The Department of Labor is working its way out of an awkward era.
For three months, literal tabloid headlines plagued the department after the New York Post first reported that ex-Secretary Lori Chavez-DeRemer is under internal investigation by the DOL’s Office of Inspector General for allegedly committing travel fraud, drinking alcohol during work hours, and having an “‘inappropriate’ relationship with a subordinate.”
In mid-April, Chavez-DeRemer officially exited the Labor Department, and her portraits were pulled off the walls. This undercut Teamsters chief Sean O’Brien, who lobbied hard for her nomination, and deputy Keith Sonderling was swiftly named as acting secretary. His experience includes a four-year stint as EEOC commissioner and three years as deputy administrator of the DOL’s Wage and Hour Division. He has been described as “the steadiest option” to lead the DOL, and here are highlights of his early efforts:
The new DOL staff assembles
Sonderling’s promotion reportedly was no surprise to those who knew he had “take[n] an outsize role running the agency” during Chavez-DeRemer’s frequent travels. To that point, CHRO Association Senior Labor and Employment Counsel Roger King commended Sonderling’s readiness to lead the agency: “His job title considerably understates his importance on labor and employment matters to the administration.”
This week, Sonderling’s inner circle came together. They include Courtney Walter as chief of staff; Cynthia McKnight and Garrett Burty as deputies; and Joseph Burgese as senior advisor. Three out of four previously worked with Sonderling at the EEOC and the Wage and Hour Division.
A joint employment shift
On Apr. 22, the DOL unveiled its proposed rule on establishing when joint employment liability would apply. In a DOL statement, Sonderling described this as “a clear standard” to “give businesses more confidence to invest in partnerships, help employees understand their rights,” and streamline the DOL investigation process.
The proposal would create a single standard that applies under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. In doing so, the standard would evaluate four factors based upon whether an employer:
(1) Hires or fires;
(2) Substantially supervises or controls scheduling or workplace conditions;
(3) Determines wages and method of payment; and
(4) Maintains employment records.
After the proposed rule’s publication, questions arose about how closely it resembles the previous Trump-era standard that was vacated by a federal judge, who found that it narrowed the standard too much regarding the FLSA. However, labor attorneys predict that the new proposal will survive because the four factors are based upon an employer’s “reserved” control rather than “actual” control.
Redefining independent contractors
In late February, Sonderling announced the DOL’s proposed rule that would roll back the Biden-era 2024 worker classification standard and favor an “economic reality” inquiry to distinguish between independent contractors and employees.
This proposed rule also evaluates whether an individual has control over their work or is running an entrepreneurial enterprise. Other factors include permanence of the working relationship and how important the person’s work is to the company’s core operations.
Moving into the AI future
This month, Sonderling revealed the DOL’s new AI in Registered Apprenticeship Innovation Portal, which is billed as “a one-stop resource for organizations looking to build artificial intelligence literacy” by developing mentoring opportunities. The portal offers training modules to build skills in various industries, including healthcare and manufacturing. Companies can also upgrade preexisting apprenticeship programs with AI integration.
Increased 401(k) investment options
In March, Sonderling announced a proposed regulation from the DOL’s Employee Benefits Security Administration following a Trump executive order. The proposed rule creates safe harbors for 401(k) plan fiduciaries through criteria to evaluate alternative asset classes for investments. As Sonderling put it, “The department’s days of picking winners and losers are over.”
What could come next
Sonderling sailed through Senate approval (53 – 46) for his position as Chavez-DeRemer’s deputy. It’s too soon to say whether Trump will nominate him as DOL chief, although he could also serve indefinitely like Biden pick Julie Su did if there are any obstacles to his confirmation.
Meanwhile, it’s clear that Sonderling leans into employer-friendly policies, although the proposed rules above are still moving through notice and comment periods, so employers should stay tuned for updates.
