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November 3, 2020 | Human Resources | Posted by Bob Greene, Senior HR Industry Analyst at Ascentis

What Employers Need to Know About Pre-Election Regulatory Changes

As the USA hurtles along toward a contentious Presidential election today, with the House of Representatives already on “District Work Period” (aka, campaigning for two more years) and with the Senate having just concluded its pre-election business, it would seem that Washington, DC would be a pretty quiet place for the next few weeks, right? Actually, not so much! 

The Executive Branch (Presidency and executive departments) are hard at work pushing through an unprecedented level of regulatory changes, and many will have significant impacts on HR and human capital management. 

Work Visa “Tug-of-War” 

Going as far back as the “Buy American, Hire American” executive order (E.O. 13788, signed April 18, 2017; the “BAHA” order) the current Presidential Administration has clearly articulated an intention to reduce the number of work visas issued in the US, particularly the H-1B visa. One year later, US Citizenship and Immigration Services (USCIS) published a list of accomplishments related to BAHA, focusing on correcting perceived “abuses” of various guest worker programs by employers. Over this period, employers reported sharp year over year increases in visa application denials, as well as RFEs (requests for evidence), which increased paperwork required to complete the application process. 

Within the past year alone, the President took the following additional actions, vis-à-vis work visas: 
  • On June 22, the President signed an order temporarily (through December 31) suspending the issuance of new work visas in most employment categories, and barring hundreds of thousands of foreigners from seeking employment in the US. Foreign workers already in the country on a valid work visa would not have been affected. 
  • On October 1, US district court Judge Jeffrey White (N.D.Ca.) blocked further implementation of the June 22 order, ruling that that the President’s order was “ultra vires”i.e., exceeded his authority. Employers are immediately able to continue with pending H-1B, L-1, and other previously blocked visa petitions. 
  • Just a few days after the blocking of their previous order, October 8, the Administration announced a number of new restrictions on work visas, short of a total ban, but designed to make it more difficult for employers to succeed with these applications. The new restrictionssome of which took effect immediately upon their announcementtarget H-1B visas specifically, and include: (a.) narrowing the definition of a “specialty occupation,” (b.) enhancing the ability of the Department of Homeland Security (DHS) to enforce compliance with worksite inspections, and (c.) reforming the methodology used to determine prevailing wage levels (see Table I, below), which Administration officials argued put American workers at a competitive disadvantage. 
  • By October 23, a flurry of three lawsuits challenging the new regulations had been filed, by plaintiffs as varied as the US Chamber of Commerce, multiple universities, several trade associations, and private employers. All of the suits seek injunctive relief, meaning that preliminary injunctions may issue fairly quickly. At this writing, the new rules are still in effect. 
  • As this blog is being completed, on October 29, the Administration has announced an additional volley of new restrictions on work visas. The Notice of Proposed Rule-Making (NPRM) applies to so-called “PERM” (permanent labor certification) workers, as well as H-1B, H-1B1 (Chile and Singapore citizens only) and E-3 (Australia citizens only) visa holders. It would effectively eliminate the visa lottery system used to select successful applicants from much larger applicant pools, which has been in effect for the past 30 years. Instead, applicants would be selected based on promised compensation level for the position being filled, from highest to lowest compensation. From the Administration’s perspective, this would further ensure that only the highest paid jobs would be filled by foreign workers. Table I, below, reflects the minimum pay levels (per the “OES,” or Occupational Employment Statistics) in effect prior to the new, October 8 order, the pay level which must be met or exceeded under the new order, and the impact of the separate, October 29 order eliminating the visa lottery system and substituting the “descending compensation” prioritization in its place.
  • So, for example, under the prior rule, the Level I prevailing wage for an electrical engineer in Pittsburgh, Pennsylvania this year was $66,976 (at the 17th percentile of the applicable wage range.) Under the new rule, that Level I wage minimum compensation level for the visa application moves to $92,851 (at the 45th percentile of the wage range). See this excellent note from the law firm of Foley Lardner LLP for further details.  

Mandated Changes to Diversity & Inclusion Training Content 

By Presidential Executive Order, the Administration recently announced they would impose new restrictions on the content of diversity and inclusion training for all federal employees, including the US military. This will impact an estimated 4.3 million workers. Two Office of Management & Budget memoranda (M-20-34 and M-20-37) further elaborated on this Order, specifying the specific type of content forbidden to be included in employee training. Generally, the forbidden content revolves around concepts recently in the news, such as suggesting that “systemic racism” exists or that the concept might apply to the United States.   

It is important to note that these same training content restrictions extend to all private sector employers who are also federal contractors, and that Section 4 of the Executive Order specifies the categories of impermissible content, as well as the penalties for violation, up to and including the draconian penalty of complete debarment. Complete debarment can include cancelation of all “in-flight” contracts, failure by the federal government to pay for work completed but unpaid under any existing contract, and even a form of “black-listing” of the affected company from competing for any future federal contracts. 

Given the stakes, federal contractors should be actively evaluating their employee training content to ensure it does not include conceptual material that the federal government now prohibits from being communicated to employees. 

That’s Not All 

In addition to the Executive Branch’s new regulations impacting visa applications and diversity training – not to mention the pending Supreme Court arguments, scheduled for November 10, once again debating the constitutionality of the ACA – the President and his agencies have been busy with dozens of other initiatives. Here are a few that will be most important to you as an employer: 
  • The Department of Transportation is pushing through revisions to the “hours of service rules,” potentially loosening them for both long-haul and short-haul truckers. Industry support groups have long requested these revisions to better reflect the realities of today’s working conditions.  Critics of the moves contend that public safety would be compromised by putting these revised rules in place. 
  • In what could become a VERY contentious decision, the Department of Labor is expected, any day now, to re-vamp the rules by which employers make the “employee vs. independent contractor” determination. These new rules could particularly impact companies that depend on gig workers (Uber, Lyft, Instacart, and similar business model organizations). In a letter sent this week by the Attorneys General of 24 states to DOL Secretary Scalia, they stateUnreasonably broadening independent contractor status will leave millions of workers vulnerable to violations of the [Federal Labor Standards Act], corresponding state laws, and other state and federal labor and employment laws…” 
One last, crucial point: as previously mentioned, all of the actions described above were taken solely by members of the Executive branch: the President, his cabinet secretaries, and their agencies. Should the election result in a change in Presidential party, any or all of these new regulations could be ripe for immediate repeal or nullification after January 20, 2021! 

Bob Greene currently serves as Senior HR Industry Analyst at Ascentis. Bob’s 40 years in the human capital management industry have been spent in practitioner, consultant and vendor/partner roles. As practitioner, he managed payroll for a 5,000-person bank in New Jersey. As consultant, he spent 8 years advising customers in HRMS, and payroll and benefits system design as well as acquisition strategies. Bob also built a strategic HCM advisory practice for Xcelicor (later acquired by Deloitte Consulting.)