Beltway Buzz, November 10, 2017

The Beltway Buzz is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what's happening in Washington, D.C. could impact your business.

Now You See It, Now You Don't—Revised House and Senate Tax Reform Proposals Differ in Treatment of Executive Compensation. As we reported in last week's Beltway Buzz, the House introduced its tax reform proposal last Thursday, which contained a surprising number of unexpected provisions that could significantly affect employee benefits and, in particular, deferred compensation arrangements ( Timothy G. Verrall has more in his article, " Brady's Bunch—Are Big Changes Coming for Employers Under the Tax Cuts and Jobs Act?"). This week, two significant new developments in the tax reform drama took place, potentially changing the landscape yet again (and most likely not for the last time).

First, on Thursday, the House Ways and Means Committee passed, by a 24-to-16 vote, a significantly revised version of last week's House proposal, which is expected to face a full House vote next week. In a last-minute surprise, the revised House proposal eliminates most of the changes to the taxation of executive compensation that had been included in the original proposal and instead restores the current rules. Also on Thursday, the Senate Committee on Finance unveiled its own proposal, which differs substantially from the House proposal in a number of critical ways. Sticking out like a sore thumb are proposed changes to deferred compensation arrangements, even though the House version has now scrapped similar proposals. Neither bill makes any changes to the 401(k) deferral limits, although the Senate bill would prohibit employees earning $500,000 or more in a year from making "catch-up" contributions. It is also notable that neither proposal includes a repeal of the individual mandate under the Affordable Care Act—a nugget the Trump administration has been pushing for.

The House and Senate bills will have to be reconciled before being passed and sent to the president for signing. With all the wrangling over issues such as tax brackets and the elimination of deductions, "buried" employee benefits and executive compensation provisions are not likely to be the hottest topics on cable news, but they have a potentially huge impact on businesses and employees alike. (Hat tip to Richard C. Libert, Stephanie A. Smithey, and Timothy G. Verrall.)

Paid Leave Legislation Proposed. Late last...