Policy Matters Newsletter - November 18, 2022

Midterm Dust Finally Settles (For The Most Part). What do we know as of the publication of this newsletter? First, the results were not close to as red as most historians ventured, but republicans were still able to flip control of the House of Representatives (we do not know the margins yet, but no matter what they will be small).  The first female Speaker of the House, Nancy Pelosi, has announced she will not run for a leadership position, which could end up weighing down the Democrats as Nancy Pelosi has shown an uncanny knack for pressing legislation in a narrowly divided Legislature. Kevin McCarthy will likely win Speaker of the House as his conference recently voted in his favor, with 188 aye votes and  36 no votes. Those who can count surely noted that does not represent the 218 needed to ascend the speaker throne. How the full House vote plays out on January 3rd will be nothing if not interesting.

Across the aisle, with Jon Fetterman and Catherine Cortez Masto’s wins, control of the Senate remains in Chuck Schumer’s hands. Democratic control means the President will continue to stack the Judiciary without obtrusion and can do the same for the all-important Article I nominations. Though the balance of power will remain in Democratic control through Kamala Harris’ tie-breaking vote regardless of what happens in the run-off between Raphael Warnock and Herschel Walker, the actual structure of that power still rests very much on the results of the run off. Should Warnock win, and the Democrats take a 51-49 lead, the balance of power in the various committee assignment will rest solely with Democrats, meaning less chances for the GOP obstructing judicial nominees, executive appointments, and of course, legislation.

Our very own Scott Hecker, Leon Rodriguez, and Scott Mallery recently got together for a quick discussion regarding the fallout from the midterm election. It is worth a listen. The same group plans a follow-up, election related podcast at the end of December. Stay tuned!

SCOTUS And The Administrative State. That the Democrats were unable to hold onto the House of Representatives, but kept control of the upper chamber, portends a much more active administrative state given the divided, and potentially gridlocked, Congress. At the same time, though, SCOTUS appears to be on an active campaign to diminish the power of Executive Agencies, like the Department of Labor. Earlier this year, SCOTUS handed down its decision in West Virginia v.  Environmental Protection Agency, holding that the EPA did not have authority under the Clean Air Act to devise emissions caps to regulate green-house gases industry wide. For the first time, SCOTUS invoked the so-called major questions doctrine —  which provides that courts should not defer to agency statutory interpretations  of “vast economic or political significance” —  to invalidate the administrative regulation.

Earlier this fall, SCOTUS heard oral arguments in  Securities and Exchange Commission  v. Cochran and Axon Enterprise, Inc. v. Federal Trade Commission both of which involve constitutional challenges to agency proceeding. The central issue before the Supreme Court is whether federal district courts can hear those challenges before the agencies decide them in the first instance, or in other words, before a Plaintiff exhausts administrative remedies. While nothing is set in stone until a physical order is released, based on the oral argument, SCOTUS seems prepared to permit people and companies subject to agencies’ enforcement actions to raise constitutional objections to the agencies’ structures in federal trial courts without having to first exhaust administrative remedies.

With the administrative state seemingly under attack from Article III, the runoff in Georgia looms even larger for the Biden agenda. Should Warnock deliver the Democrats a 51-49 majority, it will be much easier to staff the administrative agencies.

The EEOC Plans To Get Moving. As Seyfarth reported here, the EEOC recently released its draft Strategic Plan––not to be confused with the Strategic Enforcement Plan––which focuses on the EEOC’s strategic objectives accompanied by targeted goals and performance measures. The Strategic Plan (available here) is set to run through 2026. Through the Strategic Plan, the EEOC identifies three Strategic Goals: first, to combat employment discrimination through the strategic application of EEOC’s law enforcement authorities; second, to prevent employment discrimination and advance equal employment opportunities through education and outreach; and third, to strive for organizational excellence through the agency’s people, practices, and technology. For employers, this Strategic Plan demonstrates the EEOC’s focus on identifying and pursuing systemic discrimination claims with more robust tools and strategies and signals a potential shift away from the dearth of activity we have seen from the EEOC in the last couple of years, as Seyfarth reported here and here. Expect increased enforcement through litigation and less of a light touch through conciliation.

Congress Keeps Legislating: Ensuring Transparency To Deter Sexual Harassment. On Wednesday, November 16, the House passed a bill to nullify certain nondisclosure agreements where employees allege sexual harassment or assault. As Bloomberg Law reported here, the “Speak Out Act” (S.B. 4524) seeks to “limit the judicial enforceability of predispute nondisclosure and nondisparagement contract clauses relating to disputes involving sexual assault and sexual harassment.” In other words, under this law, employers would be prohibited from relying on nondisclosure and nondisparagement clauses to “silence” employees who allege sexual harassment or assault, despite such agreements being entered into before the alleged acts took place. This comes shortly after the “#MeToo Bill” (H.R. 4445) was signed by President Biden, which invalidates arbitration agreements that preclude a party from filing a lawsuit in court involving sexual assault or harassment, as Seyfarth summarized here and here.

Speaking Of Legislation, Secure Act 2.0 Might Get The Green Light In December. We here at PMN have touched on the various retirement bills that have been introduced and debated over the last two years. Some of the dust is settling and it looks as though the Secure Act 2.0 has risen above the other proposals and might just see the President’s desk next month. The bill would, among its more than 55 provisions, provide tax credits for small businesses for matching, require automatic enrollment in retirement plans, increases contribution limits, and permits penalty-free withdrawals up to $1,000 per year to cover personal or family emergency expenses. Senate Finance Chair Ron Wyden is confident that the House and Senate will agree on language and send the bill to the President by the end of the year. The House has already passed its version of the measure by an astounding vote of 414-5. Two year ago, this author would have been skeptical of such a prognostication, but this  Congress has not failed to surprise many when it comes to passing legislation.

OSHA Beefs-Up Enforcement Personnel. Recent reports show that OSHA has significantly increased the number of its investigators in fiscal year 2022, nearly 19% more than in 2021 as Seyfarth recently reported here. This comes as no surprise, as under the current administration we have seen agencies such as OSHA and EEOC  receive significant funding for staffing purposes. With the increase in personnel, we can expect to see increasingly aggressive enforcement of OSHA standards as well as increased penalties for violations thereof.

D.C. Voters Send Subminimum Wage For Tipped Employees The Way Of The Dodo. On November 07, voters in the District Of Colombia voted overwhelmingly in favor of an initiative that will do away with the subminimum wage for tipped employees and instead requires restaurants to provide all workers with the standard minimum wage. While the President has called for federal action to do away with the subminimum wage, such legislation is unlikely. However, the success of the initiative in D.C. is likely to persuade other states with similar direct democracy provisions to put a similar question on the ballot.