Inauguration and Beyond: What Employers Should Watch for from the Incoming Trump Administration
With the Trump inauguration around the corner, the Labor & Employment team at Obermayer is preparing to advise employers regarding the impact of the incoming administration on labor and employment law at the Federal level. There are several areas where changes in Washington could trickle down to impact the laws that govern the modern workplace. Here, HR Legalist dives into some of those areas—with the caveat that much of the politics in these areas is very much still in flux.
Fate of Government Agencies
Trump has pledged to create the Department of Government Efficiency (“DOGE”) to be headed by Vivek Ramaswamy and Elon Musk. Ramaswamy previously said that some agencies could be closed entirely. Musk previously said that he wants to reduce the number of federal agencies from 400 to 99. Similarly, they intend to downsize the workforce of the remaining federal agencies. The authority of the DOGE is uncertain since it would essentially be an advisory body without formal authority to make cuts to federal agencies. Adding to the uncertainty, Musk recently admitted that the original goal of $2 trillion in savings would most likely not happen. However, Trump has also nominated Russel Vought for the director of the Office of Management of Budget (OMB). Vought has voiced support for increased presidential authority to eliminate civil service employees. If significant cuts are implemented within agencies, they could lead to significant regulatory delays and slower enforcement. This impacts labor and employment law because rulemaking and informal guidance from agencies such as the EEOC, DOL, and NLRB, often impacts what employers can and cannot do.
EEOC
Reductions to agency staffing could result in significant delays in processing complaints before the Equal Employment Opportunity Commission (“EEOC”). As a result, the EEOC may be more apt to issue Notices of Right to Sue early on to reduce delays and eliminate backlog. When a Right-to-Sue notice is issued early, the employer does not have to spend the time and money to prepare a position statement and potentially respond to Requests for Information at the agency level. However, an early Right-to-Sue sets the stage for potential litigation in federal or state court, which can often be more costly than defending an EEOC charge.
Currently, the EEOC has a 3-1 Democratic majority, which cannot change until July 2026. However, Trump will likely appoint the only Republican currently on the Commission, Andrea Lucas, as Chair and to appoint a new EEOC general counsel. The Democratic majority will prevent Republicans from initially targeting existing policy actions, like the inclusion of abortion care as accommodations under the Pregnant Workers Fairness Act (“PWFA”). EEOC guidance on topics such as gender identity-related protections from workplace harassment (which touches on issues such as bathroom access and preferred pronoun usage) may also remain in place until the majority flips. However, the appointment of a new general counsel could shift the EEOC’s litigation priorities, including a potential increased focus on religious accommodations. That said, an update to EEOC practices gives a majority of commissioners the ability to reject efforts to file suit, thereby allowing the Commission’s three Democrats to block the Republicans’ ability to push their agenda through litigation in the first years of the Trump administration. After the commission flips, the EEOC could scrutinize diversity, equity and inclusion (DEI) programs as discriminatory.
Status of Non-Competes
In January 2023, the Federal Trade Commission (“FTC”) proposed a rule to prohibit use of non-compete clauses for employees and independent contractors. The Rule went so far as to require employers to rescind existing non-competes and to inform workers that they are no longer in effect. The rule was slated to take effect on September 4, 2024. However, in August, the Northern District of Texas struck down the Rule and enjoined its enforcement, holding that the FTC lacked statutory authority to implement the Rule. The FTC appealed the decision to the Fifth Circuit Court of Appeals. The Fifth Circuit is expected to affirm the lower court decision and continue to enjoin the ban. However, it is likely that President Trump will replace the Chair of the FTC and then the newly appointed Chair could cause the DOJ to drop the appeal, thus permanently killing the ban.
DOL and Wage & Hour
In November of 2024, Trump announced Lori Chavez-DeRemer, a former Republican congresswoman from Oregon, for the position of Secretary of Labor, the head of the Department of Labor (“DOL”). DeRemer is an interesting choice in part because she supported the labor-friendly Protect the Right to Organize Act (PRO Act) when she was in Congress. However, her overall record on labor issues is business-friendly, and the PRO Act has very little chance of even passing through a Republican-controlled Congress. Trump recently nominated Keith Sonderling to be deputy labor secretary, the number two position at the DOL. Sonderling is a former management-side labor attorney with experience at both the EEOC and the DOL’s Wage and Hour Division and has a business-friendly reputation.
The DOL could influence several employment law topics that have changed from administration to administration. Near the end of Trump’s first term, the DOL finalized a rule easing the requirements to classify workers as independent contractors. However, under Biden, the rule never went into effect. It is expected that the DOL under Trump will reinstate the proposed rule and make it easier for employers to classify workers as independent contractors.
The white-collar exemption allows employers to designate certain employees as exempt from the Fair Labor Standards Act’s (“FLSA”) minimum wage and overtime requirements. To qualify for the exemption, employees must be paid a minimum salary threshold. During his first term, Trump raised the salary threshold to $35,568. The Biden administration increased the minimum to $43,888 and it was scheduled to increased again to $58,656 on January 1, 2025. However, in November of 2024, the Eastern District of Texas determined that the DOL’s new salary rule exceeded its statutory jurisdiction and enjoined the rule nationwide. The DOL appealed that decision to Fifth Circuit. However, much like the FTC’s noncompete ban, it is expected that the appeal will be abandoned under Trump.
The DOL under Trump instituted the Payroll Audit Independent Determination (PAID) program, which allowed companies to self-report minimum wage and overtime violations to avoid more costly penalties. The DOL ended this program in January 2021. It is possible the DOL under Trump will reinstate the PAID program.
NLRB
The National Labor Relations Board (“NLRB”), the primary agency setting traditional labor law at the federal level, currently has a 3-1 Democratic majority. The NLRB’s general counsel under Biden, Jennifer Abruzzo, has taken aggressive labor-friendly position on a variety of issues, including (1) prohibiting confidentiality clauses in settlement agreements; (2) arguing that non-compete agreements violate labor law; (3) making it harder to classify workers as independent contractors; (4) restricting workplace conduct rules and handbook provisions; and (5) making it easier for the NLRB to issue orders requiring employers to bargain with unions even in the absence of a formal election.
The NLRB is a five-member board, and it currently has a 2-1 democratic majority. Because there are two vacancies, the NLRB could flip to Republican control if the Senate confirms two Republican as replacement board members. Given the number of pending confirmations on the Senate’s docket, this could take some time. Even if the NLRB flips Republican, it will still take some time for the Board to make changes to the law, since the NLRB makes law by ruling on specific cases that must first be decided at the regional level. In the meantime, however, Trump is expected to remove and replace GC Abruzzo shortly after inauguration day, leading to the rescinding of many of her office’s labor-friendly memos and policies. Once that change is made, the NLRB’s regional offices, which take direction from the GC, are expected to be much less aggressive on the enforcement side.
As usual, HR Legalist will continue to track these developments beyond inauguration day.
The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.