While no one has a crystal ball to help predict the future with any certainty, the changes that the Trump administration has already implemented with respect to Department of Labor leadership positions, regulations and proposed legislation provide a guide for our predictions regarding what to expect in the coming months and years.
When President Trump came into office, he instituted a hiring freeze that was subsequently lifted in April with instructions for nearly all federal agencies and departments to find ways to trim headcount and budgets. The Wage and Hour Division (WHD) alone currently employs about 1,000 investigators who lead audits and investigations into employees’ wages, leave and other issues. According to BNA, about 25 percent of the WHD field staff is eligible for early retirement or leave. Given these statistics, we would expect some reductions and turnover in that enforcement arm of the Department of Labor. Nevertheless, we recommend that employers remain vigilant and take compliance seriously. As a reminder, under the Bush administration, the Department of Labor had fewer total enforcement actions, but it used a smaller number of substantial investigations to make well-publicized examples of certain employers.
On April 28, 2017, Alex Acosta, a conservative former U.S. attorney and member of the Bush administration, was sworn in as Secretary of the Department of Labor. One of the items on Secretary Acosta’s agenda is the pending appeal of the new overtime rule that was set to go into effect on December 1, 2016, prior to its enforcement being enjoined. The Obama Department of Labor appealed that ruling, but it is unclear whether the Trump administration will withdraw the appeal, revise the regulations or take other action on the issue of overtime under the Fair Labor Standards Act. It currently has a deadline of June 30, 2017 for filing its brief. While it appears unlikely that the subject regulations raising the salary threshold for exempt workers will go into effect at the federal level, employers should be mindful that states are enacting more employee-friendly rules and regulations that may impact overtime eligibility or requirements for certain employees under state law.
At the Equal Employment Opportunity Commission (EEOC), President Trump has appointed Victoria Lipnic as the acting chair. Although Lipnic has not indicated a desire to roll back or change the priorities identified in the agency’s most recent Strategic Enforcement Plan, budgetary pressures are expected to limit the agency’s ability to exercise its enforcement capabilities and pursue litigation regarding systemic issues. The proposed fiscal year 2018 budget blueprint calls for $9.6 billion in discretionary spending at the Department of Labor, down from $12.2 billion for the prior year, according to a proposal released by the White House on March 16. The request did not provide much detail with respect to specific agencies or programs that would be impacted by the budget cuts, if passed. While some employers have welcomed the idea of fewer investigations and enforcement actions carried out by the EEOC, it is important to recognize that many of these activities will be taken up by the EEOC’s counterparts at the state level. The effect of reduced EEOC federal enforcement actions for companies with a national footprint may be less predictability and a somewhat inconsistent approach from the state agencies in question.
Finally, with the addition of Neil Gorsuch to the Supreme Court, employers can expect relatively favorable decisions from the conservative justice who was publicly criticized by some senators for his decision in the “frozen trucker” case that was decided while he served on the Tenth Circuit Court of Appeals. In the coming year, the Court is expected to rule on cases that will address whether the use of mandatory arbitration clauses violates employees’ rights under the National Labor Relations Act. Some Supreme Court watchers also anticipate that the Court will likely decide whether public employees can be forced to pay compulsory union dues.
Given the uncertainty of what to expect under the Trump administration, employers are advised to continue their efforts to comply with current rules and keep a watchful eye on rulings or laws that may impact their workforce or employment policies.