After Democrats swept the critical Senate races in Georgia this week, it became even more certain that the next four years will present employers with a much different White House policy agenda.
And with Democrats in control, President-Elect Joe Biden’s Thursday nomination of Boston Mayor Marty Walsh to lead the Department of Labor will most likely be approved.
If confirmed, Walsh would be the first union member to serve in this role in nearly half a century.
The nation is transitioning from the administration of President Donald Trump to that of Biden after an unprecedented year—which highlighted the agility and flexibility employers need to navigate change, says John Bremen, managing director, human capital and benefits, and global head of thought leadership and innovation for Willis Towers Watson.
“It’s safe to say that the past year trained successful business leaders to be ready for anything,” Bremen says.
As employers work to restore stability—and a greater sense of normalcy—in the year ahead, he says, it is important to understand that 2021 also likely will be an unpredictable year, especially related to medical, social, economic and political factors, including on the legislative and regulatory fronts.
During his campaign, for instance, Biden issued proposals addressing healthcare and retirement; calling for additional payroll and income taxes on corporations and higher-income taxpayers; supporting paid family, medical and sick leave; proposing an increase in the federal minimum wage; and more.
In a recent blog post, several WTW experts outlined key HR areas that will be most impacted by the new administration, including:
Biden’s announced proposals include increasing the federal minimum wage to $15 per hour. He also supports the Paycheck Fairness Act, which would require employers to demonstrate the reason for disparities in pay between men and women. These proposals have been languishing in Congress for several years, and the prospects for final action during the 117th Congress are not clear, yet a Democratic-led House, Senate and White House could push them forward.
Paid leave faces a similar scenario. Biden supports paid family and medical leave based on proposals such as the FAMILY Act, which would provide workers two-thirds of their salary (subject to a cap) for up to 12 weeks of qualifying leave. He also supports the Healthy Families Act, under which employees would earn an hour of paid sick leave for every 30 hours worked, up to seven paid sick days per year.
Biden has also said he would ensure that workers receive overtime protections to which they are entitled. In addition, he proposed restoring the broad definition of “joint employment” and stopping employers from misclassifying workers (including “gig” workers) as independent contractors. He could attempt to implement such proposals through executive and administrative action.
Biden has proposed to increase marginal tax rates, Social Security taxes and capital gains taxes, which could all gain traction if Democrats secure the Senate. The focus for executive compensation may also pivot to the regulatory front, specifically to a Democratic-led Securities and Exchange Commission. The WTW authors note that, while the pandemic will likely get top priority, expect recent changes to regulations passed along partisan lines to be revisited during a Biden administration. These could include easing the recently imposed restrictions on proxy advisors, proxy access and shareholder proposals, which could increase shareholder influence over corporate operations.
Biden has established a COVID-19 task force to help guide public health and economic policies addressing pandemic relief, including expanded testing, vaccine distribution and support to state and local governments, small businesses and others. In addition, employers can expect an expanded Affordable Care Act, including a public option and higher-premium tax credits, pending legislative action, or executive or administrative action. For example, Biden could expand outreach and enrollment through the ACA marketplaces. He may also reinstate rules prohibiting healthcare discrimination based on gender identity.
Retirement savings “could provide an area for possible bipartisan discussion and compromise” during the 117th Congress, according to WTW. Biden issued campaign proposals to “equalize” the tax benefits of defined contribution plans, provide tax incentives to encourage plan sponsorship among small businesses and provide automatic 401(k) programs to give workers without an employer-sponsored plan access to a retirement savings plan. He has also pledged to allow catch-up contributions for workers who temporarily leave the workforce to care for family members and to allow survivors of sexual and domestic violence to access their retirement savings.
“Many of President-elect Biden’s proposals will require legislative action, and the outlook for such action during the 117th Congress will depend on the final Georgia Senate election outcome and the willingness of Congressional leaders to work together to approve legislation, among many other factors,” Bremen says.
WTW’s advice to HR leaders is to continue closely monitoring events in Washington and policymaking centers around the world.
They must also, Bremen says, have “scenario plans” in place for any number of likely outcomes, plus strategies for maintaining agility, resilience and sustainable performance throughout 2021.