Setnor Byer Insurance & Risk

Shortly after delivering his inaugural address, President Biden began taking steps to push his policy agenda forward. This is particularly true in the employment law context. Step 1, as expected, was to stop any pending regulatory activity initiated under the Trump administration. This president’s Chief of Staff issued a memorandum ordering an immediate regulatory freeze of all non-emergency regulatory activity pending review by the new administration.

The memorandum, which is nearly identical to the one issued on President Trump’s first day in office, specifically instructed the heads of all executive departments and agencies, including the Department of Labor, to:

  • not propose or issue any rule in any manner until a department or agency head appointed or designated by President Biden reviews and approves the rule;
  • immediately withdraw any rules that have not already been published in the Federal Register; and
  • consider postponing by 60 days the effective date of any rules issued in any manner, including those published in the Federal Register, which have yet to take effect for the purpose of reviewing any relevant questions of fact, law and policy.

The scope of this regulatory freeze is quite broad in that it applies to any:

  • regulatory actions;
  • guidance documents;
  • substantive actions by an agency, including notices of inquiry, advance notices of proposed rulemaking and notices of proposed rulemaking;
  • agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory or technical issue or an interpretation of a statutory or regulatory issue.

Its effects are already being felt. The Department of Labor’s Final Rule for determining independent contractor status under the Fair Labor Standards Act, which was set to take effect March 8, 2021, is expected to be among the more significant casualties of the regulatory freeze. Three FLSA opinion letters issued by the Wage & Hour Division on President Trump’s last full day in office have already been withdrawn by the Biden administration. Employers should expect more of the same in the coming weeks and months. Unfortunately, the uncertainty that always accompanies regulatory changes significantly increase the risk of employment-related claims and lawsuits. The confusion caused by uncertainty creates an environment where mistakes are inevitable. As a result, employers will likely need Employment Practices Liability Insurance to protect against various employment-related claims. Please contact us to learn more about EPLI coverage.