What the New Congress Could Mean for Hotel Labor Policy

On November 3, Democrats won significant majorities in the House of Representatives and the Senate. But before speculating about what impact the new Congress may have on the lodging industry, a quick mathematical reality check is useful.

Most legislation requires 60 votes to get past a Senate filibuster, and Democrats, currently estimated to hold 54 seats, will be short of that. And a presidential veto can be overridden only by two-thirds of both chambers, which Democrats won't come close to. 

So, practically speaking, bills that would change federal wage law or the joint-employer standard for franchises will need not only the new Democratic majorities but also support from some Republicans and the White House to become law. 

The Current State of the Joint-Employer Standard for Franchises 

The joint-employer standard determines the criteria for whether a brand or franchisor can be held legally responsible for workers employed by a franchisee or management company. We’ve seen the standard careen back and forth for more than a decade. 

Republicans in the current Congress introduced bills to write a narrow joint-employer test into law. The Save Local Business Act (H.R. 4366) would amend both the National Labor Relations Act and the Fair Labor Standards Act so that a company is a joint employer only if it "directly, actually, and immediately" exercises significant control over essential terms of employment, according to Congress.gov. The House Education and Workforce Committee reported the bill, and on January 13, 2026, the House adopted a rule to bring it to the floor by a vote of 214 to 207, according to the Office of the Clerk of the House. 

A narrower bill, the American Franchise Act (S. 3525 in the Senate and H.R. 5267 in the House), would apply a similar test specifically to franchisors. According to Congress.gov, its Senate cosponsors include independent Angus King of Maine, who caucuses with Democrats, and Republican Susan Collins of Maine (who just lost her seat). That suggests some support beyond Republicans for protecting the franchise model.

Democrats reintroduced the PRO Act (H.R. 20, S. 852) in March 2025. Among many changes to labor law, it would establish a broad joint-employer standard that includes indirect and reserved control. Democrats on the House Education and Workforce Committee argue that this standard would protect franchisees. 

The Current State of Hotel Wages

On wages, the federal minimum has been $7.25 an hour since 2009. The federal cash wage for tipped workers is still $2.13 in states that use the federal floor. The One Big Beautiful Bill Act, signed July 4, 2025, created a federal income tax deduction for qualified tips for tax years 2025 through 2028. The deduction is capped at $25,000 and phases out for incomes above $150,000 (or $300,000 for joint filers). The law also created a deduction for qualified overtime pay of up to $12,500, or $25,000 for joint filers. Neither deduction affects Social Security or Medicare taxes, and both expire after 2028 unless Congress extends them.

The Raise the Wage Act of 2025 (H.R. 2743, S. 1332) would raise the federal minimum wage to $17 by 2030 and index it to median wage growth after that, according to its sponsors, Rep. Bobby Scott, Democrat, of Virginia and Sen. Bernie Sanders, independent, of Vermont. The bill would also phase out the tipped subminimum wage by raising the tipped cash wage in steps from $6 to $17.

House Republicans also advanced the Tipped Employee Protection Act (H.R. 2312), which would change how the FLSA defines a tipped employee. The Congressional Budget Office (CBO) estimated in September 2026 that the bill would likely result in more workers being classified as tipped employees. 

Potential Hotel Labor Scenarios in the Next Congress

Three scenarios, not mutually exclusive, seem most likely:

Scenario 1: Stalemate. Given the filibuster and the veto, it’s possible that no major federal labor law will change in 2027 or 2028. A $17 minimum wage or a PRO Act-style joint-employer standard would face a near-certain veto. Writing the Republican joint-employer test into law would need either action in the lame-duck session before January or (unlikely) Democratic support in the new session. 

Scenario 2: A Bipartisan Deal on Tip and Overtime Deductions. The tip and overtime deductions expire after 2028, so the next Congress will have to decide whether to extend them. Both parties have expressed support for tax relief on tips, which gives each side a reason to come to the table. 

Scenario 3: A Fight Over Confirmations and Oversight. With a Senate majority, Democrats will chair the committees that oversee labor policy and decide which labor nominees get confirmed. After two Senate confirmations on August 7, 2026, the NLRB has a 3–1 Republican majority with one empty seat. According to the Center for Workplace Compliance and the law firm Ogletree Deakins, Chairman James Murphy's term expires December 16, 2027, Scott Mayer's in December 2029, and James Macy's in August 2030. Democrat David Prouty, who was reconfirmed in August, serves until August 2031. If Murphy's seat isn't filled, the Board would still have a three-member quorum, but its Republican majority would shrink to 2–1. The Senate may slow or block future labor nominees and use hearings to examine the current administration's labor rules. 

The federal rules on wages and joint employment may hold steady for now, but history suggests they won't stay that way. Hotel leaders should treat the next two years as a planning window, auditing pay and tip practices, clarifying who controls what between brand and property, and keeping an eye on their state legislatures, where change often comes more quickly than it does in D.C.