FALL 2020 OUTLOOK: November Election Could Produce the Most Profound Changes to Human Resources Public Policy in More Than 80 Years

August 28, 2020

2020 has proven to be the most volatile year in memory, turned upside down by COVID-19 and social unrest triggered by the George Floyd killing.  Meanwhile, the November elections are just 67 days away—and Democrats have committed to passing legislation representing tectonic shifts in human resources policy not seen since the industrial era.

In the short term, another congressional COVID relief bill is potentially in the works.  On the practice side, the Association’s Racial Justice Initiative is a top priority and an effort that will last beyond 2021.   In the workplace, the pandemic has disrupted longstanding work mores, begging the question—which employees will return to offices and if so, when and how?  Remote working and child care remain pressing challenges for working parents and the membership overall.

If 2020 has taught us anything, it is that anything can happen, and the Association will do all we can to drive and support the change our members need.

RACIAL JUSTICE INITIATIVE:  Our Racial Justice Initiative, chaired by Association Vice Chair Perry Stuckey, Senior Vice President and Chief Human Resources Officer, Eastman, will focus on approaches to increase representation of Black and Hispanic employees through greater leadership accountability.  The Initiative will also engage the membership in sharing best practices designed to identify and address bias within companies and improve health outcomes among minorities.  We will discuss these activities in detail at our forthcoming Washington Policy Conference.

POLITICAL OVERVIEW:  With the election only nine weeks away, Democrats are poised to keep control of the House, and need to win four seats to take control of the Senate (or three seats if the Biden-Harris ticket wins).  Establishment Republicans breathed a sigh of relief when their favored candidate won the primary in Kansas in early August, increasing the chances they hold that seat.  And while different pundits argue GOP candidates in Georgia, Montana, and South Carolina could be in trouble, control of the Senate will come down to Arizona, Colorado, Maine, and North Carolina.

A Democratic sweep of the White House and Senate would very likely result in an end to the Senate rule requiring 60 votes to advance legislation.  As discussed below, this would make it extremely likely that far-reaching labor and employment legislation, as well as health care reform, would become law, some of it in short order.

Whoever wins in November could be facing a difficult economy early next year.  Recession-level hiring plans (just 17% of HR Policy members expect to increase U.S. employment over the next 12 months and 39% plan to reduce it) coupled with a historic level of continuing unemployment insurance claims (27 million) suggests trouble may lie ahead unless there is an agreement on additional COVID relief by September 30 and a viable vaccine by early next year.  A declining economic situation could delay any tax hikes and increase the likelihood of a large infrastructure spending bill next year.  On the other hand, more money to help businesses survive could also have troublesome strings attached to it.

COVID-19 RELIEF LEGISLATION:  Major disagreements between the House, Senate, and White House scuttled the chances for enactment of a COVID-19 relief package before both Houses recessed until September.  The question now is whether the parties can come to an agreement when they reconvene.  Only 13 legislative days are scheduled in September before Congress leaves town for a final campaign push.  Both parties acknowledge the need to shore up the child care sector and expand and extend unemployment insurance, but disagree on the details.  The parties are even farther apart on other issues.  Senate Majority Leader McConnell pledged to block any relief package that does not include liability protection, and Speaker Pelosi won’t agree to a bill that includes such protections.  The only legislative train leaving the station may be a stopgap spending measure for the federal government, which has only a slim chance of including COVID-related items.

LABOR AND EMPLOYMENT POLICY The impact of a Biden election on HR policy issues will largely be determined by whether it is accompanied by complete Democratic control of the Congress.  Even if Republicans retain control of the Senate, there will be significant regulatory actions—both in terms of policy and enforcement—and substantial new requirements governing the workplace policies of government contractors.

With Democratic control of Congress (and elimination of the filibuster), there will be a period of at least two years of a hyperactive employment law agenda.  In virtually every affected area, both Biden and Vice Presidential candidate Kamala Harris have been strong advocates of dramatic changes in the past and this is reflected in their campaign platform.  Some of these are areas where large companies share the goals—if not the specific requirements—of the legislation, such as paid leave and eradication of pay discrimination.  Other measures would be far less acceptable, such as the PRO Act, which would minimize employee choice in union representation and eliminate protections for companies from becoming enmeshed in the labor disputes of companies with which they do business.

Such a landscape would pose unprecedented challenges for the Association and the business community at large in determining which measures to focus their resources on and how to do so.  Simply saying “no” in all areas would not be a viable option.

HEALTH CARE:  HEALS vs. HEROES – if there is another COVID bill before the end of the year, it may include a combination of health care provisions from both bills.  For example, the Republican HEALS Act would allow employers to offer telehealth as an excepted benefit (e.g., dental and vision benefits) to employees.  In addition, unused 2020 contributions to Flexible Spending Accounts and Dependent Care Flexible Spending Accounts could be rolled over into 2021.  The Democrats’ HEROES Act would create a 100% COBRA subsidy for former employees and a partial subsidy for furloughed employees, prohibit balance billing for COVID-19 testing and treatment, and allow greater flexibility for HSAs.  HR Policy and the American Health Policy Institute continue to advocate for these provisions along with permanently addressing all surprise medical bills and increasing transparency.

Mental health initiative:  With COVID-19 imposing significant stress on the workforce, the American Health Policy Institute, in partnership with Total Brain, One Mind, and the National Alliance of Healthcare Purchaser Coalitions, will be working to advance reforms to improve behavioral health benefits and services.  A key component of this partnership is the neuroscience-based U.S. Worker Mental Health Index, which measures monthly the aggregate changes in a profile of mental health indicators.  The Association has entered a one-year agreement with Total Brain to support and use the Index.  The agreement also enables Association members to pilot the Total Brain assessment tool for three months with preferential terms for continued use.

AHPI is on the Steering Committee of The Path Forward for Mental Health and Substance Use, which is focused on driving market-based improvement in access and care for behavioral health for all Americans.  The five priority strategies to improve behavioral health care include improving network adequacy, expanding adoption of the collaborative care model, implementing measurement-based care, expanding tele-behavioral health, and ensuring mental health parity compliance.

Major health care reform legislation hinges on election outcome:  Should Democrats sweep both Houses of Congress and the White House, the House-passed Patient Protection and Affordable Care Enhancement Act (H.R. 1425) is likely to be the starting point for reform in 2021.

EXECUTIVE COMPENSATION:  With layoffs making headlines in the COVID-19 economy, executive compensation will share the spotlight in economic discussions during election season.

On the practitioner front, companies are actively adjusting executive compensation plans to meet the evolving COVID-19 economy.  A standardized formula for executive compensation no longer appears appropriate as even companies in the same sector have seen wildly different impacts from the crisis.  Concurrently, conversations about the addition of inclusion and diversity elements to both annual and long-term programs are top of mind.  A recent Center survey showed approximately 26% of companies include an I&D metric within compensation plans, with an additional 42% planning to or considering doing so.  Currently, metrics are almost exclusively in the annual plan but there is growing recognition that metrics may drive better results in long-term programs.  Unsurprisingly, ISS has its own perspective on these issues, requesting companies provide racial/ethnic identifiers for board members and executive officers.  Further, ISS has indicated policies regarding board diversity could be “sharpened” next proxy season.

From a legislative and regulatory perspective, a Democratic sweep could mean a repeal of the SEC’s recently completed proxy advisory firm rules through the Congressional Review Act.  Additionally, the SEC has announced that on September 16, 2020, it will vote to update the requirements shareholders must meet to submit shareholder proposals as well as the “resubmission thresholds,” which dictate what levels of shareholder support a proposal must receive to be eligible to be voted on at subsequent shareholder meetings.  This rulemaking will also be a target for repeal if Democrats sweep.  In the meantime, expect the House Financial Services Committee to hold hearings on income inequality issues, ESG, and human capital disclosures to set the stage for an aggressive policy push in 2021.

DATA PRIVACY:  At the federal level, data privacy seems to have taken a back seat to more pressing issues—for the time being.  During congressional debates on COVID relief packages in spring and early summer, HR Policy petitioned key lawmakers to make sure that legislation regulating tracking and tracing proposals would not hinder employers’ efforts to ensure safe workplaces.  As the prospect for new relief packages diminished, however, so did deliberations on privacy measures.

The states, on the other hand, have been busy.  Kansas, New York, and South Carolina all passed laws placing various requirements on contact tracing efforts.  Additional contact tracing privacy bills in New York, New Jersey, and California are moving forward.  And, most significantly, a sweeping amendment of California’s comprehensive consumer data privacy law is on the ballot, and is considered very likely to become law.  The good news: among the changes is an extension of the exclusion of employment personal data until January 1, 2023.

Regardless of who wins in November, and assuming the pandemic subsides, in 2021 Congress will again turn its focus to passing a comprehensive consumer data privacy proposal.  However, a Democratic sweep, or even just taking the Senate, would mean greater challenges in exempting HR data, obtaining preemption, or limiting a private right of action in any such law.

In Europe, the Court of Justice of the European Union invalidated the EU-U.S. Privacy Shield, which allowed companies to transfer personal data to the U.S., and called into question other legal bases for data transfers.  Whether the U.S. and EU can come to an agreement ensuring workable, secure, and sustainable data flows remains an open question.  

IMMIGRATION:  As much as any other issue, immigration policy will be impacted by the November elections.  Looking ahead, the Democratic agenda in this area is mostly positive for employers, but a mixed bag nonetheless.  If in November Biden wins and Democrats take the Senate, Biden will reverse Trump’s executive actions implementing the public charge rule and restricting immigration and work visas.  Next will be a slate of immigration reform packages, including the Dream Act, which enshrines the DACA program into law and gives Dreamers a path to citizenship.  However, increased scrutiny on work visa programs such as H-1Bs may continue, as outlined in the Biden-Sanders Unity Task Force document.  If, on the other hand, Trump wins and Democrats win the Senate, we can expect further executive branch actions restricting immigration and temporary work visas.  On the other hand, we may also see certain measures, such as the Dream Act, reach the president’s desk.  Finally, if Trump wins and Republicans can keep their Senate majority, we will likely see more of the status quo, including continued gridlock in Congress.

In the meantime, HR Policy has been busy advocating against the Trump administration’s restrictions on work visas, including via letters and an amicus brief supporting an injunction on the restrictions.

STATE AND LOCAL ACTIVITY:  For some of us it’s difficult to define “the future of work.”  The phrase is a moving target that’s evolved even more in the pandemic.  But for progressive policymakers at the state and federal level, their definition is clear.  They imagine a future where all workers are employees and all employees can join a union.  Look no further than California.

New Year’s Day 2020 ushered in a new law in the Golden State—AB 5—enshrining the so-called ABC test, which presumes workers are employees unless an employer can show that the workers work outside the employer's usual course of business, among other factors.  Aimed at making gig workers and other independent contractors employees, AB 5 is leading to upheaval in California as Uber and Lyft recently announced they would cease California operations after a court ordered the companies to classify their workers as employees.  A subsequent court decision allowed the ride share companies to keep running—and classify their workers as independent contractors—pending appeal of that decision.  The gig companies are taking their case to the people this November with a referendum (Proposition 22) that would keep independent contractor status for "app-based drivers," exempting them from AB 5, while leaving AB 5 intact for most companies.  Other states, including Massachusetts and New York, have or will adopt the so-called ABC test.  It could become a federal issue too.  Joe Biden and Kamala Harris support AB 5 and oppose Prop. 22 and the federal legislation is ready to go—the House-passed PRO Act would amend the NLRA to adopt the ABC test.

Another California initiative that could set a precedent for the rest of the country, Proposition 16, will be on the ballot in November.  Keep your eye on it; it would repeal a ban on affirmative action in public employment, education, and contracting that was passed in 1996.

WEEKLY POLICY WEBINAR SERIES:  In the weeks between the Washington Policy Conference and the November 3 elections, HR Policy will host seven one-hour “Policy Impact” webinars examining these and other substantial changes to HR policy that may lie ahead.  Taking place each Wednesday at noon EDT, the webinars will feature member perspectives, subject matter experts, and HR Policy staff.  You can register for the webinars at the links below:

MAJOR HR POLICY FALL SESSIONS HR Policy Association has a number of virtual sessions to allow you to learn more about these current initiatives and hear from peers on the approaches they are using within their companies.  This kicks off with our Washington Policy Conference, September 9–11; our workplace policy briefing series (see above); the Center On Executive Compensation Annual Meeting, November 11, and the Fall Future Workplace Policy Council meeting, December 8–9.

We hope you enjoy the last week of summer and look forward to "seeing" you at the Washington Policy Conference.