United States: Republicans Re-Take Congress: Now What?

By now, even with 13 House and 2 Senate seats still undecided, it is clear that Republicans scored big on November 4.  At last count, the Senate gained at least seven Republican seats, securing the GOP's control of Congress's upper chamber. Republicans gained a sizable number of seats in the House of Representatives as well, with the current Republican-Democrat breakdown of 243-180.  So what does this mean for employers?  A lot. 

First of all, Senate and House Committees will both be chaired by Republican Party members.  Committee chairs are instrumental in setting legislative agendas, establishing budgets, and scrutinizing administration and activities and initiatives. Accordingly, much greater scrutiny of the agencies' regulatory and enforcement agenda is on the horizon. 

Senator Lamar Alexander (R-TN), current Ranking Member of the Senate Committee on Health, Education, Labor and Pensions (HELP), has already released a statement promising to "fix our broken system and move our country in a new direction."  Such efforts will include "put[ting] an end to the Obama administration's unconstitutional overreach ..." Republicans have repeatedly criticized the administration of executive overreach. Over the past year, the White House has issued several controversial executive orders and presidential memoranda, including the Fair Pay and Safe Workplaces Executive Order, which imposes multiple new risks and obligations on government contractors; Executive Order 13658, which raises the minimum wage for workers and tipped employees of federal contractors; and a memorandum directing the Department of Labor to revise its "white collar" overtime exemption regulations.  

The Republican majority may use the power of the purse to rein in such initiatives.  Specifically, Senate Republicans will likely rely on the appropriations process to block agency regulations, including those issued to implement the President's executive orders or directives.  Lawmakers could include provisions in funding bills that explicitly bar agencies from using the funds to carry out the contested measures.  

The emboldened Republican majority may target current labor and employment initiatives through legislation.  Sen. Alexander,  the expected new HELP Committee Chair,  and Sen. Mitch McConnell (R-KY), who is slated to become the new Majority Leader,  have already introduced the National Labor Relations Board Reform Act, a bill that would, among other things, expand the NLRB from five members to six, three Republicans and three Democrats, as well as require a majority of four members to make a decision to encourage consensus from both sides.  The five-year terms of the members would be staggered, and synchronized in pairs, with one member from each political party facing confirmation at the same time.  It is expected that this bill will either be acted upon or reintroduced when the new Congress convenes.  

Members of the new Republican-controlled Congress may also introduce legislation as a preemptive strike against certain Board policy changes.  For example, lawmakers might draft a bill to clarify the definition of "employer" under the NLRA to counter the agency's intent to change how it determines who is a "joint employer" for liability purposes, particularly with respect to the franchise industry.    

Other bills – such as recent legislation addressing the Equal Employment Opportunity Commission's perceived agency overreach – might gain traction as well. 

With respect to healthcare reform – an issue Republicans have refused to let subside four years after the Affordable Care Act was enacted – expect incremental changes over wholesale repeal.  

The most vulnerable portions of the ACA include the individual mandate, excise tax on medical devices, and the definition of "full-time" for employer mandate purposes that relies on a 30 v. 40-hour workweek threshold.  

It bears mentioning that although Republicans soundly won control of the Senate, they do not hold the 60 seats needed to constitute a filibuster-proof "super majority."  Therefore, Senate Republicans may consider using the "budget reconciliation" process to pass bills – including those repealing or repealing portions of the ACA – which requires only a simple 51-vote majority. Even so, House and Senate-passed legislation still face the President's veto pen.     

Other Implications

Without a Democratic majority in the Senate, it will become more difficult for the President to appoint controversial picks to the federal bench, as well as to the U.S. Supreme Court, if needed. Any candidates will need to hold more centrist views in order to pass confirmation muster.  

In addition, agencies might try to tie up loose ends during the lame duck session.  For example, NLRB member Nancy Schiffer's term expires on December 16.  Former recess appointee Sharon Block has been nominated in her stead.  Therefore, it is widely expected that the Board will finalize its election representation regulations before December 16, as Block's confirmation is not guaranteed.  Anticipating this maneuver, lawmakers may try to prevent the rule's issuance through the appropriations process, or introduce a legislative fix.  

The new composition of Congress will not, however, put an end to federal agency regulatory and sub-regulatory activity.  To the contrary, agencies might see 2015 as its last opportunity before the 2016 elections to finalize their outstanding rules and alter workplace policy.  

Ballot Initiatives

While Republicans made gains at the federal level, states and localities were able to push a more progressive agenda.  Ballot initiatives to increase the hourly minimum wage or institute a "living wage" were approved in Alaska, Arkansas, Illinois, Nebraska, and South Dakota, as well as in Oakland and San Francisco, California. A similar initiative in Eureka, California, however, failed.  Efforts to legalize marijuana in some fashion were successful in Alaska, Oregon, and the District of Columbia, but were rejected by Florida voters. Georgia voters approved a measure prohibiting the state from increasing the maximum state income tax rate above that in effect as of January 1, 2015. Finally, Massachusetts approved a ballot measure that will require employers with 11 or more employees to provide up to 40 hours of paid sick leave per calendar year, and requires smaller employers to provide unpaid leave. Other localities that approved paid sick leave initiatives include Oakland, California, as well as the New Jersey cities of Trenton and Montclair.

What Now?

To make sense of the midterm elections, Littler's Workplace Policy Institute will hold a complimentary webinar on Thursday, November 20 at 9:00 PT/12:00 ET. Information on how to register for this event will be forthcoming.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael J. Lotito
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