Looking Ahead:
Incoming Administration & Employment Laws
President-elect Trump is expected to have a substantial influence on the future of employment law policy. Most significantly, the Trump administration will be able to appoint leaders of various federal agencies, including the Department of Labor (DOL) and the National Labor Relations Board (NLRB), who are responsible for administering federal law. While employers must wait and see what changes will take place under Trump’s presidency, Trump has indicated potential policy positions throughout his campaign. Employers may also look to the positions the Trump administration pursued during its prior term for signs of what to expect in the coming years. In addition to the anticipated changes in approach to enforcement by the EEOC and DOL rules, the key employment law issues to watch under a Trump administration are the following:
Taxation of Overtime Wages and Earned Tips
On the campaign trail, Trump proposed exempting both overtime wages (i.e., wages paid at a rate of 1.5 times the regular rate of pay for all hours worked in excess of 40 in a given workweek) and tipped wages from federal income tax. In support of his proposal to eliminate income taxes on overtime wages, Trump argued that it would incentivize overtime work by employees and help with recruitment by companies that offer significant overtime opportunities. The Trump campaign also pointed to the financial benefits for service workers if earned tips were no longer taxed. However, these policies would need to pass through the legislature and could face resistance for various reasons, including the loss of federal tax revenue.
Minimum Wage
Minimum wage increases have been popular at the state and local levels in recent years. However, under the Fair Labor Standards Act (FLSA), the federal minimum wage has remained at $7.25 per hour since 2009. While Trump has historically opposed an increase in the federal minimum wage, including during his 2020 campaign, his 2024 platform showed potential support for an increase in wages. While it is possible that the Trump administration will pursue an increase in the minimum wage, it is unlikely to be a significant increase.
OSHA Regulations
OSHA is a regulatory agency of the DOL responsible for regulating safety and health conditions in most private industries. During President Joe Biden’s administration, OSHA took steps to heighten workplace regulations. Such efforts, including the following, are likely to be repealed or modified significantly under the Trump administration, which has generally pushed for deregulation:
- Worker Walkaround Representative Designation Process Final Rule, which provided that employees could designate a nonemployee third party as their representative during an OSHA inspection; and
- Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings Notice of Proposed Rulemaking, which, if finalized, would provide required safeguards from heat injury and illness that employers in certain industries would be required to implement.
NLRB Changes
The NLRB is an independent federal agency that enforces the National Labor Relations Act (NLRA), which grants most private-sector workers the right to organize and collectively bargain and gives workers the right to engage in protected concerted activity. While changes can be expected under a Trump NLRB, they will probably not be immediate, as the NLRB currently has a Democratic majority and will retain that majority until 2026.
During his first term, Trump adopted employer-friendly policies and focused on limiting the influence of unions. Therefore, employers may expect to see a return to some of the NLRB positions in place during his first term and a reversal of Biden-era NLRB decisions. Some of the decisions that a Trump-era NLRB may seek to overturn include:
- Cemex, which held that when a union requests recognition on the basis that a majority of employees support such union, the employer must either recognize the union or promptly file for an election;
- Stericycle Inc., which adopted a new standard for evaluating employer work rules challenged as facially unlawful under the NLRA, making it harder for employers to defend such rules;
- McLaren Macomb, which reversed a Trump-era decision and held that employers may not offer employees severance agreements that require employers to waive their rights under the NLRA; and
- Fresh & Easy, which increased the circumstances in which an employee acting alone is considered to be engaging in protected concerted activity.
Additionally, President-elect Trump will likely replace the NLRB’s current general counsel with an employer-friendly attorney, who will likely reverse the Biden administration’s pro-union initiatives.
There is currently a vacancy on the NLRB’s five-person board. If the Democrats are unsuccessful in filling the vacancy with a Democratic member before Inauguration Day, Republicans will most likely fill the vacancy soon thereafter with a pro-management appointee and secure a Republic majority on the NLRB for the near future.
DEI Initiatives
The Biden administration generally promoted DEI initiatives. Through Executive Order (EO) 13985, the administration established a policy of pursuing a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized and adversely affected by persistent poverty and inequality. This contrasts with the approach to DEI taken during Trump’s first term and the approach to DEI efforts taken by other Republicans. For example, during his first term, the Trump administration issued EO 13950, which prohibited federal contractors and subcontractors from providing certain workplace diversity training and programs and discussing divisive topics in workplace training. Additionally, in 2023, a group of 13 Republican attorneys general issued a letter to Fortune 100 companies threatening legal action for continuing DEI measures. In light of this continued tension regarding DEI initiatives, the Trump administration is expected to revoke Biden’s EO and reinstate Trump’s EO 13950.
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 likely rescind or abandon any efforts to regulate noncompete clauses at the federal level, regardless of the outcome of the case.
AI Regulation
Employers may also expect to see reduced federal regulation of AI under the Trump administration and a rollback of certain Biden-era policies. In 2023, Biden issued EO 14110, which established new standards for AI safety and security, including those that would reduce bias and discrimination with respect to employment decision-making. In response to Biden’s EO, the DOL published a Field Assistance Bulletin in which it identified recommended best practices in using AI to perform various wage and hour tasks (such as generating timecards, setting schedules, monitoring performance, tracking employee hours and processing payroll), including exercising proper human oversight, to help ensure that the AI systems and tools do not violate the FLSA.
On the campaign trail, Trump stated that he would repeal Biden’s EO 14110 and seek to eliminate restrictions on AI, which would likely include those that aim to reduce discrimination and bias in decision-making.
Immigration Reform and Enforcement
Immigration reform was a key component of the Trump campaign. If enacted, such initiatives could affect employers as well. For example, the Trump administration may place limits on the use of highly skilled foreign workers, such as those hired through the H-1B visa program. Moreover, 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. If Trump succeeds in these efforts, employers may see a substantial decrease in the available workforce.
Are Weight-Loss Drugs
Considered Preventive Care?
The Affordable Care Act (ACA) mandates that health plans cover certain screenings and behavioral interventions for obesity as preventive health services. Questions often arise regarding whether weight-loss drugs such as Ozempic are subject to the ACA’s preventive health services mandate.
Although several obesity and weight-management items and services are subject to the ACA’s preventive health services mandate, drugs such as glucagon-like peptide 1 (GLP-1) agonists (including Ozempic) that may be prescribed for weight loss are not currently included in the mandate. HHS’s website lists the preventive items and services that must be covered, which are based on recommendations and guidelines from a number of organizations, including the U.S. Preventive Services Task Force (USPSTF) and Health Resources and Services Administration (HRSA). The ACA requires non-grandfathered, nonexcepted group health plans to provide coverage for specified items and services without cost-sharing when they are delivered by in-network providers.
Coverage of screenings for obesity in adults is required because it is currently listed by the USPSTF as a recommended preventive service. The USPSTF also recommends specific behavioral interventions for weight management for adult patients based on body mass index, including weight-loss goal setting and strategizing about how to maintain lifestyle changes. Additionally, HRSA recommends certain counseling for midlife women with normal or overweight body mass index to maintain weight or limit weight gain. However, weight-loss drugs are not included in the USPSTF or HRSA preventive services guidelines.
Even though coverage is not required by the ACA as a preventive service, small group market plans may be required to cover certain weight-loss drugs as essential health benefits. And an exclusion of drugs prescribed for weight loss may fail to comply with other state mandates and federal laws, including HIPAA (e.g., because it is not applied to all similarly situated individuals or is directed at individuals based on a health factor) and the ADA (e.g., because it makes disability-based distinctions).
IRS Announces Annual PCORI Fee
Adjustment for 2024
The IRS has announced the annual increase in Patient-Centered Outcomes Research Institute (PCORI) fees that must be paid by health insurers and self-insured health plan sponsors. PCORI fees were established by the Affordable Care Act (ACA) and are used to support clinical effectiveness research. Because the ACA provision included an expiration date, PCORI fees originally were collected only for plan years ending before October 1, 2019. However, legislation enacted at the end of 2019 reinstated the PCORI provision, continuing the fee requirements through plan years ending before October 1, 2029.
The initial PCORI fee applicable dollar amount of $2.00 is adjusted annually based on the percentage increase in projected per capita national health expenditures. The adjusted applicable dollar amount for PCORI fees for plan and policy years ending on or after October 1, 2024, and before October 1, 2025 (i.e., calendar year plans), is $3.47. This is a $.25 increase from the amount in effect for plan and policy years ending on or after October 1, 2023, and before October 1, 2024. PCORI fees are calculated by multiplying the applicable dollar amount for the year by the plan’s average number of covered lives.
PCORI fees are reported annually on the second quarter IRS Form 720 no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies (i.e., July 31, 2025 for plan years ending in 2024). Self-funded plan sponsors should confirm that this important date is noted on their compliance calendars (Insurers are responsible for paying the fee for insured employer group plans).
