The rule changes, most of which are still in progress, would affect workers such as federal contractors, tipped employees and workers who are jointly employed, such as those with jobs at franchised brands. In some cases, the changes seek to reverse Trump administration efforts. In others, the Labor Department is working to implement its own rules.
These include the agency’s announcement last week that it had begun the process of raising the minimum wage for federal contractors to $15 an hour and ensuring it will continue rising to keep pace with inflation.
The regulatory actions represent the administration’s “commitment to respecting and protecting workers’ rights, health and safety,” said Labor Secretary Marty Walsh.
Mr. Biden has proposed other policies aimed at tilting the balance of power toward workers from employers, including raising the federal minimum wage for private-sector employees, increasing wages for caregivers and making it easier for workers to organize labor unions. However, those changes would require congressional approval, a difficult undertaking in a narrowly divided Senate.
Regulatory action allows the administration to see part of its agenda implemented without the need for Congress to pass legislation.
The Trump and Obama administrations similarly took steps to undo their predecessors’ agenda through executive orders and regulation. But by starting the lengthy federal rule-making process during his first months in office, Mr. Biden is making it more likely rule changes will be fully implemented by the end of his term. The Trump administration launched several efforts late in the president’s term that never took effect.
The rule-making process has drawn opposition from business groups and some Republicans who say the administration is increasing costs, the regulatory burden and uncertainty for employers.
Rep. Virginia Foxx (R., N.C.), the ranking member on the House Education and Labor Committee, said in a written statement that the minimum-wage increase for federal contractors “will severely disadvantage small businesses competing for federal contracts because they are poorly positioned to absorb these additional expenses.” The mandate “is paving the way for increased automation, a reduction in workers’ hours, and additional small business closures,” she added.
Glenn Spencer, head of the U.S. Chamber of Commerce’s employment-policy division, said conversations with the Labor Department have been encouraging, but that he would like to see the business community’s input better reflected in the regulatory actions.
“We’re really at a crossroads here to determine which direction the department is going to go,” Mr. Spencer said. “We’re hopeful that it’s going to be a direction that seeks to really work with businesses and employers to fashion things that are palatable rather than try and go in a very different direction that will result in litigation and a more acrimonious relationship.”
Some Democrats hope the Biden regulatory efforts herald more aggressive moves to come.
Recent action “signifies a shift that I hope will then launch into a much broader proactive agenda,” said Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute, who served as the Labor Department’s chief economist during the Obama administration.
The department’s rule-making effort on the minimum wage for federal contractors starts the process of carrying out Mr. Biden’s April executive order mandating the increase to start Jan. 30, 2022.
About 327,300 federal contract workers currently earn at least the federal contracting minimum wage of $10.95 an hour but less than $15 an hour, according to figures provided by the Labor Department. The federal minimum wage, which applies to private-sector workers in 20 states, has been $7.25 an hour since 2009.
Under the proposed rule, the $15 minimum wage would apply to new federal contracts, but not to ones currently in effect until they come up for renewal, extension or exercise of an option.
Another proposal would limit private-sector employers’ use of the tipped minimum wage, which allows employers to pay less than the federal minimum wage and apply workers’ tips to make up the difference. Under federal law, tipped workers can be paid as little as $2.13 an hour, provided they earn enough in tips to reach the federal minimum. The rule would affect a swath of workers, including many of the 11 million Americans employed at bars and restaurants.
The proposal focuses on tasks that support tipped work, but that don’t lead directly to gratuities, such as when a restaurant server refills salt and pepper shakers. Employers wouldn’t be allowed to apply the tipped minimum wage to any time workers spend doing supporting tasks that exceeds 20% of their workweek or that is a continuous period that exceeds 30 minutes, according to the proposed rule. The rule would undo changes under former President Donald Trump that loosened limits on when employers could use the tipped minimum wage. The restaurant industry supported the Trump-era rule.
Mr. Spencer, of the U.S. Chamber, said the tipped-minimum-wage issue should be a question of enforcement rather than new regulations.
“If the department thinks that people are abusing the tip credit and not paying people properly, then you can go out and you can do enforcement on that. It doesn’t mean you need new rule-making to make it so complex to do that you essentially force employers away from it,” he said.
The Labor Department earlier this year also moved to undo two Trump administration rules.
One would have made it easier for businesses to classify gig workers, such as Uber drivers, and others as independent contractors rather than employees entitled to certain benefits and protections. The Trump administration completed that rule in January 2021, and the Biden administration blocked it from going into effect. The Labor Department also said it is seeking to rescind another rule that would have made it more difficult for workers to claim to have two employers simultaneously in cases when they are challenging wages and overtime. That would nullify a rule put in place last year.
Business groups have said the joint-employer rule would have provided regulatory clarity for employers that are franchised brands or use staffing firms. Allowing a worker to be considered an employee of both a local business and an international brand, such as a fast-food chain, could open the door to efforts to unionize the larger corporation, some labor lawyers say.
Meanwhile, a coalition that includes business groups, Uber Technologies Inc. and Lyft Inc. has filed a federal lawsuit challenging the withdrawal of the rule governing independent contractors.