With three weeks to go before Congress adjourns for the year, members of the U.S. House of Representatives and Senators are looking at a very long to-do list before they can head home. With tensions still lingering following the longest government shutdown in history, these are some of the items that Congress will try to tackle before heading home for the holidays.

Health Care
The most critical deadline lawmakers will be facing over the next three weeks is Dec. 31, when enhanced premium subsidies for the Affordable Care Act expire. If the subsidies are not extended, millions of individual Americans and small businesses will face higher premiums or could even lose coverage.

That is not a scenario that politically vulnerable Republican House and Senate members want to face, but there does not appear to be consensus among them on extending the subsidies. In fact, many would prefer that House leadership propose a comprehensive health care reform plan that would focus on things like expanded health care savings accounts and other reforms. Since such a plan is unlikely to pass the Senate, it’s unclear what the backup plan would be. Will House leadership allow a modified ACA subsidy extension proposal reach the floor for a vote, or will they, and the president, be willing to let the subsidies disappear heading into an already highly charged midterm election year?

FY 2026 Spending Bills
With current funding for the government set to run out on Jan. 30, 2026, both House and Senate appropriations committees are hard at working drafting the nine outstanding appropriation bills. Considering the House and Senate continue to be far apart on topline spending levels for all nine bills, the real question seems to be if lawmakers can resolve spending and policy differences to pass an omnibus bill by the end of January—or will they need to pass another continuing resolution to stave off another government shutdown?

National Defense Authorization Act
This must-pass annual bill always gets done, but lately it has taken longer to do it. With both the House and Senate having passed their own versions of the NDAA, a compromise version must be negotiated and agreed to by both chambers before the end of the year. Republican policy riders, such as language that would block states from regulating artificial intelligence, likely will make negotiations with Democrats more difficult than usual.

Other Policy Issues
Many lawmakers are urging leadership to take up an annual tax extenders bill—which would include several expiring tax provisions, such as the Work Opportunity Tax Credit, as well as other provisions that were modified or not included not included in the July 2025 budget reconciliation bill. There seems to be consensus around a tax extenders bill, but there is little agreement on what should be included or how large it should be, which makes its future unclear at best.

What Is the Likely Outcome?
Although it is possible that Congress could come together and solve all these issues before the end of the year, it is also possible that lingering animosity over the shutdown means legislators end the session in three weeks without having accomplished anything.

The most likely outcome is something in the middle. With both sides still smarting after the recent shutdown, they should make significant progress on funding the government through the end of FY 2026—although a short CR may be needed to allow both sides more time to wrap everything up. A short-term, scaled-back extension of the ACA subsidies is also a distinct possibility, as is postponing the consideration of all other issues until the new year.

California employers avoided a drastic increase in their federal unemployment tax rate for 2026 when the U.S. Department of Labor granted the state’s application for a benefit cost ratio (BCR) reduction waiver earlier this month. However, this does not mean that California employers are out of the woods yet, as it is difficult to see how California can pay off its federal unemployment loans of almost $21 billion anytime soon.

Under federal law, employers are charged a 6% tax rate on the $7,000 tax base per employee. When a state is in good standing with the federal unemployment insurance regulations, employers in the state receive a credit of 5.4% (“FUTA credit”), thereby reducing the rate to 0.6%—meaning that employers pay $42 in federal unemployment taxes for each employee. However, if a state falls out of good standing, the FUTA credit is reduced by 0.3% each year, and FUTA credit reductions continue until the federal loans are paid back.

Next year will mark the fourth consecutive year California’s FUTA credit is reduced. This means that California employers’ federal unemployment tax rate now sits at 1.8%, which will result in California employers paying $126 per employee in federal unemployment taxes. Given the amount of the state’s outstanding federal loans, it could have been much worse. If DOL did not grant a waiver to the state, California employers would have seen their federal UI tax rate increase to 5.2%, resulting in a charge of $364 per employee.

If California does not pay off its federal loans before Nov. 10, 2026, employers will see the FUTA credit rate reduced by another 0.3%, which would raise their tax rate to 2.1% for 2027, resulting in a tax of $147 per employee. Also, the state would have to apply again for a BCR reduction waiver, and there is no guarantee California would receive it again, especially if it does not take steps to show it is trying to pay off the loans.

New York and Connecticut both paid off their outstanding federal UI loans this year to restore the original FUTA credit to employers. California businesses, organized labor, and legislators must get together to draft a plan that pays off these loans, or the state’s economy will continue to feel the effects of this increased tax on employment.

The results of two high-profile governor’s races taking place today, in New Jersey and Virigina, will be examined for clues as to the current feeling of the country, but a state ballot initiative in California—concerning the California Citizens Redistricting Commission—could very well have the greatest effect on the 2026 midterm elections.

If California voters approve Proposition 50, new congressional district maps, drawn by the state legislature rather than the current independent commission, will be used starting with the 2026 midterm elections and continuing through the 2030 election cycle. If voters reject it, the current maps will remain in effect.

But wait, why is this happening now?

In addition to California, several states with legislatures that are overwhelmingly controlled by one party are looking to redistrict earlier than usual in an attempt to maximize the number of congressional seats their party controls. With the margin of control in the U.S. House of Representatives so close, the addition of a few new seats could have a huge effect.

If California’s Proposition 50 is approved, the newly drawn state congressional map will target five Republican-held seats. Earlier this year, the Texas legislature passed a new congressional map that targets five Democratic held seats. Legislatures in Florida, Indiana, Maryland, Missouri, Utah, and Viginia are all exploring the possibility of redrawing their maps before next November.

By the time the redistricting frenzy dies down, close to two dozen congressional seats could be affected. This will certainly play a role in who will be the Speaker of the House in January 2027, but it will also have an enormous effect on businesses all across the country.

Once the new maps are finalized, businesses may very well find themselves in districts with new representatives. Even if the representative remains the same, the district itself may have changed—becoming either more competitive or more partisan than before. As a result, policy priorities could change. So could political relationships.

Staffing firm leaders who have spent years building relationships with their member of Congress and that representative’s staff may find themselves having to start all over again. And while it is not automatic, there will certainly be cases where redrawn federal districts also affect state legislative districts. Those state relationships might need to be rebuilt as well.

If a staffing firm is headquartered, or has a major office, in a district changed during this process, the first thing the company needs to know is when the new district lines go into effect. States are trying to get them in place before next year’s midterm elections, but tight timelines, lawsuits, and other factors may postpone the implementation of new maps until 2028.

If your company is located in a district that will change next year, you should engage in the new race and find out who will be running for the seat. Try to meet the candidates and find out where they stand on important tax, labor, employment issues.

Once the election is over, reach out to the new representative and offer to be a resource, as you are likely to have a much better grasp on employment and other issues in the district. And if the previous representative is still in Congress (or the state legislature) don’t let that relationship go by the wayside. Even though the representative does not represent you anymore, that person still is an influential lawmaker who deals with issues that directly affect your business and your employees.

Don’t wait until you have a problem or need help to meet your new representative; reach out and connect with the legislator as soon as possible. The representative will appreciate the gesture and your help in getting to know the new district, and you will be on your way to building another solid relationship.

The approach of the U.S. Federal Trade Commission to policing noncompete clauses has shifted, from a broad nationwide ban to focused enforcement against unlawful noncompetes. In April 2024, the FTC introduced a rule intended to ban most noncompetes across the U.S. The rule faced several legal challenges, and, in August 2024, a U.S. District Court held the rule was unlawful. On Sept. 5, 2025, the FTC withdrew its appeal of the court ruling, effectively abandoning its nationwide ban. Statements accompanying the FTC’s decision to withdraw emphasized that the FTC lacked authority for a sweeping rule but would still police illegal noncompetes through enforcement of Section 5 of the Federal Trade Commission Act of 1914.

On Sept. 4, 2025, the FTC launched a public inquiry through its joint labor task force. The stated purpose of the inquiry was to gather data to “understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions [emphasis added].” The task force is encouraging members of the public—including employees currently and previously restricted by noncompete agreements—as well as employers facing hiring difficulties due to competitors’ noncompete agreements to share information about the use of noncompete agreements. As a result of this information collection effort, employers may find themselves in the agency’s crosshairs.

The FTC is also distributing letters to many large employers and staffing firms in the health care sector notifying them that the FTC has information that “suggests that many health care employers and staffing companies include noncompete agreements in employment contracts that may unreasonably limit employment options for vital roles like nurses, physicians, and other medical professionals.” The FTC states that it intends to focus resources on enforcing Section 5 of the FTC act against unlawful noncompetes, particularly in the health care sector. Although the FTC acknowledges that narrowly tailored noncompetes can serve a valid purpose in certain circumstances, the agency encourages companies to conduct comprehensive reviews of their noncompetes and restrictive covenants to ensure they are justified and not overbroad or otherwise unfair or anticompetitive.

In light of the FTC’s activities, staffing firms should ensure their noncompetes pass legal scrutiny under both federal and state laws. Noncompete clauses are particularly likely to be struck down in states like California, Minnesota, North Dakota, and Oklahoma, which have some the most restrictive rules regarding the use of noncompetes.

Earlier this month, the U.S. Department of Labor unveiled its Unified Agenda of Regulatory and Deregulatory Actions, which “provides the American people with a transparent look at regulations being considered by the Administration and ensures the public is engaged throughout the process.” This regulatory agenda, which is similar to a to-do list for the department, can be found here.

Twice a year, federal agencies are required by law to let businesses, workers, and the public know about which rules are being written or changed, when that might happen, how people can give input (usually through public comment periods), and why it matters. This semiannual agenda lists two items of interest for the staffing industry and their clients: joint employer status under the Fair Labor Standards Act and employee or independent contractor classification under the FLSA.

As many staffing firms know, the rules and regulations around joint employer status seem to go back and forth depending on what political party is occupying the White House. Most recently, a joint employer rule issued in 2020 which made it harder for a company to be considered a joint employer was rescinded in July 2021. According to the agenda, DOL is “considering a notice of proposed rulemaking to adopt regulations that would guide the Wage and Hour Division’s enforcement of joint employer liability.”

When it comes to independent contractors, the agenda notes that the current independent contactor rule is the subject of several ongoing legal challenges. According to the agenda, “the Department intends to rescind the 2024 Independent Contractor rule and is considering how it will proceed with examining the circumstances under which a worker should be classified as an employee or independent contractor for the purpose of federal wage and hour requirements.”

(Note: ASA Policy Edge is a new content feature designed to keep members ahead of legislative developments that could affect their business.)

The federal government’s fiscal year closes Sept. 30, and as of this moment, there is no plan to fund the government through fiscal year 2026. If a funding agreement is not in place by Oct. 1, the federal government will be faced with a shutdown. The U.S. Congress could avoid a shutdown by passing all 12 pending appropriations bills and having the president sign them into law before Sept. 30, but that has not happened since 1996. If a shutdown is to be averted, it will require Congress to pass a continuing resolution, which would extend current funding levels to a specific date, but there are still several factors Congress must consider before it can move forward.

A shutdown would inject even more uncertainty into the economy and would mean that other legislative issues would be stuck in a holding pattern. That would be problematic, because one of the legislative items expected to be considered this fall is a bipartisan tax extenders package that would likely contain an extension, and possible expansion, of the Work Opportunity Tax Credit program currently set to expire at the end of 2025. As of now, the House of Representatives is scheduled to be in session for 14 days during the month of September, and the Senate will be in session for 16 days. Is that enough time to reach an agreement to keep the government open? ASA will keep its members updated.

(Note: ASA Policy Edge is a new content feature designed to keep members ahead of legislative developments that could affect their business.)