Synopsis: On January 20, 2021, the Biden Administration revoked the Trump Administration Executive Order (EO) which had restricted agency Guidance. On January 27, 2021, the Department of Labor (DOL) rescinded the “PRO Good Guidance” rule that it had issued pursuant to the Trump EO – a rule that limited the force of informal guidance in DOL enforcement actions. This rescission may undercut the persuasive effect of an employer interpretation of federal statutes at the agency level, because more Guidance limits the ability for employer interpretations and increases agency enforcement power.
In September of 2020, we published a blog post describing how the Trump Administration reigned in the role of informal federal Department of Labor opinions, generally called “Guidance,” in the agency’s enforcement actions against employers. See our blog post here. The upshot was that there would be less Guidance, and thus more employer freedom to interpret federal statutes.
Now, the Biden Administration has weighed in by rescinding the Trump Administration’s Guidance rule. In a final rule, effective on January 27, 2021, the Department of Labor posits that Trump’s internal rule on guidance “deprives the Department and subordinate agencies of necessary flexibility” and “unduly restricts the Department’s ability to provide timely guidance on which the public can confidently rely.” The Biden Executive Order that led to this agency action, in turn, states that the Administration intends “to use available tools to confront urgent challenges,” including the pandemic, economic recovery, racial justice and climate change. The Order added that the Administration is relying on “robust agency action” to achieve its goals.
You can compare the Trump rule at Fed. Reg. vol. 85, no. 168 (8/28/20) with the Biden rule at Fed. Reg. vol. 86, no. 16 (1/21/21) to drill down on the different treatment of agency Guidance.
We draw these conclusions from the latest Department action on Guidance:
- Employers should expect more Guidance.
- Employers should expect the Department of Labor (and likely other federal agencies) to insist on compliance with each and every issuance of Guidance, thus shrinking the universe of employer statutory interpretations that don’t conflict with Guidance.
- More Guidance may mean more clarity in agency enforcement standards, depending on the drafting quality of the Guidance.
- Whether any particular Guidance is legally binding will still depend on court rulings, as it may be inconsistent with governing statutes or the Constitution .
Please reach out to your Seyfarth attorney if you would like to discuss the impact the Biden Administration rescission may have on your employee benefit plans.