President Donald Trump has no record in public office and did not frequently discuss substantive labor and employment policy proposals during his election campaign. This hampers forecasting what his administration will do with respect to changing — or not changing — existing labor and employment laws, rules, and initiatives.
Nevertheless, based on President Trump's agenda favoring reducing regulations and the evolving composition of his administration, it may be safe to predict that the Trump administration will pursue a pro-business labor and employment agenda that will contrast markedly with that of the Obama administration. This article addresses some of the policy shifts that employers can expect to see.
Wage and Hour Law
New Overtime Exemption Rule
On November 22, 2016, a Texas federal judge issued a nationwide injunction temporarily enjoining the U.S. Department of Labor from implementing its new rule that doubled the salary threshold to $47,476 a year for white-collar employees to be exempt from having to be paid time-and-one-half for hours worked over 40 in a workweek. This rule would have made about four million employees in executive or administrative roles eligible for overtime pay.
It is now likely that the Trump administration will simply drop any defense of the new rule, thereby allowing it to die on the vine. Congress, now controlled in both Houses by Republicans, could enact its own preferred legislation. One such legislative proposal would implement a more moderate increase of the salary threshold to $36,000 per year rather than the suspended rule's $47,476 per year.
Increasing the federal minimum wage from the current $7.25 an hour may or may not take place. But if it does take place, it likely will not be as appreciable as some have demanded. In states like Illinois, this will not matter: Illinois' minimum wage is now at $10.50 an hour and will increase to $11.00 an hour on July 1, 2017.
Other jurisdictions have gone even further. The City of Chicago has enacted an ordinance annually increasing the minimum wage to reach $13.00 an hour by July 1, 2019, while Cook County has enacted a similar ordinance under which the $13.00 minimum threshold will take effect on July 1, 2020. New York and California have enacted legislation gradually increasing the minimum wage in those states to $15.00 per hour. Expect these trends to continue, with a patchwork of different minimum wages across jurisdictions depending on where the work force is situated.
National Labor Relations Board Decisions and Rules.
During the Obama administration, the NLRB issued a series of far-reaching decisions and rules that were not employer-friendly. These included: declaring unlawful arbitration agreements under which employees waive their rights to initiate or join in class actions; expanding the definition of who is an employer; limiting an employer’s ability to prohibit employees from using social media or the employer's proprietary electronic media to air workplace grievances; striking down employee handbooks as overly broad because of perceived "chilling effects" on protected concerted activity; favoring so-called "micro units" consisting of only a small number of employees as appropriate bargaining units; and enacting so-called "quickie election" rules severely curtailing the time allowed for employer electioneering in union election campaigns.
Employers can expect a gradual reversal of such decisions and rules by a Trump NLRB. President Trump will have the opportunity to appoint NLRB members such that a majority-Republican NLRB will be constituted. Similarly, the current NLRB general counsel's term is due to expire in 2017. The NLRB general counsel oversees prosecution of cases before the NLRB and, in so doing, can be instrumental in advancing the administration's agenda. Therefore, replacement of its incumbent can also have a major impact.
Employers should not expect, however, that such changes will take place quickly. Appointments take time, especially if opposed, and it also takes time before the NLRB can decide a case that changes precedent. In the meantime, the regional field offices and NLRB administrative law judges will follow current precedent.
Class Action Waivers
One issue that should be resolved sooner rather than later is the legality of class action waivers in arbitration agreements. Employers have found such waivers very useful in limiting their exposure to debilitating class action claims, such as wage and hour class action lawsuits. Currently, there is a split among the U.S. Courts of Appeal on the issue. (The Seventh Circuit, covering Illinois, Wisconsin, and Indiana, has adopted the position that class action waivers violate the National Labor Relations Act). The U.S. Supreme Court has agreed to take up this issue this term. Given the current composition of the Supreme Court, the nomination of Neil Gorsuch to the Court (if such nomination survives the Senate review process) increases the odds that a split Supreme Court would uphold class action waivers.
Right to Work
A slight majority of states now have right to work laws on their books. ("Right to work" bars union security clauses in collective bargaining agreements that require workers to pay union dues as a condition of keeping their jobs.) With a Republican administration and a Republican-controlled Congress, some form of federal right to work legislation may be introduced, though it may be difficult to pass.
The outlook may be more ominous for public-sector unions, however. Last year, the Supreme Court deadlocked 4-4 on whether public sector unions could compel state workers to pay union dues in light of workers' First Amendment rights. The issue may well soon be back before the Supreme Court and, if so, the addition of Neil Gorsuch to the Supreme Court could provide the swing vote to hold that public sector unions have no right to collect compulsory fees. Such a ruling could have a major effect on the public-sector unions' treasuries and, consequently, their powerful lobbying capabilities in state and local governments across the country.
One area that almost certainly will be impacted by President Trump's election will be immigration policy. The administration likely will take a more aggressive approach to workplace immigration compliance. This may lead to more Form I-9 audits. It also may lead to an end to, or rollback of, the Deferred Action for Childhood Arrivals (DACA) program, which shields more than a half-million young, undocumented aliens from deportation and provides them with legal work authorization.
Another development affecting employers could be some form of immigration-reform legislation that likely will include mandatory E-Verify. Visa programs used by U.S. employers to secure foreign workers may also be affected by making use of such programs more difficult.
EEOC and Executive Orders
Equal Employment Opportunity Commission
During the Obama administration, the EEOC adopted an aggressive strategic enforcement plan in the area of equal employment opportunity. This included greater emphasis on gender pay equity and focusing on "backlash" discrimination against Muslims, Arabs, and Sikhs. Likewise, the EEOC has taken the position that Title VII's prohibition on sex discrimination includes discrimination based on gender identity, gender transition, and sexual orientation. With the appointment of a new EEOC chair and transformation of the EEOC's composition to a 3-2 Republican majority, employers can expect this push to be scaled back, especially if the Republican-controlled Congress, as expected, appropriates less funding to the EOOC.
During his administration, President Obama imposed a series of regulations on federal contractors, including raising the minimum wage for federal contractor employees to $10.20 an hour; requiring contractors to include gender identity and sexual orientation in their list of protected classifications; promoting pre-hire collective bargaining agreements; and requiring employers with certain types of federal contracts to provide employees up to 56 hours of paid sick leave per year. These executive orders likely will be reviewed, and at least some could be rescinded or amended by President Trump.
Affordable Care Act (Obamacare)
One of President Trump's promises on the campaign trail was to repeal and replace Obamacare. More recently, he has suggested that rather than an outright "repeal," he may instead seek to preserve certain aspects of the Affordable Care Act, including the ban on preexisting conditions exclusions and the rule allowing young adults to remain on their parent's health insurance plans until age 26. While significant change ultimately is likely, for now the process is ongoing as to what the Trump administration and congressional Republicans will fashion as a replacement for Obamacare, and how this will affect employers.
For more information on these developments and their potential effects on you as an employer, please contact your Much Shelist attorney.