Over the past six months, since the start of the Trump Administration, I have delivered perhaps a half-dozen presentations on what workplace regulations and changes employers can expect from the new President. My sessions always had to begin with a disclaimer – we really don’t know what to expect from the new Administration, so all we’re doing is really reading political tea leaves and wish lists.
Fortunately, we now have some clear signs about the new Administration’s priorities. Of course, the President has free reign to make changes to regulatory issues that are the domain of the Administration’s executive branch. What will happen in the House and Senate is much harder to predict.
That said, here are some of the initiatives being currently promoted by the Trump Administration:
Repeal of the Affordable Care Act (ACA). At the time of writing this article, a repeal and replace version of the ACA has passed the House and the Senate is working on a version of its own. The Senate versions that have been floated so far have met resistance from both conservative and moderate GOP members of the Senate, creating a politically challenging situation for the Senate Majority Leader. Should a version pass the Senate, a reconciliation of the two versions would need to be created and then voted on by both houses before reaching the President’s desk. Long story short, we have quite a distance to go before there’s an ACA repeal and, given the amount of time necessary for providers and insurers to react to the changes, even if the law is repealed and replaced within the next few months, we anticipate that employers will see no changes until at least 2019. Our advice is to stay the course and to check in with your health insurance broker – they remain your best source of information about how any changes will impact you and your company.
Obama Overtime Rule. On December 1, 2016, a new minimum salary threshold was to go into effect which would have required anyone earning a salary of less than $47,476 to become eligible for overtime. This proposed rule is currently held up in court. Trump’s new Labor Secretary, Alexander Acosta, said during his confirmation hearing that while he agrees that the current threshold of $23,660 is too low and should be adjusted, it should not be increased to the level proposed by Obama. Rumor has it Acosta is eyeing $33,000 as the new minimum salary threshold. Our advice is to hold tight until either a new rule is proposed or the court acts on the current injunction, but you can expect that the threshold will certainly be increased from its current level.
Independent Contractor Guidance. Within the last two years of his term, President Obama’s Administration released guidance to employers on how to assess whether an independent contractor should be considered an employee under the Fair Labor Standards Act (FLSA). The new guidance created a much higher standard of “economic dependence” and would have reclassified many independent contractors as employees. In one of his first acts as Secretary of Labor, Mr. Acosta withdrew this guidance and returned to the long-standing “control standard” which focuses much more on whether the contractor truly is independent and is able to maintain control over how and when the work should be performed. For more on how to determine if your independent contractor is classified correctly, search for “DOL Factsheet #13.”
Paid Maternity/Paternity Leave. In his 2018 Budget Proposal, President Trump proposed a new federal paid maternity/paternity/adoptive parent leave program. The program would provide for 6 weeks of paid leave for new parents and would leave the structure and the funding of the program largely up to the states. States would administer (and fund) the program through their Unemployment Insurance (UI) program. The level of the benefit and funding are largely undetermined at this point, but it is anticipated to be approximately the same level of financial benefit as each state’s weekly UI benefit. Since most presidential budget proposals are really an Administration wish list, it will be necessary for the House or Senate to design and usher this program through to passage, leaving it with an uncertain fate.
Mandatory E-Verify for All Employers. Presently, E-Verify is largely a voluntary internet system that enables employers to verify the legal work status of potential employees. E-Verify is mandatory for all federal contractors and, on the federal level, is voluntary for all other employers. Nine states—Alabama, Arizona, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Utah—require E-Verify for all or most employers, with some carve-outs for small businesses. Eleven states—Colorado, Florida, Idaho, Indiana, Michigan, Missouri, Nebraska, Oklahoma, Texas, Virginia and West Virginia—require E-Verify for most public employers. Minnesota and Pennsylvania require E-Verify for some public contractors. Nationwide, barely 10% of private employers currently use E-Verify. In his 2018 budget proposal, President Trump allocated funding to require all private employers in all states to use E-Verify for all hires. Given the limited use of this system today, this initiative, should it make its way through Congress, represents a significant change in most employers’ hiring process. Stay tuned!
State-Based Initiatives. In the absence of significant congressional action on numerous workplace initiatives over the past few years, many states and localities have moved forward with their own regulatory requirements, including increasing the minimum wage, implementing equal pay rules, establishing mandatory sick and parental leave programs, ban-the-box and scheduling predictability laws.
Clearly, legislating workplace rules and regulations on a state or local basis creates a sizeable challenge for large, multi-location employers who must track and comply with each regulation. In response, numerous states have passed state workplace preemption laws which make it illegal for localities to legislate workplace standards that differ from those of the state. We can expect to see the rate of state and local employment regulations increase as well the number of state preemption laws.
In the months ahead, we will be monitoring what bubbles up, especially in the area of deregulation and tax reform – the next big areas of change. We’ll keep you posted!
By Claudia St. John, President – Affinity HR Group Inc.
