How the Biden Administration May Impact Your Workplace

Market Blueprint

As with any change in administration, the shift from Trump to Biden brings vastly different philosophies, policies and implications for employers. Now backed by a Democrat-controlled Congress, the Biden administration potentially has a clearer path to legislative wins, which could significantly impact U.S. employees and employers alike.

Legislative shifts often require employers to adapt or risk penalties. Anticipated changes may mean, for example, redrafting internal policies, re-categorizing workers, and rewriting employee handbooks. Essentially, the more prepared your organization is, the easier it will be for you to thrive in this new environment.

Here is a snapshot of the hot-button issues likely to receive early attention from the new Biden administration, and some suggested actions you may take now to prepare your organization accordingly.

TRADE

There is no question that foreign trade, and the Chinese market in particular, are a key concern for the Biden Administration. The new administration is expected to adopt a far more transparent, measured, global approach to managing the Chinese trade issue. This could mean the rollback of some Trump tariffs and holding the Chinese accountable for agreed-upon goods and service purchases stipulated in the Phase One agreement struck in January 2020.

These changes should make it easier for organizations with overseas markets, or those who rely on imported Chinese raw materials and components, to forecast costs and manage supply chains. However, Trade Credit policies will be under intense scrutiny from carriers as the impact of market turmoil and corporate insolvencies continues to result in large claims.

ACTION: If your trade credit policy carrier requests information from you and your customers, it is critical you respond thoroughly and quickly to mitigate reductions/limitations to your coverages, or even cancellations. For example, it is increasingly common for carriers to request details on your customers’ accounts receivables. While this is often uncomfortable, most businesses are growing accustomed to these requests. Gathering these details promptly will prove easier than you might think and will absolutely serve you well in the long run.

EMPLOYEE RELATIONS & DIVERSITY

Biden will pursue his campaign pledge to cultivate continued workplace diversity and equity. In fact, racial equity is one of the four key pillars in the Biden Administration’s Build Back Better Agenda, a plan to get Americans back to work following the COVID-19 economic downturn. The program promises to establish equal opportunity in compensation, minority-business competitiveness, and involvement in clean-energy programs among other things. Biden also promises to address discrimination and harassment in the workplace, and has pledged to pass the Paycheck Fairness Act as the next step in efforts to ensure women are paid equally for equal work.

ACTION: Now is a good time to either evaluate your current diversity program, or put one in place. Ensure you have an up-to-date pulse on employee sentiment regarding employee relations and ensure policies and payroll are fair and equitable — across gender, sexual identity and racial lines—and that you have clear policies which prohibit discrimination of any kind.

LABOR RELATIONS & BENEFITS

In sharp contrast to the Trump administration’s pro-employer approach, the Biden administration promises a distinct shift to a more employee-centric mantra. In fact, another pillar in the Build Back Better effort is an updated social contract which pledges to treat American workers and working families as “essential at all times, not just during times of crisis.” The program calls for increasing the national minimum wage to at least $15/hour, elimination of the tipped minimum wage and the elimination of the sub-minimum wage for people with disabilities. The Administration has also pledged to pass universal paid sick days and 12 weeks of paid family and medical leave. The Administration is also advocating passage of the Protecting the Right to Organize (PRO) Act, a substantive rewrite of the National Labor Relations Act that will make it easier for workers to organize unions and collectively bargain. More will become clear as Biden appoints three new members to the 5-person National Labor Relations Board (NLRB), and in doing so, flips the Board to a Democratic majority.

ACTION: While the details of these shifts will likely become more clear toward the end of 2021, the best defense is an early offense. Over the coming months, pay particular attention to employee relations, benefits and overall workplace morale. After all, the best way to offset employee grievances is to focus on employee satisfaction. This is even more true during the pandemic as it is so easy to miss negative employee sentiment when many of your employees are still working remotely.

EMPLOYEE CLASSIFICATIONS

On January 6, 2021, the Trump Administration moved to loosen the Fair Labor Standards Act (FLSA) to make it easier for employers to classify employees as contractors. However, in a first-day Executive Order, Biden halted the March 8, 2021 implementation of these new standards pending further review.

Provisions to allow gig workers to organize, and be classified as employees eligible for benefits are included in the proposed PRO Act. Regardless of the PRO Act’s fate, Biden’s early moves to shake up the NRLB point to much stricter enforcement of the FLSA’s provisions around employee classifications.

ACTION: As the Federal pendulum swings from employer-friendly to employee-focused, if you employ contract workers, take steps now to ensure your classifications are updated and accurate. A good tool to establish if workers are correctly classified as contractors is the “ABC Test.” Some form of this test is used in states including California, Connecticut, Delaware, Illinois, Indiana, Massachusetts, Nebraska, Nevada, New Hampshire, Vermont, Washington and West Virginia. The following is an example of the ABC Test adopted by the state of California, which requires screening each job with three simple questions; the answer to all three must be YES in order for a contractor job classification to withstand scrutiny:

A. Is the worker free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact?
B. Is the worker performing work that is outside the usual course of the hiring entity’s business?
C. Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed?
SOURCE: https://www.thebalancesmb.com/what-is-the-abc-test-for-independent-contractors-4586615

HEALTH CARE

With early signs pointing to the Supreme Court upholding the constitutionality of the Affordable Care Act (ACA), the Biden Administration has pledged to build upon the ACA over the next four years. In fact, many are calling Biden’s health plan “Affordable Care Act 2.0.”

  • To give people a lower-cost alternative to the private policies offered on the Healthcare Exchanges, the Biden Administration pledges to establish a public health insurance option similar to Medicare that would compete with traditional insurance and provide insureds access to pre-negotiated, lower-than-market rates at hospitals and health-care providers.
  • Reduce the maximum income percentage spent on private insurance through the marketplace from 10% to 8.5%, with the differences in premiums made up for in federal tax credits.
  • Re-instate the individual mandate through a combination of legislative action and presidential executive orders.
  • Permit consumers to purchase prescription medications overseas.
  • Lower the Medicare eligibility age to 60 (from 65), however, Biden faces stiff objections from hospital executives.
  • Dismantle Trump Administration provisions for association health plans (that allowed employers to skirt ACA-specified minimum coverage provisions).

ACTION: While it appears ideas like a public health option (that will require 60 Senate votes for passage) will struggle to find sufficient support, other more budgetary changes that require a simple majority (like reinstating the individual mandate) are more likely to pass. In the meantime, keep a close watch on legislative changes and stay in touch your benefits team.

DIGITAL ECONOMY & DATA SECURITY

Particularly in light of the events leading up to the raid on the Capitol on January 6, 2021, the digital economy will be under intense scrutiny in the early days of the Biden Administration. Key issues will range from whether social media companies should continue to be afforded legal impunity akin to traditional media companies, to how consumer data is managed. Data security has been a growing topic of concern over the last decade as individuals want more control over their personal data, and to know where it’s being sold.

Experts predict Biden may seek to adopt federal laws similar to the protections found in the California Consumer Privacy Act (CCPA). In 2018, California passed the CCPA, which gives citizens the right to know what data businesses collect about them, delete some of that information, opt out of the sale of personal data and avoid discrimination as a result of exercising their CCPA rights.

If enacted, expanded federal consumer privacy legislation may resemble something akin to the General Data Protection Regulation (GDPR) of Europe. This would mean a greater burden on employers and marketers to show data transparency with users and enable individuals to control more of their data. Such legislation would almost certainly come with penalties for noncompliance as well.

ACTION: Conduct a thorough audit of your data-security practices and cyber insurance policies, to identify and correct any weak points in both procedures and coverages. On the consumer data front, be sure your organization has clear and comprehensive data-usage policies along with thorough customer-disclosure processes to avoid any surprises.

For further insight into what impact the first 100 days of the Biden administration might have on your business, click here to view the recording of the AIA Alera Group webinar from February 10th hosted by Marcy M. Buckner, J.D., senior vice president of government affairs with the National Association of Health Underwriters (NAHU).