Last week President Joe Biden released an outline for the American Families Plan — the third phase of his economic “Build Back Better” package. The $1.8 trillion proposal would invest in education, paid leave, unemployment insurance and childcare and would be paid for through $1.5 trillion in tax hikes, expanded financial reporting, and increased Internal Revenue Service (IRS) enforcement. Let’s round the bases to see how it might affect businesses and schools.
Biden is calling for an additional four years of free, public education for all children. The plan would establish universal preschool for 3- and 4-year-olds and provide two years of free community college. The $200 billion preschool proposal would benefit around 5 million children and save families $13,000 a year. The $109 billion community college proposal also includes an additional $62 billion to boost retention and completion at colleges and universities that serve high numbers of low-income students.
WHOLE NEW BALL GAME
The American Families Plan wants to guarantee 12 weeks of paid family and medical leave within 10 years. The national program would cost around $225 billion over a decade and would be paid for by tax hikes. Under this program, workers would get at least two-thirds of their average wages replaced during their leave, up to $4,000 a month. The plan would also give workers three days of bereavement leave per year. The U.S. is one of the only countries that doesn’t guarantee workers paid time off when having a child or dealing with an illness. Approximately 75% of American voters support the idea of a national paid leave program.
The plan also calls for reforms to the unemployment insurance (UI) system, and would automatically adjust the length and amount of UI benefits workers can receive depending on economic conditions. Each state uses a different calculation to determine unemployment benefits and sets its own employment tax rate to fund unemployment insurance, along with payment amounts, length of time workers can get benefits and requirements for eligibility. The American Rescue Plan puts $2 billion towards UI system modernization, equitable access, and fraud prevention. The proposal doesn’t give specifics on this, but it appears that it would give Congress the flexibility to easily adjust the length and amount of benefits in times of economic crises.
THE BRUSH BACK
The American Families Plan will be paid for in tax hikes for taxpayers in the top bracket and calls for taxing capital gains as regular income for households making more than $1 million. The plan includes $80 billion for the IRS to increase enforcement against large corporations, businesses, estates, and higher-income individuals. The administration estimates that this would raise $700 billion over 10 years. However, the plan has come under hefty criticism from Republicans and Sen. Joe Manchin (D-W.Va.) has raised opposition to some of the tax increases. We’ll keep checking on the play-by-play as this unfolds.
Labor Secretary Marty Walsh last week said that a lot of gig workers are misclassified as contractors instead of employees. Walsh stated that he will be holding talks with gig companies as he considers the issue. The Labor Department last week asked the White House to approve repealing a rule the Trump administration put in place before the end of his term that would have made it easier for gig companies to classify workers as independent contractors.
The 9th U.S. Circuit Court of Appeal in San Francisco found that California’s gig economy law (AB 5) applies to about 70,000 truck drivers who can be classified as employees instead of independent contractors by the companies that hire them. The change would give the drivers access to overtime, sick pay, and other benefits. The court overturned a ruling last year by a federal judge that said federal interstate transportation law pre-empted AB 5. This case could wind up before the U.S. Supreme Court since the decision contradicts a 2016 ruling by the 1st U.S. Circuit Court of Appeals in Bostin that a similar Massachusetts law did conflict with federal law.
Making Our Way Around the Country
The U.S. Supreme Court last week denied an air ambulance company’s petition for a review of a Texas decision that said such businesses cannot charge insurers more than what is “fair and reasonable” for emergency air transport in the state. In June 2020, the Texas Supreme Court found that the federal Airline Deregulation Act did not preempt the Texas workers’ compensation fee schedule. However, the decision deviated from rulings by the 4th, 10th, and 11th Circuit Courts, which held that similar state laws and fee schedules constituted impermissible rate regulation preempted by the Airline Deregulation Act.
Efforts to pass a data privacy bill came to a halt when state lawmakers could not agree on how to limit companies’ harvesting of data and uses for people’s data. Legislators disagreed on issues including how the sharing and selling of personal data should be defined and whether some of the largest tech companies should be exempt. Businesses raised concerns that complying with the law would cost billions of dollars and that it might be too difficult to establish the infrastructure and protocols necessary.
THE PERFECT GAME
Little League has started in earnest in my household, so there’s a lot of baseball/softball talk going on. On this day in 1904, Cy Young pitched the first perfect game in “modern” baseball. In over 150 years of Major League Baseball history, and over 218,000 games played, there have been 23 official perfect games. Hoping Jake Arrieta, previous Cy Young Award winner, and the Chicago Cubs give us the perfect game — or just a trip to the playoffs. Please stay well, stay safe, and stay connected.