Politics and Payroll: Charting an Uncertain Path in Congress

President Joe Biden’s political reputation as a dealmaker likely will be put to the test as he tries to pass significant legislation through Congress, a payroll expert said March 17.

Biden has had a robust legislative and regulatory agenda since taking office in January, which presents many opportunities and challenges for payroll professionals, said Thad Inge, senior manager for government relations at Paychex Inc.

“Washington is divided,” Inge said. “We have a very polarized country politically and a very polarized Congress.”

Payroll professionals, while navigating political changes, have to determine how best to maximize opportunities and how best to mitigate challenges, Inge said at the American Payroll Association’s online Capital Summit.

Biden faces competing legislative scenarios—bipartisanship and reconciliation, Inge said.

With the Senate evenly divided, Biden would need the support of all 48 Democrats and two independents for legislation to pass with a simple majority; Vice President Kamala Harris would cast the deciding vote in a tie. However, most legislation would require a supermajority of 60 votes to pass the Senate. The American Rescue Plan Act of 2021 passed Congress without any Republican support in the House and Senate. The bill (H.R. 1319) advanced through the reconciliation process, leading to a narrow path for passing the legislation, Inge said.

“You generally need 60 votes to get something done in the Senate,” Inge said. “We’re seeing the reconciliation procedure used now, which changes that a bit, where you get something through with 50 votes.”

The Labor Department likely will bring a wide spectrum of enforcement actions regarding wage and hour issues, Inge said. The Biden administration, which has a labor policy agenda that focuses on worker protections, wants input from businesses in a bid to develop strong relationships, he said.

Topping the agenda is worker classification, Inge said. The Labor Department has proposed rescinding a Trump administration rule that would make it easier for businesses to classify workers as independent contractors instead of employees under the Fair Labor Standards Act. The rule was proposed shortly before Trump left office in January but has not taken effect.

Additionally, the tipped-employee rule that was finalized late in the Trump administration but had yet to take effect would be revisited under a proposal by the Labor Department’s Wage and Hour Division, Inge said. The Trump rule, which the department paused in February, would have allowed employers to pay tipped workers a lower hourly minimum wage of $2.13 when performing nontipped tasks.

Regulatory changes likely are to affect the overtime threshold, Inge said. Employees who earn less than the salary-cutoff level would qualify for the time and one-half overtime premium when work hours exceed 40 in a week. Biden has said he would like to return to the overtime threshold of $47,476 proposed by President Barack Obama, which was blocked by a federal court before it could take effect, Inge said. The Trump administration imposed an annual salary threshold of $35,568, which took effect Jan. 1, 2020. The previous threshold of $23,660 had been in place since 2004.

Paid leave is a major issue for federal, state, and local governments, Inge said. At the federal level, aid related to the coronavirus pandemic has accelerated action regarding the establishment of paid leave and sick leave programs, he said. For example, in Colorado, voters approved a November ballot measure to create a family-leave insurance program, he said.

“There is some real bipartisanship around the need for a more centralized structure for paid leave,” but figuring out how best to fund paid leave programs is an ongoing question policymakers face, Inge said. “I don’t know if we’re close to a national bill on this, but I think we’ll continue to see regulatory changes and different policies.”

The future of the tax cuts that took effect Jan. 1, 2018, under the federal tax overhaul (Pub. L. 115-97) is uncertain, Inge said. Biden supports a tax increase for families with income that exceeds $400,000 per year, though whether taxes would increase on individual incomes under a formal proposal is unclear.

“The reality of a divided Congress—a 50-50 Senate and a very close House—makes me a little more cautious about saying this will definitely happen,” Inge said. “If a tax bill is part of a future infrastructure spending package, I think it would have to get bipartisan buy-in, or at least a buy-in from moderate Democrats.”