The apparent sweep of a pair of Georgia U.S. Senate races opens the door for Democrats to eliminate a host of regulations passed by the Donald Trump administration.
In particular, the Department of Labor passed several rules that might not survive. The vehicle to erase rules is the Congressional Review Act. In an ironic twist, the CRA had been a little-used legislative tool until Trump was elected in 2016.
Washington Post reporter Dave Weigel noted the potential for Democrats to deliver payback:
The CRA gives Congress a short window to review and overturn federal rules. From 1996 to 2017, the act was used once, to overturn the Clinton administration’s workplace ergonomics rule in 2001. In the first months of 2017, however, a Republican-led Congress joined the Trump administration to nullify 16 rules issued at the end of the Obama administration.
Any incoming presidential administration already has the authority to suspend any rules published in the final 60 days of the previous administration, known as “midnight regulations,” can be rescinded by the incoming administration. ProPublica is tracking midnight regulations, many of which relate to financial services.
The CRA allows Congress to go back further. In 2017, the Republican-led Congress targeted rules issued by the Obama administration as far back as May 2016.
Here are DOL rules that generated controversy this year and might fall victim to the chopping block:
Investment Advice Rule. A successor to the Obama-era fiduciary rule, this one can be simply withdrawn by the Biden administration. But having Senate control might push the administration to enact rules closer to a fiduciary standard. Doing that might require legislation to address a 2018 Fifth Circuit Court of Appeals ruling that tossed out the fiduciary rule. The court ruled that the DOL overstepped its authority in regulation rollovers.
Financial Factors in Selecting Plan Investments. Known as the ESG Rule, this rule requires ERISA fiduciaries to put profit above social goals when considering ESG funds. Published in December, the rule reinforces retirement security as the guiding principle in retirement accounts, and called out ESG funds in particular.
Environmental, social and governance funds have grown more popular over the past several years, particularly among younger investors. And although ESG funds lagged in returns in their early years, many now show respectable results – although that is hotly debated.
If Biden nominates a labor secretary who is more active on worker rights, a new set of rules can come under scrutiny and revision, including a recent one on overtime.
Overtime Rules. While it falls outside the CRA authority, the DOL overtime rules that went into effect Jan. 1, 2020 could be targeted by the Biden administration. The overtime issue is another one that both the Obama and Trump administrations wrote and rewrote rules to cover.
Under the Trump overtime rules, the minimum salary for exempt status increased from $455 per week ($23,660 annually) to $684 per week ($35,568 annually). Employees who make less than $35,568 per year were automatically eligible for overtime. The DOL estimated that increasing the salary threshold made about 1.3 million additional workers eligible for overtime.
These regulations replaced the Obama-era 2016 final rule that had raised the minimum salary for exempt status to $913 per week ($47,476 per year), which was invalidated by the U.S. District Court for the Eastern District of Texas. The court ruled that the $913 per week salary level was too high, thereby capturing many individuals who perform exempt duties and should be exempt from overtime.
A Biden DOL might take another crack at overtime rulemaking.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org. Follow him on Twitter @INNJohnH.
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