, Senate, and the White House, but we are going to see an aggressive legislative effort here. One is already in the works. On the federal level, again, something that catches a lot of headlines is the idea of increasing a federal minimum wage. And several members of the Senate and the House have already proposed legislation that would bump the federal minimum wage up to $15 an hour. Now, that's not a change that would go into effect overnight. So, it's not as though, even if it's successful and the president signs off on it, that on March 1st, we're going to have $15 minimum wage. It'd be phased in over time. It would take a number of years to do it. But it gets interesting from the political standpoint and I know neither of us is political, but what is happening already is that that $15 minimum wage is getting lumped into a COVID relief bill. From a strategy standpoint, the people who are pushing it, it makes a lot of sense. They put the minimum wage as part of a COVID relief bill, so that way, if anybody opposes it, they're a monster for trying to keep those who are in incredible need during the pandemic from getting relief. But we've seen that some of the opponents of the legislation, they have the fortitude to stand against it and take some of the pushback. And there are plenty of voters in this country who are sympathetic to those people. So, the politicians won't be going too far out on a limb to oppose that minimum wage, but we should expect, Chris, that the increase in the minimum wage, whether to $15 or otherwise, is going to continue to be a legislative proposal that's going to get a lot of traction.
Chris Koehler: And just to clarify, this is the federal minimum wage, as opposed to what states might be doing?
Brian Kelly: Yeah. Every state, of course, can have their own minimum wage as well. California is usually way out in front of everybody on that. As we start getting through the Rust Belt, the wages don't go up as high, but this would be the federal minimum wage, so it would apply to virtually all employers. There are some special rules that we won't get into, about who is and isn't in interstate commerce, but for practical purposes, it would apply to all employers if it's effective.
Chris Koehler: What other legislative changes might be attempted?
Brian Kelly: One of the big things is that President Biden pushed all along the campaign trail to try to expand paid leave, so paid family and medical leave. We all know now that on the federal level we've got the Family and Medical Leave Act, which is a very valuable law, it gives people time off, job protected time off, if they or a family member has a medical issue. What President Biden wants to do is make that FMLA time into paid time. So, you take it off, not only is your job protected, you're also going to get paid. That scares a lot of people, Chris. One of the things that the legislators are trying to do to help it be more palatable is they're trying to make that paid leave something that employers could then get back from the Federal Government. We saw that this past year with the COVID pay, the family-friendly COVID relief act, that a lot of employers complied with, that if you paid your employees for their time off, their COVID time off, as an employer, you could then take a tax credit and essentially get 100% of it back from the government. So, one of the proposals for President Biden's paid family and medical leave would do the same type of thing. Employees could take time off with pay, but then the employer could seek a tax credit to get that back. As you can imagine, that would come with a very, very significant price tag to pay all public and private sector employees for their time off. So, that's something that I think is not going to get rushed right through.
Chris Koehler: Do you have a timeframe at all?
Brian Kelly: The folks in Congress have indicated they're going to continue to try to advance it, but they haven't indicated it's going to be a legislative priority. So, I don't expect that to be something here in the first six, nine months of the administration.
Chris Koehler: Okay.
Brian Kelly: There are other areas too, that perhaps might not have been getting as much headlines, Chris, that are interesting. People may remember this past summer, the US Supreme Court ruled in a couple cases where they said that the federal employment laws protect people from discrimination based on sexual orientation and gender identity. And while it was good that the Supreme Court stepped in and provided that clarification, really what the Supreme Court was saying there was that it interpreted the federal employment discrimination laws to prevent discrimination based on sexual orientation and gender identity, those laws don't actually say that. What the laws do is they prohibit sex discrimination. And so, the courts have now said sex discrimination includes discrimination based on gender identity and sexual orientation. So, from a legislative front, and one other thing that President Biden has pushed, he's pushed for something that he calls the Equality Act, and what the Equality Act would do, it would amend the federal anti-discrimination laws to expressly include sexual orientation and gender identity as protected classifications. So, instead of a court having to say, "I interpret it that way." It would be explicit. And that's something as well, that I think is going to get some traction. The president has also indicated a desire to expand the current protections for pregnant workers, older workers, and disabled workers. And I think we're at a place now where those types of proposals will not be that controversial. And I think we're going to see some legislative development there as well.
Chris Koehler: Sounds like quite a full plate for the next couple years of legislation in your area of the law.
Brian Kelly: It is, and a lot of these laws could use some changes. A lot of the laws, like I said, when we talked about the difference between laws and regulations, are very general. And if Congress wants to make something required or prohibit something, it ought to say that. So, it's going to be an exciting time, Chris.
Chris Koehler: Brian, thanks. We try to end each of these podcasts with a couple concrete takeaways for our listeners. What do you have for us on the new employment law changes?
Brian Kelly: At the risk of sounding cliche, the adage that elections have consequences, really is an accurate one. And it's something we are going to see here and those consequences are going to come through the employment laws on companies that don't comply with both the new and the existing laws and regulations. And companies should expect there's going to be much more aggressive enforcement of these laws through the agencies and otherwise. And it's time for everybody just to take a close look, make sure their policies are up to date, the supervisors know what they need to do, and everybody's on the same page, whether it's anti-discrimination, compensation, benefits, whatever it may be.
Chris Koehler: Thanks, Brian, very helpful, practical as always for you and putting it in layman's terms or at least terms that I can understand. So, to recap, changes are coming or are already underway. Familiarize yourself with the ones that will pertain to your business and then make sure your policies are consistent with the new laws and regs. Brian, thanks again for coming.
Brian Kelly: Thanks for having me, Chris.
Chris Koehler: That's it for this episode of Shoveling Smoke. Thanks for joining us and we will look forward to our next discussion here. Shoveling Smoke is a production of Evergreen Podcasts. Our producer and audio engineer is Sean Rule-Hoffman. Thanks for listening.