Workplace Regulation: An Opportunity to Finally Move Into the 21st Century

January 06, 2017

As much as in any other policy arena, President-elect Trump has an opportunity to put his stamp on workplace regulation, which, seventeen years into the new century, continues to be mired in a set of laws and policies largely instituted in the previous century.  Indeed, President Obama has implemented numerous changes in this area, but most have simply been a more expansive and aggressive approach to existing policies.  These have maintained the premise that employers will not embrace progressive policies or give a fair deal to their employees unless told to do so by the government.  While turning this around will take a full four years at least, the first order of business will be staffing the various DOL agencies and then reversing the misguided policies of the previous administration.

Action on Nominations  The first order of business will be confirmation of Andy Puzder, CEO of CKE Restaurants, as Secretary of Labor.  His confirmation hearing is expected the week of January 16.  His belief that excessive regulations "create huge disincentives against economic growth that ultimately kill job creation" will be welcomed by the business community.  Beyond Mr. Pudzer’s confirmation, numerous other important positions at DOL will need to be filled, including:

  • Deputy Secretary of Labor
  • Solicitor of Labor
  • Assistant Secretary for Policy
  • Wage and Hour Director
  • Office of Federal Contract Compliance Programs Director
  • Assistant Secretary Employee Benefits Security Administration
  • Assistant Secretary for Occupational Safety and Health Administration
  • Assistant Secretary for Employment and Training

In addition, important seats will need to be filled at the Equal Employment Opportunity Commission and National Labor Relations Board (see separate story). 

Repeal and/or Replace  At least in the early months of the new administration, there will be considerable attention to revisiting controversial policies of the previous administration, either through outright repeal or through revision.  As part of this, Congress is expected to use the Congressional Review Act, which allows for repeal of certain regulations by simple majorities in each house of Congress and a presidential signature.  The policies that are likely to receive the earliest attention include: 

  • DOL Overtime Rule – A November federal court injunction against implementing the increase in the minimum salary for a "white collar" exemption rule is currently on appeal in the Fifth Circuit.  However, even if the injunction is lifted, it is clear that the rule will not survive in the current administration, given Mr. Puzder's strong public opposition to it.  It remains to be seen how quickly action could be taken and whether it is a simple repeal or whether a smaller increase would be proposed.
  • Executive Orders – President Obama signed numerous executive orders imposing workplace regulations on federal contractors, any or all of which could be immediately revoked.  This week, Vice President-elect Pence indicated this could happen as early as Inauguration Day.  The one considered most likely to be axed is the Fair Pay and Safe Workplaces (a.k.a Blacklisting) Executive Order, the implementing regulations of which were also enjoined last fall.  The new Congress could act even earlier by passing a Congressional Review Act resolution for President-elect Trump's signature that would vacate the Blacklisting regulations.  Other workplace-related executive orders that the new president could revoke include those imposing paid leave requirements and a higher minimum wage on work performed on federal contracts, LGBT rights and prohibitions against restrictions on employee discussions regarding their pay.  Although the new president may not follow down this path, President Obama’s tenure has exposed the ability of presidents to misuse their executive order authority to make employment policy changes.  The new Congress has an opportunity to eliminate future abuses by curtailing the president’s ability to impose similar restrictions on federal contracts.
  • EEO-1 Equal Pay Reports – Action by the Equal Employment Opportunity Commission to rescind the ill-advised Obama era mandate that requires employers to begin reporting compensation data in March 2018 (for calendar year 2017) could be delayed until a Republican majority on the Commission is in place, which may not be until late 2017.  However, Congress could block implementation of the revised EEO-1 when it finalizes funding for fiscal year 2017 this spring or enacts 2018 funding in September.  Employers should explore how quickly they could pull together the data needed to report in 2018 if necessary.
  • Regulatory Reform – The House this week began taking action on a number of regulatory reform efforts, including the Regulations From the Executive in Need of Scrutiny Act (REINS), which would require approval by Congress of any regulation with an economic impact greater than $100 million before it could take effect.  This and the other bills have been passed by the House in previous Congresses but, along with other regulatory reform measures, would need strong bipartisan support in the Senate to muster the 60 votes needed to overcome a filibuster.

Enforcement  Changes at the top notwithstanding, the federal workplace laws will continue to be enforced by the thousands of federal employees who performed the same job in the previous administration.  Given the decentralized enforcement structure at DOL, employers are not likely to notice much change during the first year of the Trump administration.  However, once a new management team is in place, a renewed emphasis on compliance assistance instead of a punitive enforcement strategy should enable employers to work more cooperatively with DOL to maximize compliance in the least burdensome way.

EEOC Agenda  While President-elect Trump will be able to quickly designate a new EEOC chair from among the sitting commissioners, operating with one Republican and three Democrat commissioners will make it very difficult to enact any significant regulatory reforms.  Current Chair Jenny Yang (D) has announced her intention to stay on the Commission until her term expires on July 1, and she may be able to holdover until September 1, depending on how long it takes to fill any vacant seat.  Congress’ failure to reconfirm Constance Barker (R) for a third term at the end of 2016 means Victoria Lipnic remains the only Republican member on the EEOC.  However, President-elect Trump will be able to promptly fill the EEOC's vacant General Counsel, which, in combination with a new Chair, will begin to reshape the agency's litigation and enforcement strategies.  For example, Commissioner Lipnic has been publicly critical of how much authority has been delegated to the General Counsel's office without proper oversight by the full Commission.  In 2017, the EEOC is also likely to continue learning about the use of "Big Data" in the context of employment, and will likely follow-up its 2016 report on workplace harassment with some recommendations on how to settle such cases.  Revisiting the EEOC’s wellness regulations is likely to wait until after an ACA replacement is enacted.

State and Local Activity  With the advent of a less activist federal government, the various interest groups are likely to step up their activity at the state and local level with particular focus on so-called gig economy issues (and other independent contractor and alleged "joint employer" arrangements), paid sick and family and medical leave, gender pay equity and scheduling rights.  As this activity continues to proliferate, large, multi-state employers will become more strained in their ability to provide uniform benefits and policies.

Workplace 2020  Early this year, HR Policy will issue the Workplace 2020 core report, which incorporates the views of chief human resource officers of major corporations regarding the direction of the workplace, how that matches up with employment policies largely formulated in the previous century, and specific policy recommendations to address the mismatch.  The report and ensuing reports on the various policy areas the initiative examined is intended to assist policy-makers—both governmental and corporate—in restructuring policies to enable the development by major companies of the kinds of workplaces that will ensure a competitive American economy.