What Does a Trump Administration Mean for Employers?

dolchanges-blogWith President-Elect Trump’s announcement December 8 of his nominee for Secretary of Labor, a clearer picture is emerging regarding Trump’s agenda for the regulation of employers. Considering that the Republicans also maintained their majorities in both the House and Senate, Trump can be expected to have considerable success pushing his policy initiatives through.

So what can employers expect of a Trump administration? The discussion below addresses two broad areas where Trump will have the opportunity to significantly affect the HR and employment-law world: his nominations and appointments to positions of power, and his ability to influence or dictate legislative and administrative policy.

Nominations and Appointments

Trump’s nomination for the replacement of recently deceased Justice Antonin Scalia on the Supreme Court will be among his most consequential. Trump has already said he intends to replace Scalia with a justice “in the mold of” Scalia, who was conservative and generally considered friendly to business. Not only will Trump get to name Scalia’s successor, but he will possibly get to name additional justices if any of the current justices retire during his term(s). The three oldest sitting Supreme Court justices are Ginsburg (83 years old), Kennedy (80 years old), and Breyer (78 years old). Justices Ginsburg and Breyer are reliably liberal, while Justice Kennedy is commonly thought of as a moderate swing vote. If Trump gets to nominate not only Scalia’s replacement, but possibly one, two, or even three more justices during his four (or eight) years in office, he could dramatically shift the balance of power on the Court in a way likely to be employer-friendly. And let’s not forget that the president also gets to nominate judges to the lower federal courts, which may have more impact on employers on a day-to-day basis than the Supreme Court.

Trump will also get to name his cabinet and underlying administrative positions. The cabinet position most likely to affect employers will be Secretary of Labor. Trump’s pick for this post is Andrew Puzder, CEO of CKE Restaurants Inc., which owns Carl’s Jr. and Hardee’s. Puzder is a Trump adviser who has been critical of the Affordable Care Act, opposes steep increases in the minimum wage, and has generally spoken out against over-regulation, including the recent U.S. Department of Labor (DOL) rule making it harder for employees to be classified as exempt. It’s a good guess that Puzder (assuming he’s confirmed by the Senate) will scale back some of the aggressive policies and tactics of the current DOL. Within the DOL, Trump will also get to appoint key positions such as the Wage and Hour Division Administrator, the Occupational Safety and Health Administration (OSHA) Administrator, and the Director of the Office of Federal Contract Compliance Programs (OFCCP).

The Equal Employment Opportunity Commission (EEOC) is another agency to watch. The EEOC is a bipartisan commission composed of five commissioners, each serving a staggered, five-year term. The president gets to appoint all of the commissioners, with the majority of commissioners coming from the president’s party. The next vacancy will occur on July 1, 2017, when the term of the current Chair, Jenny Yang (an Obama appointee), expires. The EEOC’s current general counsel (also an Obama appointee) is also set to depart this month, and Trump will get to appoint his successor. It’s a safe bet that during Trump’s presidency, the EEOC will be less aggressive, regarding both its enforcement efforts and its expansive interpretation of the laws it enforces.

Similar to the EEOC, the National Labor Relations Board (NLRB or Board) is composed of five members (when fully staffed). Each member is nominated by the president for a five-year, staggered term. Traditionally, three members (i.e., a majority) come from the president’s party. The president also gets to nominate the NLRB’s general counsel (a position that has proven quite influential in recent years). Currently, the Board has only three sitting members, two Democrats and one Republican. In the next two years, Trump is scheduled to fill the other two member vacancies, and replace two outgoing members. Additionally, the current general counsel’s term ends in November 2017, at which time Trump will get to nominate a successor. We can expect Trump’s nominees to be more business-friendly than the Board has been the last several years.

Legislative and Administrative Policy

Likely to be one of Trump’s first HR-related issues to address will be the status of the DOL’s revised overtime exemption rules, which were scheduled to go into effect on December 1, 2016, but are currently on hold due to a federal court’s preliminary injunction. An appeal of that preliminary injunction is pending. While it’s possible that the status of the revised rule will be settled in the courts before Inauguration Day (January 20), that’s unlikely. If the rule’s status is still in judicial limbo on January 20, it’s likely that Trump will instruct his Secretary of Labor to back off of the new rule, either withdrawing it entirely, or proposing a less drastic change to the current rules, through either the administrative or legislative process.

To say that the NLRB under Obama has been aggressive would be an understatement. That’s likely to change under Trump, although not immediately due to the Board members’ staggered terms, as mentioned above. Some actions we could see include scaling back some of the Board’s more controversial, pro-employee, recent decisions on topics such as the “quickie election” rule, class-action waivers, joint employment, employee handbooks, social media policies, email access, and the broadening of the definition of “protected concerted activity.”

OSHA recently implemented new injury and illness reporting requirements, which, after some delay, went into effect December 1, 2016. Some of the more controversial aspects of this rule include restrictions on employers’ ability to conduct post-accident drug testing and to maintain certain safety incentive programs. This rule is currently being challenged in court, with a decision unlikely to come down before Trump takes office. Although he hasn’t said anything specific on the topic, it’s certainly possible that Trump will seek to repeal or revise this rule, or perhaps instruct OSHA to interpret the rule in a more employer-friendly way.

The EEOC recently announced that a revised EEO-1 will be required to be filed starting in March 2018 (reporting on 2017 pay data). This revised EEO-1 will require employers to report certain pay data and will be used to analyze potential pay discrimination. Look for a Trump administration to rescind or relax this requirement.

Federal contractors could also see some relief under Trump. Obama has been very active in exercising his right to issue Executive Orders (EO) when he became frustrated with Congressional inaction on issues he cared about. Several of his EOs relate to federal contractors, e.g., EO 13673 (requiring contractors to report employment law violations when bidding on a contract; this EO is currently on hold due to a federal court injunction); EO 13706 (requiring paid sick leave); EO 13658 (requiring a $10.10 minimum wage); and EO 11246 (prohibiting sexual orientation and gender identity discrimination). On the campaign trail, Trump said he would undo all of Obama’s EOs on day one of his presidency. Whether he does so remains to be seen, but in theory, Trump could eliminate any or all of these EOs simply by signing his own EO.

Although Trump has called the Affordable Care Act “an absolute disaster for families and small businesses,” a complete and immediate repeal is unlikely for several reasons: Trump may not have the votes to overcome a Democratic filibuster, many provisions are popular (e.g., requiring insurance companies to cover pre-existing conditions), and millions of people are currently insured through the Exchanges. More likely is that Trump and the Republican-controlled Congress will seek to repeal some, but not all, of the ACA’s provisions. For example, many Republicans have expressed the desire to repeal the employer mandate (requiring employers with 50 or more full-time-equivalent employees to offer coverage meeting certain minimum requirements). From a political expedience standpoint, Trump and his fellow Republicans will probably have to offer ideas for alternatives to any ACA provision they seek to repeal.

Immigration reform was one of Trump’s signature campaign issues, and all signs indicate that it will be at the top of his list of priorities when he enters office. Of particular relevance to employers, Trump said during the campaign that he would like to see E-Verify be mandatory for all workers. Employers will also likely see an increase in workplace enforcement efforts (e.g., I-9 audits) under Trump. It’s also possible we’ll see some attempts to revise the current business immigration system (e.g., the H-1B visa process).

Most of the above discussion has focused on things Trump is likely to scale back or get rid of. Employers should also keep their eye on some things Trump has suggested he may be in favor of adding, such as six weeks of paid maternity leave, funded though the unemployment insurance program (similar to a program currently in effect in California), and a moderate increase to the minimum wage.

Conclusion

Overall, odds are that a Trump Administration will be more employer-friendly than Obama’s was. And with a Republican-controlled Congress, he is likely to have success on many of his policy initiatives. Of course, nothing is certain, especially in these strange political times. We should know more as Trump continues to fill out his Cabinet and other appointments as January 20 draws closer. MSEC will keep you abreast of any relevant developments.