Trade Secrets

The long and contentious presidential campaign is over.  So, now what?  What does President-elect Trump’s victory mean for employers?

To explore this question, Foley and Lardner LLP’s Labor & Employment Practice group hosted a webinar titled “What Will Happen When the Smoke Clears? HR Strategies for 2017 and Beyond” on November 10, 2016.  The team who offered their insights included Foley attorneys Mark Neuberger, Dabney Ware, Jesse Panuccio (who recently joined Foley after serving as the executive director of the Florida Department of Economic Opportunity), Daniel Kaplan, Krista Cabrera, Donald Schroeder, Carmen Couden, and Elgie Sims, Jr. (who, in addition to being a Foley attorney, was reelected to his seat in the Illinois House of Representatives).

While the team offered their predictions, if this election cycle is any indication, predictions offer no guarantee of future results. Therefore, unless and until some official action is taken, employers should abide by all their current legal obligations.

The Nuts and Bolts of Change — How Can the New Administration Take Action?

  • Administrative Rules/Regulations:  If an agency rule has already been published in the Federal Register and is effective, the incoming administration’s options for repeal or modification of those rules are limited. Agencies must provide a notice and comment period ahead of repealing any rules or regulations. Moreover, even if agencies successfully effectuated complete reversals or repeals of effective rules, courts can approach such actions with skepticism (e.g., agency actions like this can be challenged as arbitrary and capricious).
  • Executive Orders: Executive orders that are currently in effect are not subject to a notice and comment period before they are reversed. Therefore, currently effective executive orders could, theoretically, be reversed on the first day of the new administration.
  • Enforcement/Budget: Depending on the new administration’s priorities, agencies can devote more or less relative resources to particular initiatives or enforcement areas. Additionally, Congress has the power to restrain agency action by decreasing budgets.

Federal Wage and Hour Issues

  • Overtime Rules Effective on December 1, 2016: The Department of Labor’s new overtime rules are still set to go into effect on December 1, 2016. As such, employers should plan to adjust their policies accordingly.
  • Pending Challenges to Overtime Rule: There are currently two federal lawsuits pending that challenge the implementation of the new overtime rule. The court will soon decide whether to enter an injunction to stop the rule changes from going into effect. We will let you know when and if that happens. However, until such time, it is imperative that employers remain diligent in preparing to comply with the new rule as of December 1.
  • Minimum Wage Considerations: President-elect Trump has stated both support and condemnation of increased federal minimum wages. Accordingly, increasing the federal minimum wage may not be a priority for the new administration early on, but stay tuned.
  • Agency Wage and Hour Enforcement: Under the current administration, wage and hour enforcement activities have been aggressive. As the executive branch transitions over to the new administration, we may see budget cuts to agencies and attitude shifts, which may increase agency flexibility when it comes to enforcement.

Occupational Safety and Health Administration (OSHA)

  • Enforcement Activity: Similarly, with the new administration, OSHA is likely to move away from its current tack of aggressive enforcement activity, and toward a more collaborative enforcement style.
  • Illness and Injury Reporting: Traditionally, employers must keep records of occurrences of workplace illness and injury, and then file summary reports with OSHA at the end of each year. OSHA has passed a new rule, effective January 1, 2017, requiring electronic reporting instead. Under the new rule, any establishment with more than 250 employees, or more than 20 employees in high-risk industries, must file this report by July 1, 2017. This requirement may be set aside by the new administration prior to July 1, 2017, but employers to which this rule applies should still plan to comply.
  • Enhanced Penalty Assessment Process: As of August 1, 2016, penalties for OSHA violations increased significantly. This increased penalty structure is unlikely to change. Nevertheless, while the current administration has pursued the full amount of such penalties for violations, we may see OSHA, under the new Administration, take a less aggressive approach. As occurred during previous presidential administrations, we may also expect that OSHA will revert to taking a more consultative approach with violators, thus diverting enforcement resources to consultation resources.
  • Affordable Care Act (ACA) Whistleblower Violations: ACA whistleblower violations are administratively handled by OSHA. Within the last few months, OSHA issued rules and procedures for how the agency will process such claims. This procedure is unlikely to change much, if at all, under the new administration. Of course, if the Republican leadership of Congress follows through with their promises to repeal the ACA, there may not be anything to “blow the whistle” about.

Equal Employment Opportunity Commission (EEOC)

  • EEOC Strategic Enforcement Plan: Last month, the EEOC issued its Strategic Enforcement Plan. In it, the EEOC announced its intent to focus on the areas of immigrants’ rights, religious discrimination, and sexual orientation discrimination. Given the tone of campaign rhetoric, the EEOC’s focus on and approach to these areas of interest will likely change under the new administration. Change will not be immediate, however, as the EEOC is bipartisan, and its appointed members have staggered terms. As President Obama’s appointees to the EEOC are replaced over time (the next appointment is scheduled for July 2017), we expect the EEOC to slowly shift directions. In the nearer term, expected budget cuts to agencies may affect the EEOC’s areas of focus.
  • Family Leave: During the campaign, Ivanka Trump spoke about paid family leave. If such a system comes into existence, the EEOC would be tasked with enforcing and administering that policy.

National Labor Relations Board (NLRB)

  • Composition of the Board: Changes in presidential administrations have historically led to significant changes in the NLRB’s doctrine and direction. The NLRB is composed of five members, but currently has only three, as the Senate has not consented to the appointment of remaining members. The current three-member Board is comprised of two Democrats and one Republican. Now that this election cycle is over and Congress is Republican-controlled, we expect that appointments to fill the remaining seats on the board will be fairly swift.
  • Effect of Changed Composition: Once the NLRB has a full complement of five members, we expect less enforcement actions and investigations. Certain doctrines will also likely change, including the joint employer doctrine. Under current board doctrine, merely having the right to set the terms and conditions of employment, even if that right is not exercised, qualifies an individual or entity as a joint employer, subject to labor law liability. The joint employer doctrine will probably be revisited, and we expect the NLRB to revert to requiring the actual exercise of control before joint employer status is conferred. We also expect the NLRB under the new administration to revisit the definition of statutory employees, especially in the context of graduate students and undergraduate teaching assistants.

Office of Federal Contract Compliance Programs (OFCCP) and Affirmative Action for Government Contractors

  • New Administration’s Priorities: The Trump administration’s priorities for the OFCCP will be markedly different from the Obama administration’s priorities. For example, the Obama administration’s OFCCP has been highly focused on aggressive enforcement activities, including the exercise of broad jurisdiction pursuant to the joint employer doctrine. That exercise of broad jurisdiction has typically resulted in lengthy investigations. However, we can expect that the OFCCP’s budget will continue to be significantly curtailed under the new administration, which will likely result in the length and depth of compliance reviews and investigations decreasing sharply. We also generally expect that the OFCCP will have less of an appetite for disparate impact enforcement under the new administration.
  • Executive Orders and Rules: A plethora of executive orders and other rules applicable to government contractors emerged during the Obama administration. Many executive orders will likely remain unchanged, especially as they apply to affirmative action for veterans and individuals with disabilities, sex discrimination guidelines, and prohibitions on pay secrecy policies. However, implementation of the regulations that modified annual EEO-1 reporting and the “Fair Pay and Safe Workplaces” order may be delayed or subject to other changes under the new administration.

State and Local Matters

  • Policy Changes: We expect that state and local governments will trend toward additional activity on the marijuana policy front, as more states will vote on ballot initiatives directed to varying degrees of legalization. We also expect to see increased activity on firearm regulation and policy. Employers should be prepared for increased activity on the state and local level in light of Congress’s relative silence on these issues.

Organized Labor

  • Before the 2016 presidential election, about 6.7 percent of the United States private sector workforce was unionized. This is the lowest that union membership has been in over 60 years. Although union membership has been on a steady decline, organized labor contributed over $110 million to political spending during this election cycle, more than 30 percent more than what unions spent in the 2012 election. However, many of the states that strongly supported President-elect Trump in this election have rates double the national unionization rate.
  • Vice President-elect Pence has championed right-to-work laws in Indiana. As such, the new administration’s pick for Secretary of Labor will be particularly noteworthy, as that will allow further insight into how the new administration may approach organized labor in the next four years.

Stay tuned in the months to come, as many changes to the legal and regulatory landscape impacting employers are expected. Of course, as the 2016 election cycle taught us, we should expect the unexpected.

In the meantime, it is important to remain diligent in preparing to comply with rules and regulations currently set to become effective. If you have any questions regarding compliance going forward, you should consult an experienced attorney.