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Divided Congress Creates More Questions Than Answers

Will They Compromise on Key Workplace Issues?

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Republicans staved off a Democratic push to take control of Congress, as they won key races in Indiana, Tennessee, Missouri and North Dakota to increase their majority control of the U.S. Senate in the November midterms.

Democrats, many of whom anticipated a sweeping night of change in direct response to President Trump’s divisive tone, rhetoric and harsh stances on issues such as immigration and national security, were able to flip the balance of power in the House. But election night wasn’t the call for radical change that many had envisioned.

With control of the House, Democrats are poised to set the agenda for which issues the House will focus on during the next two years. They have promised the American people that they will serve as a check on Trump’s power and will hold hearings on everything from the president’s personal finances to alleged ties to Russia.

But what will this change in Congressional make-up mean for total rewards issues? Is there any room for compromise? Or should rewards professionals anticipate two years full of rhetoric with little action on policy?

“It will be fascinating to see if President Trump and Congressional Democrats have any appetite to compromise and work together on key issues,” said Melissa Murdock, WorldatWork director of external affairs. “The distrust and political realities will make it extremely difficult for the president, Democrats in the House and Republicans in the Senate to work together on issues especially as the country gears up for the 2020 presidential election. But there may be a small window of opportunity to accomplish things like retirement reform and possibly move the debate forward on paid family leave. Whether or not either side is willing to compromise is yet to be seen.”

It is not unprecedented to see a divided Congress. According to Politico, in the 38 years since Ronald Reagan’s victory, presidents have faced having at least one chamber of Congress controlled by the opposition party in 28 years.

The question will be whether the Democrats leading the House decide to use their platform for messaging bills and oversight hearings that will likely draw significant media attention but lack the ability to result in real change. Democrats also could take this opportunity to identify policy areas where they might find support from Trump and then put pressure on Senate Republicans to act.

Following is a list of key rewards issues and how WorldatWork anticipates they will be addressed in the 116th Congress.

Minimum Wage
With the Democrats winning majority in the House, they will set their sights on raising the nationwide minimum wage, which currently sits at $7.25 per hour. The party adopted the $15 minimum wage platform heading into the 2016 election and they introduced legislation in 2017 to do just that. The Raise the Wage Act was structured to reach the $15 per hour rate by 2024 and it had 35 co-sponsors in the Senate and 152 in the House but fell short in the Republican-controlled Congress.

Democrats face a similar hurdle now with Republicans maintaining control of the Senate. However, they could work with President Trump to find a happy medium. While on the campaign trail, Trump made mixed statements on federal minimum wage, saying that it should increase to $10 an hour, while also indicating that the issue should be left to the states. Several states and municipalities have raised their minimum wage above the national figure.

If Democrats were able to elicit support from Trump on a more moderate increase, it would be much harder for Republicans in the Senate to dismiss.

Pay Equity
The 2018 midterm elections resulted in a record number of women winning seats in Congress. The House is projected to have at least 95 female members while the Senate will boast 23 members. This will bring the share of women in Congress up to at least 22%.

Nearly a dozen states have recently passed updated pay equity legislation aimed at reducing the gender pay gap. Many of these local laws have broadened their standard from allowing comparison of “equal work” to “comparable worth” or “substantially similar work.” Jurisdictions also have passed laws prohibiting employers from asking job candidates about previous salary history.

At the federal level the last piece of pay equity legislation passed was the Lilly Ledbetter Act, which provides that each paycheck received that relies on compensation discrimination is a separate, new violation — effectively eliminating the statute of limitation on these claims.

Democrats have been vocal about wanting to do more and have introduced legislation called the Paycheck Fairness Act in multiple sessions of Congress. The most recent version includes a provision prohibiting employers from asking or relying on a job candidate’s salary history. The bill in its current form would likely die in the Senate. Republicans have real concerns that the bill as drafted would make it extremely difficult for employers to defend themselves against baseless discrimination claims. But this could be an area where female members of Congress from both the House and the Senate seek to find common ground and support legislation that prohibits employers from retaliating against employees who discuss or ask questions about compensation decisions and bans employers from relying on salary history.

Cadillac Tax
The Patient Protection and Affordable Care Act’s (PPACA) high-cost plan tax (HCPT), known as the “Cadillac Tax,” has been delayed until 2020.

The tax is 40% excise tax on employer plans exceeding $10,200 in premiums per year for individuals and $27,500 for families. Employer and employee premium contributions will count against the threshold, as will most employer and (pretax) employee contributions to health savings accounts, Archer medical savings accounts, flexible spending accounts and health reimbursement accounts.

There is strong bipartisan support to permanently repeal this tax, but Republicans have been unable to get full-repeal across the finish line.

Democrats campaigned hard on protecting PPACA. Will they be willing to pass legislation that fixes a provision that so many agree is problematic?

“Even with strong bipartisan support to repeal the Cadillac Tax, it’s unclear at this point in time if Democrats in the House will want to do anything that signals that there are things to fix or change in the Affordable Care Act,” Murdock said. “WorldatWork, working with the American Benefits Council and the Fight the Forty Coalition, will continue to educate lawmakers on this destructive tax and hope to find a legislative vehicle for full repeal.”

Paid Leave
If the Democrats in the House move past oversight hearings and turn to policy reforms, one of the first issues they may try to address is paid family leave. Reforming the Family and Medical Leave Act (FMLA) is a top priority for many democratic leaders and it’s an issue that Trump’s daughter and key adviser Ivanka Trump has advocated.

FMLA currently requires covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons. It allows eligible employees to take up to 12 work weeks of unpaid leave during any 12-month period to attend to the serious health condition of the employee, parent, spouse or child, or for pregnancy or care of a newborn child, or for adoption or foster care of a child.

Democrats will push for those 12 weeks to go from unpaid to paid. Republicans have released their own proposals on paid leave as well. One bill sponsored by Rep. Mimi Walters (R-CA) seeks to amend the Employee Retirement Income Security Act to establish a voluntary arrangement for employers to offer paid leave and flexible work options which then would make employers exempt from certain state and local paid leave laws.

“Passing any form of paid leave mandate that either requires employers to offer paid leave or sets up a new government run program to pay for paid leave will be an extremely tough sell in the republican controlled Senate,” Murdock said. “However, this isn’t an issue Republicans particularly like to be against. If Democrats in the House can negotiate some sort of compromise on this issue and gain President Trump’s support, there is a chance, albeit a small one, that some version of paid leave reform could be addressed.”

Retirement Savings
Rep. Richard Neal will head the House Ways and Means Committee and the Massachusetts Democrat is respected and known around Washington, D.C., for being a pragmatic operator willing to work across the aisle.

Ways and Means Committee cooperation could be possible on retirement savings issues and smaller-bore infrastructure measures related to tax breaks to spur private investment or the creation of a new bank that could seed investments, according to Politico.

“We are hopeful that Congress will preserve its longstanding bipartisan approach to retirement savings. Some are concerned that a split Congress and the overall partisan divide might make that difficult,” said Lynn Dudley, Senior Vice President, Global Retirement & Compensation Policy, American Benefits Council. “But others are more optimistic based on a number of factors. “The release of a broad retirement discussion draft by Senator Rob Portman (R-OH) and Senator Ben Cardin (D-MD) is very encouraging, as they have been very effective champions of bipartisan retirement legislation, going back over 20 years.”  

Dudley also noted that the incoming chairman of the Senate Finance Committee is likely to be a senior Senator with retirement policy experience and that the Senate Health, Education, Labor and Pensions (HELP) Committee will retain its leadership but the House Education and the Workforce Committee, which will be renamed and the Education and Labor Committee, will have new leadership and its focus could be more on oversight.

Judicial Confirmations
With an increased majority in the Senate, you can expect that Trump will continue to work aggressively to nominate conservative judges to the federal courts. Trump and the Republican-controlled Senate have been installing conservative justices for lower federal courts at a faster pace than his recent predecessors, according to the Washington Post.

With a more comfortable Republican majority in the Senate, we can expect to see confirming conservative justices as a top priority for this president. And if there is another U.S. Supreme Court vacancy, the president and conservatives in the Senate might have an easier time getting their nominee confirmed than they did during Justice Brett Kavanaugh's embattled confirmation. 

About the Author
Brett Christie is a staff writer at WorldatWork.

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