Policy Matters Newsletter - August 26, 2022

If Current Polling Holds, Expect Additional Executive Action In 2023 And 2024. This newsletter has often had occasion to discuss the Office of Information and Regulatory Affairs (OIRA) in the context of addressing rules issued by federal agencies. This little known, but very important, federal agency has been acting without an administrator for months. In the likely event the GOP takes control of the House of Representatives in November, executive action will play a prominent role in the second half of this administration’s term, and OIRA will be central to that effort.

OIRA serves as a gatekeeper for rulemaking government-wide, coordinating, vetting and approving hundreds of federal regulations from myriad federal agencies each year, with the final say over which agency priorities get fast-tracked and which get extinguished. OIRA will play a direct role in implementing major elements of the Inflation Reduction Act. The administration has announced that it is close to nominating an administrator of the agency, but has not provided any details. Politics will come into play here, as the administration must select a nominee palatable to moderate democrats while also satisfying calls from more progressive lawmakers to nominate someone further to the left than during the Obama administration.

Looming in the shadows of a potential presidential agenda based on executive action and agency rulemaking is a conservative-majority supreme court that, with its recent decision in EPA v. West Virginia, has already begun chipping away at the so-called administrative state. Indeed, SCOTUS recently granted certiorari in Axon Enter., Inc. v. FTC, a case challenging the constitutionality of the FTC’s administrative review system. Additionally, more than a dozen restaurants in and around Austin, Texas have filed a lawsuit against the Department of Labor, challenging its authority to set salary requirements that must be met for managerial employees to be considered exempt from hourly pay, including overtime, under the FLSA’s executive, administrative, or professional exemption, found at 29 C.F.R. § 541.600. This case could eventually reach SCOTUS, providing an additional opportunity to diminish agency rule-making authority, this time in a space very relevant to the employer community.

If SCOTUS continues to chip away at the authority of federal agencies, it will be exceedingly difficult for the administration to continue to press its agenda through agency action, making the administrator position at OIRA even more relevant.

Speaking Of Administrative Action…

• The Department of Defense, General Services Administration, and National Aeronautics and Space Administration, have issued a proposed rule that would amend the Federal Acquisition Regulation to implement President Biden’s February 4, 2022, Executive Order (E.O.) 14063 on the use project labor agreements (PLAs) in federal construction projects costing $35 million or more. We reported on EO 14063 this spring. Comments on the proposed rule must be submitted to the Regulatory Secretariat Division by October 18, 2022; information about submitting comments is detailed in the proposed rule notice.
• In March, the OFCCP issued Directive 2022-01: Pay Equity Audits, intended to increase contractor compliance with 41 CFR §60-2.17(b), which requires a federal contractor to perform in-depth analyses of its total employment processes to determine whether and where impediments to equal employment opportunity exist, such as compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities. The March directive caused an inordinate amount of confusion. As such, as Seyfarth noted here, due the confusion, the OFCCP issued an additional directive clarifying explicitly that 2022-01 does not require contractors to produce privileged pay analyses as proof of their compliance with 41 CFR §60-2.17(b)(3). OFCCP Director Jenny R. Yang also noted in a blog post that, although the original directive used the phrase “pay equity audit,” the revised directive instead uses the term “compensation analysis” to avoid any confusion about the nature of a contractor’s obligations.
• The Department of Homeland Security, after receiving more than 16,000 comments in response to a draft rule released in September, has issued a final rule intended to fortify the so-called DACA program. The DHS’s final regulation maintains existing criteria for DACA status and the process for seeking work authorization. The rule will apply only to DACA renewal requests, not to new applications, while a federal court order remains in place barring DHS from granting new requests for status. An appeal of that order was heard in July before the 5^thCircuit, which is expected to uphold the District Court, and thereby set the stage for a showdown before the Supreme Court. The new rule largely codifies a 2012 memo issued by then President Obama that established the DACA program.

More Cannabis Legislation. We here at the PMN have been discussing, and podcasting on, the expansion of legal uses for cannabis across the country for quite some time now. Recently, as Seyfarth noted here, Washington, D.C. Mayor Muriel Bowser signed the “Cannabis Employment Protections Amendment Act of 2022” (D.C. Act 24-483), joining the growing list of jurisdictions prohibiting most employers from taking adverse action (e.g., rejecting job applicants or terminating employees) for off-duty cannabis use.

More Of The Great Loosening, This Time From The Top. We at PMN have been following the great loosening of COVID restrictions across the nation since the middle of 2021. This time the change comes not at a state or local level, but rather from the federal agency with the most say in pandemics, the CDC. As Seyfarth noted here, the CDC recently issued a press release streamlining its COVID-19 guidance, easing isolation recommendations for individuals who are not up to date with their vaccines, individuals who are exposed to COVID-19, and individuals who have or suspect they may have COVID-19. The CDC now solely recommends that individuals exposed to COVID-19 wear a “high-quality” mask for 10 days and test on day 5, regardless of vaccination status, as opposed to requiring quarantine.

Independent Contractor Classification: An Uneven Analytical Road. In this iteration of the policy matters newsletter, we summarized the current state of federal agency rulemaking as it relates to classification of independent contractors under the FLSA. Recently, the Policy Matters team had the chance to host a podcast discussing that very topic with Seyfarth’s own Camille Olson, veteran policy analyst and frequent witness before congressional committees. Camille has been on the ground floor advocating around this issue for more than a decade. This episode is definitely worth the listen. While on the topic of independent contractor classification, it is worth noting, as Seyfarth summarized here, that an appeals court in Massachusetts which uses a version of the so-called ABC test for classification purposes, held that home inspectors were classified properly as independent contractors under the state Unemployment Insurance law.

Stop woke Act Stopped In Its Tracks. In the previous iteration of this newsletter we summarized two pieces of legislation recently signed by Florida Governor Ron Desantis: the so-called “Stop Woke Act” and the “Parental Rights in Education Act,” or the so-called “Don’t Say Gay” measure. We noted that both measures were subject to constitutional challenges in Federal Court. Well, last week, a federal judge in Florida issued an order preliminarily enjoining enforcement of the Stop Woke act on the grounds that the Legislation likely runs afoul of the 1^stAmendment. Not only did Judge Walker conclude the legislation likely violates the 1^stAmendment prohibition of state action that exercises viewpoint discrimination, it also violates the 1^stAmendment prohibition on legislation that is unduly vague. While we do not pretend to possess the foresight of Nostradamus, we anticipate a similar ruling concerning the Parental Rights in Education Act.