Decision 2016:
HR’s Guide to the Next Four Years

November 9, 2016
9 min read

After a tumultuous election season, the dust has finally settled: Donald Trump is our 45th president.

Over the last eight years, human resources professionals have been witness to tremendous changes in employment law, many of them tilting pro-employee. Laws relating to paid family leave, the minimum wage, and gender pay equity have passed at record rates, indicative of a broader shift in employment law that favors workers. However, this shift has largely been limited to a state and local phenomenon. 

In the battle between pro-employee and pro-employer interests, Trump’s rise to the White House marks a turning point.

This report will focus on four areas where Trump may have a serious impact on HR. Inferences have been drawn from the president’s campaign speeches, policy statements, and his 100-day roadmap. 

In addition to covering Trump’s plans for these key issues, this report will seek to predict their chances of passing legislative muster—and what you as an HR professional might expect to see if they do. 

 
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Paid Family Leave

Trump surprised many on the campaign trail by making paid maternity leave—traditionally a nonstarter with Republicans—part of his platform. Now that he has won the White House, will he win over his peers?

Trump’s plan for paid leave:

  • Up to 6 weeks of paid family leave for new mothers.
     
  • Amendments to unemployment insurance will pay for the program.
     
  • Only workers whose employers do not already offer paid leave can take advantage of the benefit.

 

What are paid leave’s chances in Congress?

It remains unclear whether the president will be able to convince his fellow Republicans in Congress to entertain the idea of a paid leave mandate. That being said, poll numbers and shifting attitudes could potentially give him reason to hope. 

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Earlier this year, a study found that over 70 percent of Americans (and 62 percent of Republicans) supported the idea of a federal paid leave program. That shift in opinion may not be limited to voters—just last year, Florida Senator Marco Rubio unveiled his own paid leave plan. Significantly, in 2016 a Republican-controlled New York State Senate signed off on one of the country’s most progressive paid leave laws.

If Democrats are willing to accept a less robust paid leave mandate (Clinton had called for a 12 week program), the probability of Congress and President Trump passing some form of paid family leave is actually quite high. 

 

What should HR expect?

While Trump’s paid family leave policy would certainly mark a change, don’t expect it to rattle employers like the Family Medical Leave Act did in 1993. Whatever Congress settles on, the program will not offer more than six weeks of leave, paid at a low percentage of base salary (with a maximum payout of $300 per week). 

Trump’s program should be viewed as a foundation on which states and cities will continue to build. The last year has seen a wave of paid family leave laws—like New York State’s, which promises 12 weeks for both mothers and fathers and is funded entirely through taxes. Some cities, like San Francisco, have made it a requirement to pay out family leave at 100 percent of salary, something neither presidential candidate was willing to support. 

Trump’s program likely won’t be realized until much later in his term. Building consensus from his Republican peers may take time, and per his 100 day roadmap, there’s no indication that paid leave ranks among his immediate priorities.

Prediction: Congress and the president will settle on some form of paid maternity leave—likely no more than 6 weeks paid at 33 percent of wages—in the latter half of his term.

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The Minimum Wage

During the campaign, both the president and Hillary Clinton supported an increase of the federal minimum wage. Trump supported an increase to $10 per hour, while Clinton supported a bigger boost—up to $15 per hour. 

The federal minimum wage, last updated in 2009, is currently $7.25 per hour. As of this writing, 29 states have higher minimums, some even double. With congressional Republicans softening up to the notion of a modest increase and state wages pulling away, change here seems likely.

Trump’s plan for minimum wage:

  • Increase the federal minimum wage to $10 per hour.
     
  • Defer to state and local governments for further increases.

 

How likely is a federal minimum wage increase?

Though Trump’s stance on the minimum wage was conspicuously absent from his campaign website, in interviews he opined that it should be raised to $10—a belief he concedes is “not very Republican.” Changing attitudes among his congressional peers may surprise him.

Ahead of the election, Democrats made a $15 minimum wage part of their official platform. While the GOP is resoundingly against an increase of that magnitude, polls suggest their outright opposition to an increase may be softening. A 2016 study revealed that a majority of Republicans supported a minimum wage hike up to $10.10, and even prominent leaders in the party such as Mitt Romney have broken with party orthodoxy and called for an increase.

In Arizona—a state in which Trump had a clear victory—voters approved a minimum wage increase to $12 by 2020. As Republicans look to tap into the energy that propelled their president to victory, the likelihood of a GOP pivot on the minimum wage has never been higher.



What should HR expect?

The minimum wage is likely to go up, but HR should not start budgeting for a dramatic increase. While states and cities will continue to pass $15 minimum wage laws, neither Congress nor Trump would agree to an increase of that magnitude. A much more modest increase to $10 is most likely.

To account for cost of living disparities in urban and rural communities, states like Oregon and New York have experimented with having different minimums for different geographical areas. While incorporating that model on the national scale could be difficult to manage, Congress may choose to phase-in increases at different rates in different regions to soften the impact.

Prediction: Congress will settle on a new minimum wage of around $10 per hour. States and cities will continue to pass $15 minimum wage laws.

 
 

Affordable Care Act

The Affordable Care Act (ACA), colloquially known as “Obamacare,” is a cornerstone of the departing president’s legacy. It is polarizing—with Republicans wanting to replace it and Democrats hoping to preserve it.

In contrast, the president's position on the ACA is uncompromising: it must be fully repealed. Trump has committed to starting the process on day one of his administration.

 

Trump’s plan for Affordable Care Act:

  • Repeal and replace “Obamacare.”
     
  • Broaden healthcare access and make healthcare more affordable by following free market principles.
     
  • Allow insurance providers to sell products across state lines.
     
  • Replace the individual mandate with a tax incentive.

 

Will the ACA still exist in 2020?

Trump’s victory—and just as importantly, Republicans’ retention of the Congress—might serve as a death knell for the current iteration of the ACA. Even so, Democratic resistance in Congress could prolong the program’s demise well beyond the president’s first 100 days in office.

Definitively repealing the ACA would require 60 votes in the Senate—a majority currently out of Republicans’ reach. As an alternative, Congress and the president will likely work to gut parts of the law piece-by-piece or slowly reshape it in their image. For Republicans, much of the prep work here is already done; since 2012, the GOP has attempted to pass over 60 pieces of legislation seeking to undercut or change the program.

It’s estimated that an outright repeal would strip coverage from over 22 million Americans. Republicans will tread carefully, fully aware of the potential electoral repercussions that would carry.

 

Should HR expect any changes?

The Affordable Care Act will look very different in 2020—but that metamorphosis won’t happen quickly. One of the biggest deterrents here is the sheer size of the players involved and even the legislation itself, which ranks in at over 20,000 pages. Insurance companies, who took 2-3 years to get their healthcare exchanges operational, will need time to adjust. Further complicating matters, some aspects of the rule are universally popular, like extending coverage to children until age 26 and ensuring coverage for those with pre-existing conditions. These provisions are unlikely to change.

There is one part of the ACA that is loathed by both sides of aisle, and thus an easy first target for Republicans: the Cadillac Tax. The tax is a 40 percent excise tax on high-cost employee benefits, set to take effect in 2020. It was designed to help offset the costs of the ACA and steer employers toward offering more cost-effective plans.

In the short term, employers should not expect major changes as it relates to ACA reporting and benefits administration.

Prediction: Unable to enact an outright repeal, the president and Congress will take a piecemeal approach to reshaping the Affordable Care Act.

 
 

Overtime Rules

In 2016, the Department of Labor doubled the minimum salary for overtime exemption, effectively extending overtime pay to millions of new workers. It was praised by Democrats and labor unions, but drew ire from employer interest groups, congressional Republicans, and 22 US state governments.

President Obama was committed to protecting the new overtime rules ahead of their December 1 effective date. Without his protection in 2017, however, they will very much be in congressional Republicans’ crosshairs. 

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Trump’s plan for the overtime rule:

  • In its current form, the DOL’s updated overtime rules are a hindrance to job creation.

  • The updated salary threshold needs to be reassessed.

Trump’s position on the overtime rule has only been communicated through a senior economic advisor.  

 

Will Trump Reverse the Overtime Rules?

The new overtime rules will face challenges on multiple fronts—Congress, Trump’s DOL, and federal lawsuits could all lead to the full reversal of the salary threshold increase, bringing it back down to $23,660. In fact, a federal injunction in late November temporarily put the brakes on the rules altogether.

Republicans are resoundingly against the new rules and have called for a delay in their implementation.

The details of Trump’s position on overtime are largely unknown—in late 2016, a Trump senior advisor said the president saw the DOL’s new rules as a “harmful regulatory change.” Even so, his break from party orthodoxy on paid family leave and the minimum wage could signal a willingness to push for a more moderate increase of the overtime threshold above the old $23,660 minimum—but well below the Obama administration’s preferred $47,476.

 

What Should HR Expect? 

For the time being, the DOL’s new overtime rules are on hold—but changes could come in the latter half of next year. Trump’s position on the new rules is largely unknown, but given the scope of his other initiatives, it’s nearly certain that overtime reform ranks low on his list of to-do items.

Budgeting or employee classification decisions should not be made under the assumption that Trump will repeal the rules. Regardless of what Trump’s DOL has in store, many states have taken the new rule as a cue to update their own—the New York State DOL recently enacted an overtime threshold increase that goes well beyond the controversial $47,476 figure.

The tenor of Trump’s DOL will eventually dictate what happens to overtime and the Fair Labor Standards Act more broadly. Until then, HR professionals should proceed as they would have otherwise.

Prediction: Trump’s DOL will likely change the overtime salary threshold again—but not in the near-term.  

 

Conclusion

When it comes to employment law, the importance of Trump’s victory cannot be overstated. 

Earlier in 2016, Namely reported that employment law was in the midst of a pro-employee tide. As regulations come and go, HR has effectively been caught in the middle of a decades-long tug-of-war between employee and employer interests. In the last eight years, the pro-employee cause has generally won out. The ACA, new overtime rules, state paid leave, and other regulations have changed the rules of doing business in the US.

Trump’s historic election serves a turning point in that narrative. While that legislative, pro-employee tide will continue locally, Inauguration Day may well mark a reversal of it at the federal level. 

Employment law is entering unchartered territory—and HR will be tasked with successfully navigating it.