Twenty twenty-one will be a big year for businesses and not just because of COVID-19. With the election over and the inauguration forthcoming, we wanted to bring you a brief forecast of what businesses can expect during the Biden Administration. While the President-Elect’s transition platform provides clues, the Administration’s future business and employment policy goals cannot be fully extrapolated from its transition plans; as they say, “the best-laid schemes…”. With that disclaimer, however, please read on to see what the next four years may bring.
Noncompetes and Wage and Hour Law
Biden has expressed disfavor for noncompete and no-poaching provisions in the past, openly stating that he believes they only hurt workers. These provisions, often called restrictive covenants, are useful retention tools sometimes contained within employment agreements and offers. While many states have passed legislation regulating the use of restrictive covenants in business and employment agreements, no federal regulation exists to date. Employers investing time and money training specialized employees – only to lose them to competitors – argue that such restrictions on legitimate use of restrictive covenants limit their returns on those employee-focused investments artificially and unfairly. However, the President-Elect’s platform on the issue states that “[a]s president, Biden will work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets, and outright ban all no-poaching agreements.” As such, businesses can expect to see a strong push towards restrictive covenant regulation.
Employers can also expect a push at the federal level for a $15 minimum wage; during his campaign, Biden called for an increase to a $15 minimum wage by 2026.
Another likely outcome is an increase in enforcement and compliance actions against employers for wage-and-hour violations, alongside enhanced penalties. In a follow-up to the first piece of legislation enacted by the Obama-Biden administration (the Lilly Ledbetter Fair Pay Act), Biden will also prioritize ending paycheck discrimination, evidenced by his strong support of the Paycheck Fairness Act, which would amend federal equal-pay laws to require “a bona fide factor other than sex, such as education, training, or experience” in awarding different pay to men or women doing the same or similar work; protect workers from retaliation for discussing wages; and ban the use of salary history in the hiring process.
Workplace Discrimination and Harassment
Biden supports the federal Pregnant Workers Fairness Act (“PWFA”), which was passed by the House in September, but has yet to be approved by the Senate. Under the PWFA, employers must provide pregnant workers – and employees with pregnancy-related conditions – reasonable accommodations and would prohibit such employers from (1) requiring a qualified employee to accept an accommodation other than any reasonable accommodation arrived at through the interactive process; (2) denying employment opportunities to a qualified employee for the known limitations related to the pregnancy, childbirth, or related medical conditions of a qualified employee; (3) requiring a qualified employee to take paid or unpaid leave if another reasonable accommodation can be provided; and (4) taking adverse action in terms, conditions, or privileges of employment against a qualified employee on account of the employee requesting or using a reasonable accommodation.
The Biden-Harris agenda also includes support of the BE HEARD (Bringing an End to Harassment by Enhancing Accountability and Rejecting Discrimination in the Workplace) Act, which would establish a national harassment-prevention task force and includes several mandates for covered employers, including mandatory non-discrimination training and limitations on the use of non-disclosure and non-disparagement clauses in settlement agreements.
The most immediate effect upon employers is likely to be a push by the Biden administration to enact emergency standards requiring employers to develop workplace-safety plans in reaction to the COVID-19 pandemic. Under the current administration, the Occupational Safety and Health Administration (“OSHA”) performed the lowest number of inspections in OSHA history and reduced the number of inspectors on staff to the lowest level in the past 40 years.
Biden is expected to address these policies immediately, leading to increased inspections and enforcement, as was the case under the Obama administration. This means employers will likely face harsher penalties for non-compliance and more substantial fines than they have over the past four years.
Employers are also likely to encounter the return of the Obama administration’s workplace-safety reporting rule. This would require certain employers to report illness and injury information to OSHA, which will then be maintained online as publicly available information.
Employers will likely see a return to the pro-labor days of the Obama administration’s National Labor Relations Board (“NLRB”), which is the agency that enforces U.S. labor law in relation to collective bargaining and suspected unfair labor practices. President-Elect Biden will take office and have the ability to shift the board to Democratic control within the first year of his taking office. Changes at the NLRB will likely be mirrored by the Department of Labor (“DOL”) under Biden’s recent nominee for Labor Secretary, Mayor Marty Walsh. Under a Walsh DOL, businesses would likely see an increase in regulation and investigations as well as the elimination of some employer-friendly policies that emerged during the Trump administration.
The President-Elect has also stated that he will address wage inequalities between black and white workers, make it easier for workers to pursue claims of discrimination, and push for a higher minimum wage. The administration also aims to increase the funding allotted to the Equal Employment Opportunity Commission (“EEOC”), the federal agency tasked with enforcing employment discrimination laws.
In addition, the administration has affirmed a strong support for the Protecting the Right to Organize (“PRO”) Act, a substantial piece of legislation that would provide sweeping reforms, including the imposition of substantial financial penalties on companies that violate labor laws. Notably, the Biden-Harris campaign page also promises to “go beyond the PRO Act by enacting legislation to impose even stiffer penalties on corporations and to hold company executives personally liable when they interfere with organizing efforts, including criminally liable[sic?] when their interference is intentional.”
All in all, a potpourri of employee-friendly changes is in store over the course of the next four years; employers should make ready. Before these changes go into effect, and federal agencies come knocking, businesses should seriously consider a comprehensive employment practices audit to carefully re-examine their compliance with federal labor and employment laws.
This alert should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This alert is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have. We are working diligently to remain well informed and up to date on information and advisements as they become available. As such, please reach out to us if you need help addressing any of the issues discussed in this alert, or any other issues or concerns you may have relating to your business. We are ready to help guide you through these challenging times.