The Trump administration's "Regulatory Freeze Pending Review" (Freeze Memo) instructs the heads of federal executive departments and agencies to send no regulation to the Office of Federal Register (OFR) until a presidential designee has reviewed and approved the regulation, except for "emergency situations or other urgent circumstances."

The Freeze Memo, issued in January, also asks the heads of executive departments and agencies to take the following steps:

  • With respect to regulations that have been sent to the OFR but not published in the Federal Register, immediately withdraw them from the OFR for review and approval; and

  • With respect to regulations that have been published in the OFR but have not yet taken effect, as permitted by applicable law, temporarily postpone their effective date for 60 days from January 20, 2017, or longer, for the purpose of reviewing questions of fact, law, and policy.

Although the White House subsequently filed a second memorandum, purportedly providing guidance on the implementation of the Freeze Memo, it is not entirely clear how it will affect certain regulations that have been published and scheduled to take effect, but postponed due to litigation. It is apparent, however, that for regulations not yet published and those published but not yet in effect, the Freeze Memo will postpone them, perhaps indefinitely.

The first labor and employment regulation to be frozen pursuant to the Freeze Memo occurred on February 15, 2017. The Equal Employment Opportunity Commission (EEOC) announced that it will delay the effective date of its final rule concerning affirmative action for individuals with disabilities from March 6, 2017, to March 21, 2017. The rule amends the regulations that require federal agencies to engage in affirmative action for individuals with disabilities by increasing federal agencies' hiring goals for individuals with disabilities and enhancing support services for them. The EEOC attributed the delay to the Freeze Memo.

In addition, the following labor and employment regulations could be affected, to varying degrees, by the regulatory freeze:

Fair Labor Standards Act: Overtime Rules

The Department of Labor's (DOL) new overtime rules—which would nearly double the minimum salary level at which an employee can be exempt from overtime pay—were to take effect on December 1, 2016. However, in November 2016, a federal judge in Texas granted a nationwide preliminary injunction, sought by several business groups and states, preventing the DOL from enforcing its new rules. The DOL successfully petitioned the Fifth Circuit, in December 2016, for an expedited briefing schedule on its appeal of the injunction of the overtime rule. While briefing was scheduled to be completed on February 7, 2017, the DOL asked the Fifth Circuit for a 30-day extension of its deadline to file its reply brief in order "to allow leadership personnel adequate time to consider the issues." This request came mere days after the Freeze Memo. Given that the regulation was published in the Federal Register, and was to be in effect before the Freeze Memo, it is not clear how the regulatory freeze affects this rule, if at all.

Fair Pay and Safe Workplaces: "Blacklisting Rule"

The Federal Acquisition Regulatory (FAR) Council issued its final Fair Pay and Safe Workplaces Rule, along with accompanying guidelines from the DOL, on August 25, 2016. The rule—which requires that federal contractors report violations of laws to the federal government—was scheduled to be phased in over time beginning on October 25, 2017. On October 24, 2016, a federal judge in Texas issued a nationwide preliminary injunction prohibiting implementation of much of the rule and DOL guidance, with the exception of certain pay transparency requirements. On December 22, 2016, the government appealed the district court's decision to the Fifth Circuit. While the pay transparency requirements took effect on January 1, 2017, and are not covered by the Freeze Memo, the remainder of the Blacklisting Rule may be affected.

Department of Labor: Persuader Rule

On March 23, 2016, the DOL issued its final Persuader Rule, which increases reporting obligations for individuals and entities, including law firms, that engage in certain activities designed to persuade employees against unionizing. The rule was set to take effect on July 1, 2016, but a federal judge in Texas issued a nationwide preliminary injunction in June 2016. On November 16, 2016, the judge issued a nationwide permanent injunction, holding that the rule is unlawful. On January 12, 2017, the DOL appealed the district court's decision to the Fifth Circuit. Given that the regulation was published in the Federal Register, and was to be in effect before the Freeze Memo, it is not clear how the freeze affects this rule, if at all.

Department of Labor: Fiduciary Rule/Conflict of Interest Rule

The DOL Fiduciary Rule technically became effective in June 2016, but it is not scheduled to become applicable until April 10, 2017. Although that date is outside of the 60-day window, and could theoretically escape delay, the DOL recently sought to delay the rule's implementation for 180 days and open the measure back up for public comment.

EEOC: Pay Data Disclosure Rule

In September 2016, the EEOC announced that it would begin to collect from employers pay data and hours worked, in addition to sex, race, and ethnicity information, in the expanded EEO-1 form. New forms have been published, but the rule is not set to go into effect until March 31, 2018. The Freeze Memo could result in a postponement.

OSHA: Improved Tracking of Workplace Injuries and Illnesses Regulation

OSHA's new regulation took effect on December 1, 2016. In the preamble to the final rule, OSHA emphasized that the final rule prohibits retaliation against an employee simply because he or she reported a work-related injury or illness. On November 28, 2016, a Texas court denied a preliminary injunction against the anti-retaliation provisions of the new rule. Although a permanent injunction or repeal may be forthcoming, given that the rule was in effect when the Freeze Memo was issued, the regulatory freeze should not affect the rule.

Dodd-Frank Act: CEO "Pay Ratio" Rules

The Dodd-Frank CEO "Pay Ratio" Rules generally require public companies to disclose the median of the annual total compensation of all its employees, except the CEO; the annual total compensation of its CEO; and the ratio of those two amounts. These rules have already been published in the Federal Register; however, they do not become effective until 2018. Thus, they may be subject to the Freeze Memo and face delay.

Ballard Spahr's Labor and Employment Group routinely assists employers in ensuring compliance with state, federal, and local statutes and regulations, and will continue to monitor the affect of the Freeze Memo on labor and employment regulations.

Copyright © 2017 by Ballard Spahr LLP.
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