Legal Insight Making Sense of the Regulatory Maze
Congress has, in most cases, instructed federal agencies to develop regulations regarding employee and employer rights and obligations under these new laws. Agencies then publish proposed and interim regulations, and it may take months—even years—for the regulations to become final.
Here, Wayne E. Barlow, a partner in the Los Angeles law firm of Barlow and Kobata, representing management in areas related to labor, personnel and employment, takes you through the process of developing interpretive regulations for a recently enacted law—from its assignment to a federal agency to where the agency publishes final regulations—and shows you how and why your company should be part of the process.
What first happens after Congress enacts a law and assigns a federal agency to create regulations?
Once Congress requires an agency to develop interpretive regulations, the federal Administrative Procedure Act (APA) provides that regulations are to be developed in accordance with a fact-finding technique known as notice and comment rulemaking.
The notice and comment sequence ensures that agency regulations will be subject to public comments. The process is intended to ensure that the public and persons regulated are given an opportunity to participate, provide information and suggest alternatives so the agency is educated about the impact of the proposed rule and can make a fully informed decision.
What steps must an agency follow in developing interpretive regulations?
First, a notice of the proposed rulemaking must be published in the Federal Register. The notice must include a statement of the time, place and notice of the public rulemaking proceedings, reference to the legal authority under which the rule is proposed, and either the terms or substance of the proposed rule or a description of the subject and issues involved.
After publishing the notice, the agency must give interested persons an opportunity to participate in the rulemaking through submission of written data or testimony at public hearings.
Following the period of public comment, the agency will then publish interim regulations. After publication of these regulations, the agency provides the public with another opportunity to comment before taking final action in the form of publication of the final rules.
Finally, the APA requires final regulations to be published in the Federal Register.
For what laws have federal agencies developed interpretative regulations that impact the employment relationship?
Within the recent past the following laws have been enacted: Worker Adjustment and Retraining Notification Act (WARN); Drug-Free Workplace Act of 1988; Employee Polygraph Protection Act of 1988; Americans with Disabilities Act (ADA); Family and Medical Leave Act of 1993 (FMLA); Civil Rights Act of 1991; and the Older Worker Benefit Protection Act amending the Age Discrimination in Employment Act.
In each of these laws, Congress has chosen a federal agency to develop regulations that explain and interpret the new law.
In addition to these laws, there are: the National Labor Relations Act and the Taft-Hartley Act (interpreted by the National Labor Relations Board); the Fair Labor Standards Act (interpreted by regulations developed by the U.S. Department of Labor); and the Occupational Safety and Health Act.
Are there examples of how the regulatory process works?
Take the FMLA. In the case of the Family and Medical Leave Act, Congress directed the U.S. Department of Labor to develop regulations that state employer obligations and rights. The FMLA requires employers with 50 or more employees to provide up to 12 weeks unpaid, job-guaranteed leave in a 12-month period for childbirth, adoption, and serious personal illness of employees or close family members.
The FMLA was enacted on February 5, 1993. Portions of the law applicable to non-union employees became effective on August 5, 1993, and the FMLA required the Department of Labor to issue regulations to implement the law by June 5, 1993.
To obtain public input and assist in the development of the regulations concerning FMLA, the Department of Labor published a notice of proposed rulemaking in the Federal Register on March 10, 1993, inviting comments until March 31, 1994, on a variety of questions and issues.
The Department of Labor issued an interim final rule on June 4, 1993, which went into effect on August 5, 1993. Further public comment on the interim rules was invited until December 3, 1993.
However, final regulations were not published until this year when on January 6, 1995, the Department of Labor published its final rule in the Federal Register. The total elapsed time was 18 months.
Is it important that the employer community monitor this process?
Regulations provide the details regarding laws passed by Congress and are intended to guide the public, including the employer community, to their rights and obligations. Particularly for larger organizations with sufficient resources, the employer community has every incentive to carefully monitor the development of agency regulations that will control the way it does business.
The discussion above shows, with respect to the Department of Labor's publication of final rules regarding the FMLA, that the regulatory process is not only time consuming and protracted, but the agency authorized to develop the regulations often does not publish final regulations until well after the law itself has become effective. From the date the FMLA became effective on January 6, 1995, covered employers were required to comply with the FMLA, and incur potential liability for erroneous decisions in granting employee leaves, even if they were made in good faith.
Given this delay, it is critical that employers remain current on developments involving the regulatory process.
Must employers comply with proposed and interim federal agency regulations?
Generally, yes. The validity of a proposed rule, interim rule or final rule depends on whether the agency is empowered to adopt the rule and whether the rule is consistent with the statute passed by Congress. Absent a specific basis to believe the regulations are invalid, employers should comply with the regulations.
Employers may generally rely upon and act consistent with proposed and interim regulations. However, if the proposed regulation conflicts with case law interpretation of the statute, little weight would be extended to the regulation.
Before being declared void, a court must find the regulation to be inconsistent with the law passed by Congress. A court construing an Act of Congress will give substantial deference to the agency's interpretation of the law so long as it is reasonable and not in conflict with the statute.
Most important for employers, for enforcement purposes, the agency charged with ensuring compliance will rely upon any proposed regulations.
May an employer submit comments or suggestions to a federal agency developing regulations and, if so, how?
The rulemaking process is an invaluable opportunity for the employer community and permits an organization to submit comment on proposals being considered.
Referring to the employer community's experience with the FMLA, the Department of Labor received a total of 393 comments in response to that agency's notice of proposed rulemaking. The agency received 900 comments on the interim final rules from such diverse groups as employers, law firms, management consultants, temporary help and employee leasing companies, professional and trade associations, universities and individuals. Comments were also received from advocacy groups, unions, family counselors and therapists and clinical social workers.
Important issues regarding employer obligations were determined in the rulemaking process. The final rule, for example, broadened an earlier definition of an employee's serious health condition for which family leave must be granted. The law itself defined a serious health condition as an illness, injury, impairment, or physical or mental condition that involves certain hospital or similar treatment by healthcare providers. In interim proposed rules, the Department of Labor described a serious health condition as a period of incapacity of more than three days, and defined continuing care as involving one visit to a health-care provider that results in a regimen of continued care under the provider's supervision. In the final rule, serious health condition was broadened to cover both short- and long-term conditions for which treatment and recovery are lengthy, such as for chronic conditions such as asthma and diabetes. The Department of Labor determined to stick to the "more than three days" policy, reasoning that the law was intended to provide that conditions lasting only a few days were not intended to be included as serious health conditions because such conditions are normally covered by employers' sick-leave plans.
However, as a result of the rulemaking process, the final regulation gave special consideration to chronic conditions which continue over an extended period yet often cause periods of incapacity of less than three days. The final rule covers such conditions.
Does the term "legislative history" include the rulemaking process and does it provide guidance useful to employers?
No, legislative history refers to the debate in Congress leading to enactment of legislation. Such history includes committee reports, floor dates in the House and Senate and messages to the President.
However, in developing interpretative rules, agencies often look to such legislative history to determine what is meant by key terms found in law. Such history is useful to the employer community only if an employer believes that specific provisions of a law are not explained by the law itself or an agency's interpretive regulations of the law.
How can I locate proposed and final federal agency regulations?
Proposed and final regulations can be found in the Federal Register. It is suggested that a company's HR or legal department monitor regulatory developments contained in the Register for their impact on day-to-day personnel decisions and policies.
Personnel Journal, February 1995, Vol. 74, No. 2, pp. 100-102.