Middle-Market Public Policy Roundup

Unless Congress and the president can set aside their differences, Jan. 12 will mark the longest federal government shutdown in U.S. history. While maintaining “emergency” activities, agencies that include the SEC and the Treasury are finding themselves underfunded and overextended as larger portions of their staffs go without pay. However, the shutdown hasn’t stopped the courts, which upheld the National Labor Relations Board’s current, expanded definition of joint-employer status in the Browning-Ferris Industries case. Finally, the 116th Congress has begun to fill out various committees, which we have collected here.

Government Shutdown Continues

The impasse between President Trump and Democrats in the House of Representatives over border wall funding does not appear to be coming any closer to resolution with both sides refusing to make any concessions.

As federal workers are furloughed and essential agencies such as the TSA begin to run out of funding and become unable to pay their employees, Trump has refused to sign off on any bill that does not include the $5.7 billion in border wall funding he has requested.

In an attempt to pressure the administration, the newly-elected Democrat majority in the House has begun to pass what is expected to be a total of four funding bills, none of which the Senate is expected to take up without President Trump’s approval.

It is increasingly expected that President Trump will call a state of emergency in order to build the wall, which would face Democratic challenges in the courts.

SEC and Treasury Affected

As the partial shutdown continues, agencies such as Treasury and the Securities and Exchange Commission will be operating with minimal staff. At the SEC, while a small number of SEC staff are able to work on “emergency” enforcement matters, rulemaking, filing processing, and other agency work is at a standstill during the shutdown.

At the Treasury, several rulemakings, including various provisions of the tax bill, are also put on hold by the shutdown. In addition, the Treasury Department has announced that it has postponed its previously scheduled hearing on the Opportunity Zones tax guidance to clarify certain portions of the measure, such as what qualifies as a ‘substantial improvement’ to opportunity zone property.

ACG is continuing to monitor the shutdown for further effects on middle market businesses and investors.

DC Circuit Court Issues Decision on NLRB Joint-Employer Standard

On Dec. 28, 2018, the federal appeals court in the District of Columbia partially upheld the National Labor Relations Board’s current, expanded definition of joint-employer status in the Browning-Ferris Industries case.

Under the expanded definition an employer may be found to be a joint employer of another employer’s employee based on “indirect” and “potential” control of that employee’s terms and conditions of employment, and thus be required to participate in collective bargaining or be held responsible for labor-law violations.

The court ruled that the consideration of ‘indirect’ and ‘reserved’ control was consistent with common law. However, the court said that the Board did not distinguish between indirect control that is inherent in the regular course of contracting relationships and indirect control over essential terms and conditions of employment. As such, it remanded the case back to the NLRB for further explanation.

The NLRB has already released it’s proposed rule which would revert the definition of a joint-employer back to the limited and direct pre-2015 standard. This case is unlikely to affect the rulemaking. Comments on the NLRB’s proposal are due on Jan. 14.

House Committees Begin to Fill Out

With the 116^th Congress fully underway, membership in various congressional committees has begun to fill out. At the time of press, the following committees have been decided:

House Ways & Means Democrat Addition:

• Richard Neal (D-MA-01) – Chairman
• Gwen Moore (WI-04)
• Dan Kildee (MI-05)
• Brendan Boyle (PA-03)
• Don Beyer (VA-08)
• Dwight Evans (PA-03)
• Tom Suozzi (NY-03)
• Jimmy Panetta (CA-20)
• Stephanie Murphy (FL-07)
• Brad Schneider (IL-10)
• Steven Horsford (NV-04)

New Chairman Richard Neal (D-MA-01) will lead the committee and has already indicated the Committee will hold hearings on the tax package passed in 2017.

We are still waiting for the announcement on Committee Republicans.

Senate Banking, Housing & Urban Affairs Committee