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How Trump is impacting on US employment law

Brian Jebb
risks

The Trump administration’s goals in its first few months have been clear: to focus on regulatory reforms and reverse many of the previous administration’s policies. Although the Trump administration’s actions so far have been mostly business-friendly, HR issues have not been a particular focus as efforts have been largely devoted to issues of trade, national security, environmental regulation and immigration enforcement. Article from Brian Jebb Senior Counsel, Allen & Overy.

A president can act unilaterally without the approval of Congress through the use of Executive Orders and President Trump has signaled his preference for making use of this power by signing over 40 Executive Orders in order to advance some of his highest priority issues. One of President Trump’s earliest Executive Orders in January 2017 focused on reducing regulations across federal agencies: for every new regulation issued, at least two prior regulations should be identified for elimination. This Executive Order also focused on cost management by establishing that there should not be any incremental cost for any new regulations. Several federal agencies have taken steps to implement this Executive Order by establishing task forces designed to evaluate existing regulations for repeal or modification and by issuing requests for comment from the public on how best to achieve this goal.

President Trump is able to influence the operations of global employers by the use of Executive Orders that apply to federal contractors, as most large global employers do business with the federal government. President Trump has used an Executive Order to ease the burden on federal contractors in the context of compliance with employment laws. For example, he recently revoked the requirement that companies seeking federal contracts prove that they have complied with various labor and discrimination laws.

With respect to wage and hour laws, the Trump administration has also taken steps to distance itself from rules announced during the Obama administration. In 2016, the Department of Labor had announced its intention to make more employees eligible to receive overtime compensation under the Fair Labor Standards Act by updating the “white-collar exemption.” The new rule, which would increase the annual salary threshold for exemption from the obligation to provide overtime pay from US$23,660 to US$47,476, did not go into effect due to litigation from states and companies challenging its validity. Under the new administration, the Department of Labor has decided not to defend the original rule in its entirety and is no longer advocating for the higher salary threshold that was set when the rule was announced.

Significant reform in federal laws, however, cannot happen until changes are passed by both the US House of Representatives and the US Senate. Two big issues that were a focus of President Trump’s campaign have been health care and tax reform but, so far, the current administration has failed to gather enough support in Congress to pass changes in legislation related to either issue.

Another recent example of proposed legislation is the Financial CHOICE Act, a new bill that was passed by the US House of Representatives that may remove many of the executive compensation protections and disclosure obligations established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. For example, the proposed legislation would affect rules that impose restrictions and deferrals on the payment of incentive-based compensation for financial institutions and the requirement of US-listed companies to disclose the ratio of the CEO’s compensation to the median employee’s compensation. The Financial CHOICE Act has been referred to the US Senate, though it has not yet been considered. The Trump administration’s budget request for FY2018 also includes paid parental leave as one of its priorities with a proposal to amend current laws to guarantee employees 6 weeks of paid family leave for both new mothers and fathers, which would be paid for by reforms to the current unemployment insurance system.

Immigration is another hot topic for employers who routinely hire non-US workers in the United States. In April, President Trump issued an Executive Order declaring that the official policy of the United States is to “buy American and hire American.” Recently, President Trump supported a new immigration bill that would move the US immigration system to a points-based system focused on rewarding highly skilled workers. In the meantime, the Trump administration has been focused on immigration enforcement. It is expected that employer site inspections and increased scrutiny in the adjudication of work visa petitions would arise from the administration’s increased efforts to detect visa fraud.

Employers who rely on H-1B visas, a work visa commonly granted to professionals holding at least a bachelor’s degree, have already started to face longer adjudication timeframes as the government has temporarily halted the fast track adjudication option for most employers. In a recent move, the administration announced that it was reversing its previous guidance that computer programming jobs generally qualify for H-1B visas. Instead, the new guidance has increased the burden on employers to provide sufficient evidence that the proposed computer programming position meets the requirements of a specialty occupation.

Over the coming months, it is expected that the government will continue to scrutinize work visa petitions, consistent with the administration’s message that American workers should not be discriminated against in favor of non-US workers.  Overall, the early days of the Trump administration have contained some ambitious goals in the HR arena, but it remains to be seen how many of the administration’s proposed changes will ultimately be implemented.