Now that Donald Trump has been elected as our next president, and with the recent announcement that the Republicans are in control of the Senate and the House, employers need to understand on potential changes to employment law policy under the upcoming administration.
While employers should obviously continue to comply with the various employment laws and rules currently in effect, they may want to anticipate significant changes under the Trump administration beginning in 2025. The Trump administration has already announced an expected roll-back of many of the Biden administration’s executive actions, many which had implications to employment law.
- Immigration – In case you were living under a rock, immigration reform was a key component of the Trump campaign. If immigration reform is enacted, such immigration reform could affect employers as well. The Trump campaign stated that it would seek to carry out mass deportation efforts and end certain immigration programs (such as the Deferred Action for Childhood Arrivals and Temporary Protected Status) for various countries. Additionally, the Trump administration may place limits on the use of highly skilled foreign workers, such as those hired through the H-1B visa program. If these steps are made, employers may see a substantial decrease in the available workforce.
- DOL Overtime Rule – Under the Biden administration, the DOL issued a new overtime rule amending the requirements employers in white-collar occupations must satisfy to qualify for an overtime exemption under the FLSA. To qualify for most white-collar exemptions, employees must meet the specified salary threshold.? The annual salary level will be $58,656 for most exempt employees as of January 1, 2025, and, while this change will take place prior to the inauguration, it is possible that the Trump administration will push back on the 2024 overtime rule. However, with multiple legal challenges seeking to block the DOL’s overtime rule still pending, the Trump administration could choose to wait for the court's decision before deciding to act.?
- Taxation of Overtime Wages and Earned Tips – On the campaign trail, Trump proposed exempting both overtime wages and tipped wages from federal income tax. These policies would need to pass through the legislature and could face resistance for a variety of reasons, including the loss of federal tax revenue that would occur as a result of these policies. Any change to federal tax revenue would likely need to be offset by a commensurate increase to taxes elsewhere, which is unlikely, or reduction in federal spending.
- Minimum Wage – This is less of a issue with Trump winning over Harris. The current federal minimum wage has remained at $7.25 per hour since 2009. While Trump has historically opposed an increase in the federal minimum wage, his 2024 platform showed potential support for an increase in wages. Therefore, while it is possible that the Trump administration will pursue an increase in the federal minimum wage, it is unlikely to be a significant increase.
- Independent Contractors – In early 2021, the DOL under Trump finalized a new rule?that would have made it easier for employers to classify workers as independent contractors. This rule was blocked by the DOL under the Biden administration in early 2021 and never went into effect, and the Biden administration went further and passed a new rule?that makes it more difficult for employers to classify workers as independent contractors, which took effect on March 11, 2024. While the Trump campaign did not address this specific issue in the run-up to the 2024 election, it’s possible that there will be a return to the less stringent standards of the 2021 rule or some other loosening of the test. Once again, multiple legal challenges seeking to rescind the DOL’s 2024 independent contractor rule are still pending, and the Trump administration may choose to let the court’s decision stand if they decide to repeal.
- Pay Data Collection – In general, private employers with at least 100 employees and federal contractors with at least 50 employees are required to submit employee demographic data, including gender and race/ethnicity, to the EEOC annually through an EEO-1 report. The EEOC recently indicated efforts to reinstate an Obama-era rule that would require employers to include pay data and the number of hours worked in the EEO-1 report under Component 2. The Trump administration blocked the Component 2 requirement during his first term, and therefore, even if the EEOC issues a rule reinstating Component 2 pay data collection, the Trump administration is likely to block it before it takes effect.
- Restrictive Covenants – During the Biden administration, the Democrat-led Federal Trade Commission (FTC) published a final rule prohibiting employers from entering into or enforcing noncompete clauses with most employees. The noncompete ban has faced numerous legal challenges and was ultimately blocked by a federal district court in Texas before taking effect. The FTC appealed that ruling in October 2024. It is unclear what the future of the noncompete ban is under the courts. However, Republicans have generally expressed opposition to regulations that may be considered anti-business, including federal restrictions on noncompete and other restrictive covenants. Therefore, a Republican-led FTC would very likely rescind or abandon any efforts to regulate noncompete clauses at the federal level, regardless of the outcome of the case.
- ?AI – Employers may also expect to see reduced federal regulation of AI under the Trump administration and a rollback of certain Biden-era policies. On the campaign trail, Trump stated that he would repeal Biden’s EO 14110 and would seek to eliminate restrictions on AI, which would likely include those that aim to reduce discrimination and bias in decision-making.
This is only a partial listing of potential changes being considered by the Trump administration.? Surely, there will be more as the administration takes shape and they further vet their agenda for 2025 and beyond. It is imperative employers stay informed so they can anticipate and react swiftly to the dynamic employment legal landscape.
Patrick Canavan, Managing Principal & New England Growth Leader
EPIC Insurance Brokers & Consultants
o: 781-726-6398 / c: 401-952-0680
