Weekly Legislative Update Oct. 31, 2022

 
 
2022 Midterm Elections Outlook
 
One of the most ironclad rules in American politics is that the president’s party loses ground in midterm elections. Almost no president is immune.
 
George W. Bush took a thumping in 2006. Obama’s Democrats took a shellacking in 2010. Trump’s Republicans were buried in a blue wave in 2018.
 
Since World War II, the president’s party has totaled less votes in the midterm elections than in the presidential elections.
 
In the 19 midterm elections between 1946 and 2018, the president’s party has improved on House votes just once (after 9/11).
 
Looking at more recent elections, since 1994 the president’s party has lost the House National votes in 6 of 7 midterm elections (by similar margins 6 to 9 percentage votes).
 
Since 1946, the president’s party has lost, on average, 26 seats. In 1958, the Republicans lost 57 seats.
 
The Democrats go into the midterm elections with 222 House members--just 4 more than a majority. In the Senate, which is evenly split The Democrats have a 1 vote majority because the Vice President can vote in ties. One third of the Senate is up for elections every 2 years, as opposed to 100 percent of the House up for election every two years. This year there are only three Democrats up for election in Congressional districts that Biden lost.
 
Historically, American elections are determined on war, catastrophes, or the state of the economy. Given the 40-year high inflation rate (and its immediate impact on families with the price of food and gas), just a few months ago, nearly all political pundits were predicting that Republican would control the Senate and the House. Remember, if Republican net just 1 net Senate seat, and in the House just a net gain of five seats they will control the Senate and the House. So, this very well could happen.
 
But there are three factors that could help the Democrats in this most unusual election year:
 
(1) Ukraine. As the war in Ukraine approaches its 200th day, Russia has reached out to China to merge currencies and to the global pariah state North Korea to purchase millions of rockets and artillery shells. While Trump said that Putin was a genius and early on defended the invasion, Biden has been on the global stage defending democracy and the innocent people of Ukraine, who have enjoyed freedom since the demise of the Soviet Union in large part due to the efforts of Republican President Ronald Reagan. While the issues were similar in the Korean and Vietnam conflicts, Biden stood up to Putin; and his efforts for sanctions while supplying weapons to Ukraine have hurt Russia; without deploying combat soldiers. Many Americans, especially Republicans, have had long term distrust for Russia, and China, and North Korea, and have concerns that Trump may be too cozy with their leaders.
 
(2) The Dobbs Factor. Democrats have clearly outperformed Republicans in special elections since the Supreme Court overturned the constitutional right to abortion in Dobbs v Jackson in June. We all have heard about the recent elections in New York and Alaska, but since the Supreme Court decision, the Democrats have won six straight elections. And in five of them, the Supreme Court decision played a major role in the outcomes (in Alaska, it could be argued that the election outcome was in part due to a flawed candidate in Palin). Before June, Democrats had won just 3 of the 7 special elections this year. It is unclear how the November elections will go on this issue, but a large number of women deeply oppose the Supreme Court decision, and if they vote they could determine the outcome of some of the close congressional elections.
 
3. The Trump factor. With the mounting investigations and indictments’ closing in, with the classified document scandal in the news daily, and with his fiery speeches against the Department of Justice, the FBI, the IRS, and the Secret Service there is a risk of a backfire in his bid to buoy his base. Can Trump boost the GOP turnout without repelling moderates and independents who do not support him? Trump plans to be more engaged in October than he has been in September—by appearing at rallies, being on robocalls, appearing on televised town hall meetings, and being at more fundraisers. But the risk is acute that his presence could distract from what the GOP has sought to make its central message of the midterm elections that voters should fire Democrats who have presided over rising costs and violent crime.
 
Democrats tout Biden’s recent string of legislative victories in Congress, and Trump’s inflammatory rhetoric.
 
Just a few weeks ago Trump was at a rally in Wilkes Bare, Pennsylvania where he opened the rally with “Our country is going to Hell.” One speaker was Republican Senate candidate Mehmet Oz, who won a close primary with Trump’s endorsement but then removed Trump from the top of his website as he turned to the General Election. A third speaker at the rally was Jim Bognet who is in a competitive horse race with Representative Matthew Carbright (D-PA). Bognet also removed all but two Trump references from his issue segment on his website, including a passage that accused Democrats of a “witch hunt to remove President Trump and rig the election.”
 
In the Republican primaries, a Trump endorsement and the boost from a rally with him were the envy of all. In the General though, Trump’s intervention is less welcome. In Maryland’s one and only gubernatorial televised debate, Cox who arguable won the Republican primary on the Trump endorsement never once mentioned Trump by name. Cox and Moore instead tried to paint a picture of the closeness to Governor Hogan.
 
In Colorado, Republican Senate candidate Joe O’Dea has mounted a serious campaign to incumbent Democrat Michael Bennett by denouncing Trump’s false election claims. He does not want Trump to run in 2024.
 
In Washington state, Republican Senate challenger
Tiffany Smiley is running from Trump’s Shadow. “The campaign has had absolutely no contact with Trump’s team,” she said.
 
Trump’s campaign team wants him to discuss immigration, inflation, and crime—not the 2000 election and the Mar-a-Largo raid.
 
 Nobody turns out conservative voters better than Donald Trump.
 
Many Democrats are keeping their distance from Joe Biden, whose approval rating has rebounded, but remains under water.
 
It is reasonable to think of the midterms as a national election.
 
After all, voters in all 50 states will be voting and 435 House seats will be on the ballot.
 
But that can be somewhat misleading because some 380 or so there is not really a challenge. That is due to the flurry of legislative redistricting over the past 25 years where new legislative districts have been drawn to elect more candidates of the majority party in the state.
 
So, the race for who will control the House of Representative test on whether you will vote for a Democrat, or a Republican will take place in the 50-60 districts where both parties have a chance of winning and political parties are investing and spending large amounts of money to make it happen.
 
So, let’s consider some of the polling. On a national generic test on whether for a Democrat or a Republican for Congress, polls indicate that Democrats would be favored 50% to 47%.
 
Another generic ballot test puts Democrats at 46% and Republicans at 45%.
 
CNN did a survey two weeks ago focusing in on only the competitive districts, where control of the House will be decided.
 
Among likely voters in the competitive districts, 48% of the voters will vote Republican and 43% said they would vote for the Democratic candidate.
    
When you consider these three polls together, it appears that the Democrats are doing well nationally in the battle for control of the House, while Republicans are in a far better position in the places that it really matters. These numbers would suggest that the Democratic bump over the summer—fueled by the Supreme Court overturning Roe v Wade in a midterm year, has faded somewhat and the historical trends which favor the party out of the presidency has begun to assert itself.
 
Put simply, if Republicans are able to maintain a generic ballot in the most competitive congressional districts, they should have no problem picking up the 5 seats they need to retake the House of Representatives they need to retake the House majority in the November elections.
 
History tells us that typically things get worse for the president’s party in mid-term elections. The majority and control of both Houses is up for grabs. That precedent along with the rising price of goods and necessities would typically ensure that the Republicans would take control of both Houses. But this may not be a year of typical elections. The three factors we discussed make the outcome difficult to predict. Maybe the outcome will be that each party controls one House.
 
Next week we will know what really happens!
 
 
DOL Issues Proposed Rule on Independent Contractors
 
The U.S. Department of Labor (DOL) has issued a proposed rule to clarify who is an independent contractor under the Fair Labor Standards Act (FLSA).
 
The DOL is proposing to rescind a 2021 rule in which two core factors—control over the work and opportunity for profit or loss—carried greater weight in determining the status of independent contractors.
 
The 2021 rule, which is still in effect, made it easier for employers to classify workers as independent contractors, rather than as employees.
 
Employers interested in explaining the effect the proposed rule would have on their businesses will have until November 28, 2022, to submit their concerns and arguments to the DOL.
 
After the comment period closes, it is believed that the DOL would issue a final rule sometime in the second half of 2023, or perhaps in early 2024.
 
Under the new proposed rule, employers would use a totality-of-the-circumstances analysis, in which all of the factors do not have a predetermined weight. The six factors the DOL would look at are:
 
  • Opportunity for profit or loss. If a worker can set or negotiate his pay, accept, or decline jobs, choose the order or time of performance, engage in marketing to expand the business, and hire others, purchase materials or otherwise invest in the business, the worker is more likely to be an independent contractor. However, deciding to do more work or accept more jobs is not indicative of contractor status. It is unclear how the ability to "accept or decline jobs" indicates contractor status, while the decision to "take more jobs" does not.
 
  • Investments by the worker and the employer. Investments that are "capital or entrepreneurial" in nature, such as those increasing the worker's ability to do different types or more work, reducing costs or extending market reach are indicative of contractor status. However, investing in tools to do the job indicate employee status. It is not clear how this factor would be applied in jobs that do not require any significant investment beyond a computer and internet connection. This factor also embraces the idea that the worker's level of investment should be compared to the business' investments. The utility of the relative-comparison factor is at best unclear and at worst illogical, as nearly every business will have invested more overall than any individual worker, and it would change the nature of the employment relationship based not on the worker's activities or the work done, but simply on the size of the business engaging the worker.
 
  • Degree of permanence of the work relationship. When the working relationship is indefinite or continuous, it indicates employee status. When the work is definite in duration, nonexclusive, project-based, or sporadic "based on" the worker providing services to other businesses, it is indicative of contractor status. When the work is project-based or sporadic for some other reason (such as the nature of the business), then it does not indicate contractor status.
 
  • Nature and degree of control. This factor looks at various indicia of control over the work and the economic aspects of the relationship. Importantly, control that is merely reserved, but not exercised, still counts as "control." Also notable is the DOL's statement that control exercised to ensure compliance with "legal obligations, safety standards, or contractual or customer service standards may be indicative of control." Prohibiting a subcontractor from engaging in unlawful discrimination, requiring it to follow safety rules or flowing down compliance clauses, would therefore appear to undermine contractor status.
 
  • Extent to which the work performed is an integral part of the employer's business. This factor weighs in favor of employee status when the work is "critical, necessary, or central to the employer's principal business." It is unclear what role a contractor could play that would not be "critical, necessary, or central to the employer's business." For instance, external accounting and marketing functions, both historically areas for independent contractors, would seem to be both "critical" and "necessary."

  • Skill and initiative. This factor looks at whether the worker uses "specialized skills" in performing the work, and whether those skills "contribute to business-like initiative." Being highly skilled in the substance of a particular field (such as engineering, journalism, or hospitality) does not seem to be the kind of "skill" contemplated. Rather, skill in running an independent business is what matters.
 
The DOL then includes a catch-all provision stating that additional factors may be relevant "if the factors in some way indicate whether the worker is in business for themselves, as opposed to being economically dependent on the employer for work."
 
If employers have any questions or concerns, we recommend they contact us to ensure compliance. 
 
 
Extension of Comment Period for Proposed Rule: Employee or Independent Contractor Classification
 
The U.S. Department of Labor is announcing a 15-day extension of the comment period for its notice of proposed rulemaking (NPRM), Employee or Independent Contractor Classification Under the Fair Labor Standards Act, which was published in the Federal Register on October 13, 2022.
 
Publication of the NPRM in the Federal Register started the comment period that is now being extended from 46 days to 61 days.
 
The comment period will now close on December 13, 2022, instead of November 28, 2022.
 
All comments submitted (including duplicate comments) become a matter of public record and will be posted without change to regulations.gov, including any personal information provided.
 
 
Thank you to our TopGolf Government Affairs Sponsors!
 
TIA organized a golf outing at TopGolf Las Vegas before GTE to benefit TIA’s government affairs efforts. We thank those who participated and to our event sponsors: