With President Biden beginning to fill his cabinet, independent schools are beginning to see the implementation of policy changes, representing a departure from the previous administration. While certain policy changes are under way, additional policy changes and/or laws are expected to come.
Classification of Employee vs. Independent Contractor
On March 4, 2021, the Biden Department of Labor (DOL) delayed the effective date of a Trump administration proposed rule regarding independent contractor classification. Subsequently, on March 11, 2021, the DOL announced its proposal to withdraw the rule, opening up a comment period until April 12, 2021.
The Trump administration's proposed rule narrowed the definition of "employee" in the Fair Labor Standards Act, making it easier for schools to lower labor costs by classifying workers as independent contractors rather than employees. Workers classified as independent contractors are not covered by the FLSA's wage and hour protections, including minimum wage and overtime laws, and are generally not eligible for health insurance and other benefits afforded to employees. DOL now seeks to withdraw the proposed rule, as DOL "questions whether the Rule is fully aligned with the FLSA's text and purpose or case law describing and applying the economic realities test" and is concerned about the "possibility that these changes will cause confusion or lead to inconsistent outcomes rather than provide clarity or certainty, as intended." Furthermore, DOL does not believe that the proposed rule "fully considered the likely costs" that could result from its implementation.
Schools that have relied upon the Trump-era rule to classify their workers as independent contractors would be wise to review those classifications, in anticipation of rescission of the rule.
Joint Employer Status
On January 12, 2020, the Trump administration announced a final rule narrowing the definition of "joint employer." The January 2020 rule imposed a four-factor test for determining whether two or more businesses may be deemed the employer of the same worker and accordingly become liable for violations of the Fair Labor Standards Act. The four-factor test limited joint employer liability to situations where the alleged employer actually exhibited control over an alleged employment relationship through things like hiring and firing, setting terms of employment, or directing the work at issue. Notably, a federal judge in New York invalidated substantial portions of the Trump administration's joint employer rule on the grounds that the rule was arbitrary and capricious and conflicted with the worker protections provided under the Fair Labor Standards Act.
On March 12, 2021, the DOL proposed to rescind the Trump-era final rule, opening up a comment period through April 12, 2021. DOL's proposal to rescind the rule hinges on the fact that it is "different from the analyses and tests applied by every court to have considered joint employer questions prior to the Rule's issuance, as well as [DOL's] previous enforcement approach."
Schools should consider ensuring they understand the application and implications of the joint employer test, particularly as it relates to vendors who provide services on campus, such as facilities and food service vendors.
Diversity Initiatives
Effective November 21, 2020, President Trump issued Executive Order 13950, which required, among other things, that new contracts entered into with the federal government include a clause prohibiting the inclusion of certain concepts in diversity and awareness training, including unconscious bias and societal privilege training that has become increasingly common. While it was unlikely that federal grant recipients, including PPP loan recipients, would be required to comply with EO 13950, the administration had not yet spoken with certainty on that precise issue.
On March 2, 2021, however, the Office of Management and Budget (OMB) provided detailed instructions for agencies to ensure the "complete reversal" of any agency action implementing EO 13950.
On March 3, 2021, President Biden issued an Executive Order on the Establishment of a White House Gender Policy Council, with the goal to "advance gender equity and equality, with sensitivity to the experiences of those who suffer discrimination based on multiple factors, including membership in an underserved community." Whether and the extent to which the White House Gender Policy Council will undertake initiatives that would affect independent schools remains to be seen.
PPP Loans and Title IX Compliance
By way of background, independent schools that received loans under the Paycheck Protection Program were required, among other things, to ensure that they were in compliance with Title IX during the life of the loan. In May 2020, the Trump administration issued controversial regulations regarding the implementation of Title IX, which took effect on August 14, 2020.
On March 8, 2021, in a step toward rescinding the Trump-era regulations, President Biden issued an Executive Order on Guaranteeing an Educational Environment Free from Discrimination on the Basis of Sex, Including Sexual Orientation or Gender Identity. In it, President Biden has directed the Department of Education to "review all existing regulations, orders, guidance documents, policies, and any other similar agency actions (collectively, agency actions) that are or may be inconsistent" with the Biden administration's policy that all students be guaranteed an educational environment that is free from sex discrimination. Schools that continue to carry the PPP loan would be wise to be alert to any recission of the Trump-era rules and be prepared to modify their policies.
Longer-Term Policy Initiatives
Although we anticipate that the Biden administration intends to pursue other labor policy initiatives in the next four years, we do not expect any major labor legislation in the near future. To be sure, the Biden administration's immediate focus has been and will be on legislative efforts to combat the COVID-19 pandemic. Legislation that may meet with success in the months and years to come could include increasing the federal minimum wage, changes to the federal declassification of marijuana as a Schedule I drug, or the enactment of a national paid sick/family leave program.