Biden Directive Will Make It Harder for Employers to Challenge Costly New Regulations

January 29, 2021

Amidst the flurry of executive orders issued within days of President Biden assuming office, a “Presidential Memo” could have the most significant impact in drastically increasing both the volume and scope of regulatory actions. 

The memo, “Modernizing Regulatory Review,” directs the Office of Information and Regulatory Affairs (OIRA) to add a variety of new factors to be considered when reviewing new regulations in addition to the traditional cost benefit analysis.  These factors include public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, the interests of future generations, and other “regulatory benefits that are difficult or impossible to quantify.”

The memo further directs OIRA to “ensure that regulatory review serves as a tool to affirmatively promote regulations that advance these values,” and does not have “harmful or anti-regulatory or deregulatory effects.”  The effect of these directives is likely a marginalization of cost-benefit analysis to help green light otherwise costly and comprehensive regulations that vaguely aim to achieve one or more of the new factors to be considered. 

Another potential result of the overhaul is that employers will face greater difficulties in challenging new regulations.  HR Policy Association Chief Economist and Vice President, Health and Employment Policy D. Mark Wilson observed: “Previously, a cost benefit analysis could be enough to sink such regulations, or at the very least significantly cut back their scope.  Now, the new factors listed above can be used to tip the balance towards the benefit side no matter how costly a regulation may be." 

The memo has received a warm reception from progressives.  A Huffington Post article  viewed it as “a signal that Biden could break with 40 years of conservative policy.”  James Goodwin, a senior policy analyst at the Center for Progressive Reform said: “It has the potential to be the most significant action Biden took on day one….“This could finally get us back on track after 40 years.  The progressive agenda not only could benefit from winning this process war, it absolutely depends on winning this process war.” 

Relatedly, Julie Su has been nominated for Deputy Secretary of Labor, the #2 position in the Department of Labor.  Ms. Su currently serves as California’s Secretary of Labor, and was the progressives’ choice for the U.S. DOL’s top job before losing out to Marty Walsh.  Ms. Su has a background as a labor and employment attorney who advanced union labor initiatives in her job as CA Secretary of Labor, and is expected to advance a progressive agenda in her role as Deputy Labor Secretary, including focusing on targeting misclassification. 

Outlook:  Ms. Su’s nomination and the planned overhaul of OIRA’s regulatory review process helps set the stage for the expected slew of broadly directed labor and employment regulations in the coming years.