DOL Lifts Limits on Subregulatory Guidance

Allen Smith, J.D. By Allen Smith, J.D. February 18, 2021
LIKE SAVE
DOL Lifts Limits on Subregulatory Guidance
Employers can expect to have new compliance obligations in the wake of the Biden administration's lifting of certain limits that the Trump administration had put on subregulatory guidance—guidance that hasn't gone through the notice-and-comment period.

The Trump administration tried reducing the number of subregulatory guidance documents issued, with the notable exception of opinion letters, which the Trump administration increased. Now, new opinion letters employers can look to for guidance are likely to be few and far between, while other forms of subregulatory guidance—forms that employers may find to be less helpful and more burdensome than opinion letters—may pile up.

The lifting of certain limits on subregulatory guidance raises the possibility that more guidance will be issued faster and without stakeholder input. By contrast, the issuance of formal regulations is a slow process requiring input during the notice-and-comment period. So employers will need to pay attention to what could be a stream of informal guidance from the new administration.

Background

A Trump administration rule, issued last year and withdrawn by the Biden administration, provided the Department of Labor (DOL) with policies and procedures for issuing subregulatory guidance. The rule also required a notice-and-comment process for significant guidance, and allowed the public to petition agencies to withdraw or modify guidance.

The DOL recently concluded that the Trump administration rule deprived the department of "necessary flexibility in determining when and how best to issue public guidance based on particular facts and circumstances." The DOL also determined that the rule "unduly restricts the department's ability to provide timely guidance on which the public can confidently rely," and therefore rescinded it.

"The primary concern that the Trump administration rule ostensibly sought to address was the practice of the DOL treating subregulatory guidance—issued without advance notice to the public or an opportunity for stakeholders to provide input and comment—as legally binding," said Christopher Durham, an attorney with Duane Morris in Philadelphia. "Unconstrained by an obligation to follow a time-consuming process and subject proposed guidance to potentially withering public comment, the DOL will be able to move quickly to put guidance in place on a wide range of subjects touching on employee rights and employer obligations."

Areas Where Subregulatory Guidance Is Likely

The DOL already has issued Occupational Safety and Health Administration guidance that has extensive information for implementing an effective COVID-19 prevention program to protect workforces, Durham noted.
He said that other areas in which DOL guidance is likely to be issued include:
  • Wage and hour issues under the Fair Labor Standards Act.
  • Union reporting, disclosure and other obligations under the Labor-Management Reporting and Disclosure Act. 

Plethora of Subregulatory Guidance

The DOL issues hundreds of pieces of subregulatory guidance, including frequently asked questions and interpretive bulletins, said Susan Harthill, an attorney with Morgan Lewis in Washington, D.C. The "DOL will continue to publish subregulatory guidance. It is helpful to stakeholders and is less time-consuming than rulemaking," she stated.

Subregulatory guidance also includes the DOL's Field Operations Handbook, as well as its employment law guides, recommended compliance measures and step-by-step compliance tools on its website, said Nathan Oleson, an attorney with Akin Gump in Washington, D.C.

"Subregulatory guidance is quick and relatively easy, while formal rulemaking takes time, requires the DOL to follow specific procedures and requires the agency to defend its ultimate policy choices," Oleson added. He said that the issuance of informal, subregulatory guidance often has had the same practical effect as formal rulemaking because it puts substantial pressure on employers from a compliance perspective. Under the Obama administration, "subregulatory guidance was increasingly offering detailed rules supported by extensive legal discussion, increasing the possibility that courts would follow it."

"The Trump administration also was concerned about how the DOL was using subregulatory guidance in individual enforcement actions," Oleson said. This was particularly the case with informal guidance on wages and hours as well as occupational safety and health."

In some cases, investigators were pointing to DOL guidance that was characterized as a recommendation and demanding that it be followed if the employer wanted to avoid an enforcement action," he said. "Although subregulatory guidance does not have the force and effect of law, many employers felt compelled to accept the DOL's position because of the risk posed by litigation or further enforcement action."

"The DOL issued subregulatory guidance in the past on joint employer and independent contractor issues," said Michael Lotito, an attorney with Littler in San Francisco. He expected Biden administration officials would "resort to such guidance to expedite their agenda."

Opinion Letters

Opinion letters published by the DOL could be considered subregulatory guidance, as the purpose of publishing the letters is to allow employers and employees to rely on the letters to guide compliance and understand legal rights, Durham said. But, he noted, unlike other forms of guidance, the DOL has generally not considered opinion letters to be legally binding.

"It seems unlikely that the Biden administration will continue to issue opinion letters," Harthill said, pointing out that the DOL recently withdrew three opinion letters. But employers can expect guidance similar to the Obama administration's Wage and Hour Division administrator interpretations, which the Trump administration withdrew, she added.

The administrator interpretations were intended to be more like rules than opinion letters—interpretative statements with broader applicability, Oleson said.

Effect of Rescission

The rescission of the Trump administration's rule likely will have the biggest impact on enforcement, according to Oleson.

"The Trump administration's rule did not prohibit the DOL from issuing subregulatory guidance. It simply formalized the process and required more review and transparency before this type of guidance was issued," he said. "In that respect, it may have slowed the rate at which subregulatory guidance was issued." It also may have increased the likelihood that courts would view guidance as well-reasoned and entitled to deference, he noted.

Ultimately, "the Trump administration's rule made it more difficult for investigators to pressure employers with subregulatory guidance," Oleson said. "The Biden administration lifted those restrictions when it rescinded the rule. Employers that lack a detailed understanding of the law or do not have the resources to engage in protracted enforcement litigation with the DOL may be more likely to give in when pressured by enforcement personnel to follow subregulatory guidance," he said.
LIKE SAVE

SHRM HR JOBS

Hire the best HR talent or advance your own career.

Member Benefit: Ask-An-Advisor Service

SHRM's HR Knowledge Advisors offer guidance and resources to assist members with their HR inquiries.

SHRM's HR Knowledge Advisors offer guidance and resources to assist members with their HR inquiries.

REACH OUT NOW

SPONSOR OFFERS

HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.