2020 Election
Federal – As of this writing, Joe Biden appears on track to win the presidency. His final margin of victory could exceed 300 electoral votes and he could expand his popular vote lead by as much as 5 percent, as the final votes are tallied. By most measures, that would be a resounding victory; however, that is unlikely to be the narrative once the counting concludes and, partly for good reason, Republicans had a much better election night down ballot, delivering stunning defeats to Democrats in Congressional and state contests. Democrats did not win a single “reach” U.S. Senate seat and failed to defeat a single Republican incumbent in the U.S. House. The result is that Republicans seem likely to retain the U.S. Senate (potential runoff elections in Georgia may ultimately decide the balance of power) and Republicans cut into Democrats’ majority in the U.S. House. Assuming Republicans retain the U.S. Senate, the vast underperformance down ticket will lead to divided government in Washington, D.C. That dynamic will block a legislative path for the most progressive elements of the Biden agenda. Some of those agenda items – like issues included in the PRO Act – are likely to emerge via agency rulemaking.
Presidential Transition – Joe Biden’s transition team is forging ahead while the votes are still being counted, launching BuildBackBetter.com this week. Presidential transitions typically move quickly given that 4,000 political appointees need to be vetted and placed in two months. Biden put together a shadow task force on COVID-19 in the lead up to the election and that obviously will be an initial area of focus for the new administration. The likelihood of a Republican-controlled Senate and a smaller majority in the House will impact not only the policies that a Biden Administration will pursue via Congress but also the people that Biden will nominate for cabinet posts and judicial vacancies.
State – Democrats failed to make advances at the state level as well. The state map remains almost unchanged with a few exceptions. Republicans picked up the governor’s mansion in Montana, giving them a trifecta in the state. And, Republicans may pick up additional legislative chambers as well, namely Alaska House, New Hampshire House, and the New Hampshire Senate. If those results hold, Republicans will have secured trifectas in those states as well heading into the 2021 redistricting process.
Ballot Initiatives – Explored in greater detail below, the business community notched a huge victory in California with the defeat of Proposition 15 (Split Roll Tax). However, businesses will have to comply with voter-approved 15/hr minimum wage increases in Florida and Portland, Maine, as well as a paid leave requirement in Colorado. Employers will also have to contend with California Proposition 24 (Data Privacy) which voters approved. Also in California, the most expensive ballot campaign ever – Proposition 22 (Rideshare Drivers as Contractors) – was approved by voters, exempting rideshare companies out of the requirements of AB-5. Finally, recreational or medical marijuana was approved in a number of states (Arizona, Montana, Mississippi, and South Dakota) and a number of drugs were decriminalized in Oregon.
Looking Forward – It appears as if the election will fail to provide a “reset.” Neither candidate is likely to enter the White House in Jan. with a perceived national mandate to lead. Exiting polling indicates that the country is more divided than ever – with demographic differences increasingly breaking along partisan lines. Voters viewed the candidates (and the world) through a very binary, partisan lens. That gulf presents a significant, and growing, challenge for brands. While this isn’t a new dynamic, the ever-widening gap makes it increasingly difficult for brands to straddle the divide – from mask wearing to racial justice.
COVID-19
PPP – The Paycheck Protection Program (PPP) is facing renewed scrutiny. This week a federal judge ruled that all PPP loan amounts and recipient information must be publicly released. The SBA also began circulating a new “Loan Necessity” questionnaire which requires employers to justify the loan amount as well as forgiveness. Under a Biden Administration, agencies are likely to more aggressively investigate potential misuse of funds. More details.
Employment Taxes – Businesses will likely soon face state tax increases to pay for the surge in Americans filing for unemployment benefits.To Access Align's Analysis: Log In or Subscribe
Wages
Florida – Voters narrowly approved Amendment 2, an initiative to raise the state’s minimum wage to $15/hr by 2026.To Access Align's Analysis: Log In or Subscribe
Aurora, CO – The city council narrowly rejected a proposed increase in the local minimum wage to $17/hr, with the mayor casting the tie-breaking vote in opposition.To Access Align's Analysis: Log In or Subscribe
Portland, ME – Voters overwhelmingly approved a ballot initiative to raise the local minimum wage to $15/hr. The ballot language also includes a hazard pay provision that would require time-and-a-half pay for certain workers during a declared emergency ($18/hr).To Access Align's Analysis: Log In or Subscribe
Paid Leave
Colorado – Voters approved Proposition 118, an initiative to provide up to 12 weeks of paid leave with the costs split between employers and employees.To Access Align's Analysis: Log In or Subscribe
North Carolina – Employees at 33 Freddy’s Frozen Custard & Steakburgers locations who tested positive for COVID-19 will now receive 10 days of paid sick leave, following a strike by a dozen workers at the restaurant’s west Durham location.To Access Align's Analysis: Log In or Subscribe
Delivery
Chicago, IL – Mayor Lori Lightfoot announced a $10 million federally-funded grant program intended to help independent Chicago bars and restaurants struggling with shutdowns brought on by the coronavirus pandemic. In addition, the mayor said she will propose a temporary cap on the fees that third-party delivery apps can charge restaurants, which will need to be approved by the city council.To Access Align's Analysis: Log In or Subscribe
San Francisco, CA – The city extended its 15 percent cap on delivery fees that were enacted in April in the wake of the pandemic.To Access Align's Analysis: Log In or Subscribe
Alcohol
Senoia, GA – The city council approved a first reading of an ordinance to allow home delivery of beer and wine with food delivery orders from licensed restaurants.To Access Align's Analysis: Log In or Subscribe
West Fargo, ND – The city commission extended until 2021 the special ordinance allowing for home delivery and takeout of beer, wine and sealed spirits.To Access Align's Analysis: Log In or Subscribe
Taxes
California – Voters narrowly defeated Proposition 15 which would have created a “split roll” tax system.To Access Align's Analysis: Log In or Subscribe
Joint Employer
California – Voters overwhelmingly approved Proposition 22 which classifies rideshare drivers as independent contractors.To Access Align's Analysis: Log In or Subscribe
Packaging
New Jersey – The governor signed sweeping legislation that would ban a number of single-use plastic and paper items in the state.To Access Align's Analysis: Log In or Subscribe
Key Takeaways
- The big question for most companies this week is – what will be the initial areas of focus for a Biden Administration? There’s no doubt that the pandemic will draw the early attention of the next president. And, the approach of a Biden Administration will be much different than the current approach. Expect stringent OSHA requirements and more robust guidance from various agencies. Beyond that, a Republican-controlled U.S. Senate (assuming Republicans retain control) will block much of the Biden platform, forcing compromises on major pieces of legislation and likely forcing the administration to address many priorities through agency rulemaking.
- Oregon’s decriminalization of “hard” drugs is a high stakes social experiment. While a number of countries have decriminalized drugs, Oregon becomes the first jurisdiction in the U.S. to take such a dramatic step. The outcomes of the new law will be much broader than the workplace but it will have real and substantial impacts to employers. Brands will learn much in the coming months as the state ventures into uncharted territory.
- The rideshare companies have affirmed the efficacy of a useful tactic to curb the impulses of California lawmakers. The beverage industry, a few years ago, threatened to go to the ballot to overturn the will of the legislature and in the process, earned a statewide (temporary) preemption on local sugar taxes, as legislative leaders conceded to the industry’s demands. Few industries will be able to threaten that it will spend hundreds of millions of dollars on a ballot initiative but those that can afford it will have an important check on California lawmakers.