The legal challenges stymieing Biden’s employment agenda in 2024

The Chamber of Commerce has challenged a number of Biden administration rules in court, including the FTC’s noncompete ban.
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5 min read

The Biden administration had a busy spring as agencies worked to finalize a number of employment and labor rules ahead of the 2024 presidential election. Equally busy, perhaps, was the US Chamber of Commerce, which challenged several of these policies in court—one of which was ultimately stayed by a federal judge in Texas.

Here’s an overview of the Biden policies that have been challenged, and where those lawsuits stand.

The Chamber of Commerce sued the FTC over its noncompete ban. Just one day after the Federal Trade Commission (FTC) announced a final rule banning noncompete clauses in employment contracts, business groups, including the Chamber of Commerce, sued to block it.

In a statement ahead of the lawsuit, the chamber’s president and CEO Suzanne P. Clark called the ban “a blatant power grab,” and argued the agency didn’t have the constitutional authority to issue the ban. A Dallas-based tax services firm sued the FTC on similar grounds.

The ban would bar employers from entering into noncompetes with any workers, as well as void most existing noncompete agreements, 120 days after its publication in the Federal Register. These legal challenges, though, could keep the ban from taking effect in a timely manner.

The Chamber of Commerce challenged OSHA’s walkaround rule. The Occupational Safety and Health Administration (OSHA) issued a final rule on March 29 clarifying that employees may ask a third-party representative—whether or not that person is a direct employee of their company—to be present during worksite inspections. It took effect May 31.

The Chamber of Commerce sued OSHA on May 21 in a Texas federal district court, arguing that by broadening the definition of who is allowed to accompany employees on OSHA inspections, the agency is making employers more vulnerable to unionization campaigns.

“OSHA’s new walkaround rule is the administration’s latest regulation to take a ‘whole-of-government’ approach to promoting unionization at all costs,” Marc Freedman, VP of the Chamber’s employment policy division, said in a statement concerning the lawsuit.

A number of business organizations, including the Associated General Contractors of America and the National Federation of Independent Business, joined the lawsuit.

A federal judge vacated the NLRB’s joint-employer rule. In March, a federal judge vacated a National Labor Relations Board (NLRB) rule for determining joint-employment status two days before it was set to take effect.

The rule, which was adopted in October 2023, had proposed a stricter test for determining when two organizations qualify as a “joint employer” of a group of workers. It was expected to make it easier for two businesses to qualify as a joint employer, thus opening up them to legal liability for one another’s actions, and the obligation to bargain with unions representing groups of workers.

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A Texas judge sided with the Chamber of Commerce and other business groups that challenged the rule, arguing it was “inconsistent with common law,” as well as “arbitrary and capricious.”

Republican AGs sued to block the PWFA. Attorneys general from 17 states sued the Equal Employment Opportunity Commission to challenge the Pregnant Workers Fairness Act (PWFA) on April 25. While the PWFA has been in effect for over a year, the lawsuit was filed after the EEOC published a final rule indicating that abortion is considered a related condition for which employees can seek accommodations under the act.

The Republican AGs took issue with this rule, arguing it went further than the original legislation, which was passed with support from both parties in 2022.

Separately, in February a Texas federal judge ruled the PWFA was unenforceable against the state government and its agencies because it was part of a package passed with proxy votes due to the Covid-19 pandemic. Texas Attorney General Ken Paxton sued the Biden administration over the funding package that included the PWFA last year, taking issue with the fact that a majority of US House members did not vote in-person for it.

The DOL’s independent contractor rule was challenged before taking effect. While the Department of Labor’s (DOL) independent contractor rule did ultimately take effect on March 11, at least four lawsuits were filed challenging the policy beforehand, Bloomberg Law reported.

The rule restores a “multifactor economic reality test”—which was rescinded by President Trump in 2021—for determining if a worker is an independent contractor. Business groups representing the construction, financial services, and tech industries, as well as freelance writers, sued over the rule, which is expected to make it harder for employers to use independent contractors.

Even though these lawsuits didn’t lead to the rule being overturned, it could still face an injunction at some point, a partner at law firm Morgan Lewis told HR Dive.

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From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.