What Another Trump Administration Can Mean for Employers

Votes have been cast, ballots have been tallied, and the election is over. Now the hard work of governance begins. The election of former President Donald Trump as the 47th US President will have a significant impact on issues affecting employers. It is good to be aware of the following key areas and plan for them.

 

 

In a Trump administration, EEO-1 Component 2 pay data reporting is unlikely to be revived at the federal level, and states will likely continue to be the primary drivers of pay transparency requirements. The Equal Employment Opportunity Commission (EEOC) may have a less aggressive enforcement stance on discrimination at the federal level, with more emphasis on mediation and other forms of dispute resolution.

 

Even anticipating reduced focus on enforcement, prudent employers should prioritize reviewing equal pay in their workforce and acting on the results. These steps will help employers avoid pay discrimination claims and prepare for a continued push for pay equity and transparency at the state level where such efforts are likely to continue. In addition, these proactive measures can help avoid employee attrition and litigation that can result from a workplace with entrenched disparities.

 

 

The Trump campaign did not take a stance on paid family and medical leave, paid sick leave, or other leave requirements and these issues are not mentioned in the official GOP platform. Based on the absence of such information, it is not likely that the Trump administration will focus on federal leave laws.

 

With no new federal paid family leave, paid sick leave, or other paid leave laws on the horizon, employers can expect states and localities to continue enacting their own leave laws.

 

 

Under the second Trump administration, employers can expect to see a significantly more employer-friendly approach to wage and hour law on several fronts.

 

For example, if the Biden administration should appeal the recent vacatur or the 2024 overtime rule, it's unlikely that the Trump administration would continue to pursue that appeal. It is more likely that the Trump administration would introduce its own rule to increase the salary threshold.

 

A Trump administration also would likely repeal the FLSA independent contractor rule enacted earlier this year and restore either Trump’s own independent contractor rule from his administration in 2020 or another version of an independent contractor rule. Employers should also consider any relevant independent contractor tests under common law, the federal tax code, other federal laws and miscellaneous state laws.

 

 

Trump campaigned on a proposal to exempt tips from income and employment taxes to boost the income of lower-paid Americans who receive a large share of their income from voluntary tips (approximately 2.5% of the US workforce) while retaining the income tax on wages.

If Congress passes Trump's proposal, employers should be prepared for a potential dramatic increase in employees wanting to change their status from full-wage jobs to tip-based jobs. On the other hand, employers may see it as an opportunity to pay lower wages and have employees receive tips to make up the difference.

 

However, Congress may have to act to restrict the tax exemption to taxpayers below a certain income threshold or only to tip income received in traditionally tipped occupations and cap the amount of tip income that could be exempt. Otherwise, without limitations, businesses in other types of service industries could potentially try to use the exemption or attempt to recharacterize income.

 

 

Trump also proposed a tax exemption for overtime pay, but from which taxes (income and/or payroll) is unclear. Employers would likely see a resulting increase in nonexempt employees taking on or requesting more overtime hours, which would increase payroll costs, as well as the burden of tracking and reporting more overtime hours worked.

 

Employers may need to respond by curtailing increased overtime requests. The Trump campaign said they would incorporate measures to limit these behavioral effects but have not provided details to date.

 

 

Trump has said he would eliminate all taxes on Social Security benefits. Currently, up to 85% of benefits are taxed for single filers earning more than $34k per year and joint filers earning more than $44k per year. (Below these thresholds, a smaller percentage of benefits is taxed, or not taxed at all.) However, not taxing Social Security benefits would deplete the Social Security trust fund faster than already projected, since a portion of these taxes goes into the trust fund. To prevent that from happening, Social Security tax rates would have to be increased, which would require changes in withholding.

 

 

The Tax Cuts and Jobs Act (TCJA) of 2017 was a sweeping Trump tax reform law in his first term that affected many key payroll and fringe benefit provisions, many relating to business expenses. It also implemented the paid FMLA employer tax credit, eliminated the personal exemption (which functioned as the annual withholding allowance amount on Form W-4), and cut certain federal income tax withholding rates. Many of these provisions are set to expire at the end of 2025. Trump is expected to either extend them or make them permanent, in which case employers would continue with the current status quo.

 

 

Under a second Trump administration, employers can expect to see the delay or abandonment of pending workplace safety and security legislation initiated under the Biden administration, such as the planned proposal of a national workplace violence prevention standard for the healthcare industry. Additionally, the Trump administration may begin efforts to rescind controversial rules put in place by the last administration, such as the so-called “Worker Walkaround Rule” that permitted employees to designate a non-employee third party as their representative during an OSHA inspection.

 

Regarding enforcement, employers will likely see a departure from the more vigorous efforts of the Biden administration and may see a shift in its established National Emphasis Programs (NEPs), temporary programs that focus resources on particular hazards and high-hazard industries.

 

To prepare for OSHA's rulemaking and enforcement goals under a second Trump administration, employers should ensure continued compliance with all safety and security regulations applicable to their organizations and take a wait-and-see approach as to whether certain requirements will be rolled back.

 

At the state level, employers may see more of a mixture, with occupational health and safety agencies in more conservative state plan states following federal OSHA's lead and agencies in more liberal state plan states maintaining more stringent standards.

 

 

Regardless of the outcome of the presidential election, most fundamental aspects of the US immigration system are statutory, and significant immigration reform requires an act of Congress. Nevertheless, the Trump administration has the power to shape the rulemaking and enforcement efforts of agencies like the Department of Homeland Security (DHS).

 

In a second Trump administration, immigration policy will generally become more restrictive, which will translate to increased immigration-related enforcement and deportation initiatives. Employers can expect a return to policies from the first administration, including an expanded travel ban, reintroduction of de novo review of extension applications for existing grants of immigration benefits, and limiting DHS grants of employment authorizations. Additionally, the US Department of State (DOS), which is responsible for issuing visas, may see its budget reduced, as happened during the first Trump Administration. This will result in longer waits for visa appointments and slower visa application adjudications.

 

Further, Trump has expressed his intention to:

 

• Prioritize merit-based immigration;
• Increase penalties for illegal entry and overstaying visas;
• Strengthen US Immigration and Customs Enforcement (ICE); and
• Ban companies that outsource jobs from doing business with the federal government.

 

It is also likely that a second Trump White House will see the elimination of the Deferred Action for Childhood Arrivals (DACA) program.

 

To prepare for immigration-related changes under the second Trump Administration, employers should reevaluate their workforce planning for the next several years, as the new policies may impact jobs employers were planning to outsource and will cause employees with certain work authorization documents to face additional obstacles to acquisition or renewal, as well as longer processing times.

 

To prepare for more frequent worksite raids and Form I-9-related enforcement actions, employers should also consider conducting a Form I-9 self-audit to help ensure their records and processes are compliant.

 

Additionally, US employers of nationals from countries facing a travel ban should prepare contingency plans for such employees if they become stranded outside of the United States, as happened during the first Trump Administration.

 

 

Trump campaigned on supporting workers but that does not translate to support for unions. His second administration will most likely move to reverse many of the changes put in place by the National Labor Relations Board (NLRB) and General Counsel Jennifer Abruzzo, such as union-friendly rules that:

 

• Shortened the union election process;
• Made it easier to invalidate workplace rules;
• Imposed stricter independent contractor criteria; and
• Expanded the definition of protected concerted activity under the National Labor Relations Act.

 

President Biden selected Gwynne Wilcox as chair of the National Labor Relations Board on Tuesday, according to a news release from the agency. Wilcox replaces Lauren McFerran, whose term ended December 16th after the U.S. Senate blocked her renomination to the board last week. President-elect Trump likely will designate his own chair of the board when he takes office in January. Additionally Abruzzo's term ends July 2025, just six months into his term. It is possible that Trump might follow the precedent set by the Biden administration and remove her from office through a forced resignation or firing.

 

Changes to rules and decisions more favorable to employers will take time to move through the process and unions continue to actively and successfully organize at an increased rate. Employers should stay alert for signs of organizing in the workplace. They should focus on creating a positive work environment with open communication that addresses employees' concerns to minimize the need for employees to seek union assistance.

 

 

The Federal Trade Commission's (FTC's) proposed noncompete rule has been halted by the courts, and the Trump administration is expected to pull the plug on the Commission's appeal to overturn the national injunction and implement the rule. However, states continue to enforce their current laws restricting the use of such clauses in employment contracts and to enact new restrictions - or, in some cases, ban the use of noncompete agreements entirely. In addition, state legislatures are expected to continue passing laws limiting the use of confidentiality (nondisclosure) agreements.

 

 

There is no mention of privacy in the 2024 GOP Platform document. In general, Trump has been supportive of less regulation in the tech sector.  It stands to reason that a Trump-Vance administration likely will not look to increase regulation of or protections for consumer or employee data privacy. Employers should continue to monitor developments.