America: Back to business – Trump’s second term and

in short

U.S. employers under the Trump administration are anticipating significant changes in employment laws that will impact their business operations. President-elect Trump’s first term, his campaign platform, and the shift typical of the Democratic-to-Republican transition offer clues about what’s to come: Federal agencies, policies, and rules will become more business-focused, and Many of the policies and rules that were in place during the 1960s and 1990s will be rolled back. Protections will be more worker-centered.

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1. go deep
   1. 1. Major changes in DOL policy
   2. 2. Say goodbye to the FTC’s non-compete ban for now
   3. 3. Increased review of workplace ID&E programs and initiatives
   4. 4. National Labor Relations Board reversal of approach
2. Next steps for U.S. employers

Looking into our crystal ball, we predict:

1. A major shift in Labor Department policy

• DOL ends in 2024 Final overtime rules. On November 15, 2024, a federal judge in Texas blocked implementation entirely of the Department of Labor’s final rule, preventing the agency from raising the wage threshold for the “white-collar” overtime exemption under the Fair Labor Standards Act. While the government may appeal the judge’s order before the government changes, any such appeal is likely to be short-lived come January 2025.
  Employers can therefore halt plans to change pay levels or exemption classifications in response to the now-blocked rules. If such changes have been made, employers should consult with counsel to understand how best to undo the undesirable changes, if any.
• Under federal law, employers have less burden to classify workers as independent contractors. Trump could overturn Biden’s worker-friendly contractor classification efforts, making it easier for businesses to classify workers as independent contractors and getting rid of the Biden administration’s 2024 Labor Department independent contractor rules.
  Despite some relaxations at the federal level, employers must remember that there is no single test for independent contractor classification under U.S. and state law. Many states have their own tests, which are often more stringent than federal law and apply to state wage and hour claims. Additionally, different tests will apply to unemployment claims, workers’ compensation, wage and hour, and taxes, even within the same state.
  Therefore, although federal standards may be lowered during Trump’s second term, employers must still comply with applicable state and local laws regarding worker classification to avoid legal liability. Read more here. Furthermore, failure to correctly classify workers as employees will still subject the employer to significant tax liability for failure to pay the employer’s share of social taxes and other contributions and for failure to withhold from employee income tax and employee’s share of social taxes. We have seen no indication that the IRS (certainly not state tax departments) intends to reduce payroll tax audit activity on worker misclassification issues.
• Possible Return of 2021 Fair Labor Standards Act (FLSA) Joint Employer Rule (Repealed and Not Replaced by the Biden Department of Labor). The Trump-era FLSA joint employer rules set a higher threshold for joint employer designation, requiring companies to exercise actual control over aspects such as hiring and firing, supervision and scheduling, maintenance of employment records, or setting wage rates in order to be considered a joint employer. Be a joint employer. Currently, whether an employer is a joint employer under the Fair Labor Standards Act is determined through a multifactor economic reality test that varies across judicial circuits. Employers should be prepared to reassess the application of joint employer rules.
• End of Department of Labor (DOL) ESG-Related Regulations. President-elect Trump is expected to rescind the Department of Labor’s 2022 final rule that would have allowed retirement plan fiduciaries to consider environmental, social and governance factors, including climate change, when selecting investment options and exercising shareholder rights. The rule, which targets 401k and other ERISA-governed retirement plans, replaces Trump-era rules that made it more difficult to incorporate sustainable investments into investment plans. Employers should therefore be prepared to revisit the feasibility of incorporating ESG considerations into planning investment choices.

2. Say goodbye to the FTC’s non-compete ban for now

The Trump administration is unlikely to appeal a recent federal court ruling striking down the Federal Trade Commission’s non-compete ban. Instead, we expect any significant changes in the U.S. non-compete landscape to come from state and city regulation. Notably, state restrictions on non-competes exist in both traditional “red” states (such as Oklahoma and North Dakota) and traditional “blue” states (such as California and Minnesota). We will continue to monitor developments in this area.

3. Increased scrutiny of workplace ID&E programs and initiatives

We may see: (re)issuance of anti-ID&E executive orders (e.g., limiting workplace diversity training); agency enforcement actions against organizations that promote “quotas” or discuss “critical race theory”; repeal of pay equity regulations ( For example, the Equal Employment Opportunity Commission (EEOC) pay data collection (so-called “Part 2” data) regulations); and, among other things, the Pregnant Worker Fairness Act, which limits new protections for covered employees.

• Changing of the Guard at the Equal Employment Opportunity Commission. The current Democratic majority in the EEOC’s five seats is likely to last until at least 2026, and even if a Republican member (Andrea Lucas) is named as the new chair, she is unlikely to bring any serious issues to the table vote until the Republicans can secure the franchise. majority in the organization. If/when there is a Republican majority, we may see the EEOC take a more palatable approach in response to growing pressure from anti-ID&E activists to take on cases challenging corporate ID&E policies.
• Despite these potential changes, many components of workplace ID&E will remain legalincluding expanding outreach to expand the candidate pool, creating mentoring and coaching programs open to all, conducting employee training and education, and reviewing evaluation, compensation and promotion processes to eliminate bias.

Our three-pronged approach to advancing ID&E while mitigating risk is discussed here: Is this an election year for U.S. employers to make risk calculations related to the DEI shift in the workplace relevant? We regularly work with U.S. multinational companies to reduce risks in workplace ID&E programs; please contact your Baker McKenzie lawyer for more information.

4. National Labor Relations Board reversal of approach

The new board may reconsider some of the more labor-friendly decisions of the Biden administration, such as:

• McLaren Macombin which the board of directors restricted the use of confidentiality and nondisparagement clauses in employee severance agreements.
• Sterry cyclein which the Commission adopted an employee-friendly standard to evaluate whether an employer’s face-neutral work rules and policies unlawfully “freeze” employees’ Article 7 rights.
• Cemexwhere the NLRB made it easier for unions to establish representation.
• atlanta opera companyin which the Board reinstated an employee-friendly test for purposes of independent contractor classification.

States have tried and may continue to try to counter the Trump administration’s expected more business-friendly approach. We are looking at new state legislation in the following key areas:

• minimum wage increase (Although California voters just rejected a ballot measure that would have raised the state’s minimum wage
• Pay Transparency (Including salary and wage disclosures in job postings and increased reporting requirements for employers)
• Expand Paid Leave Act
• New rules for artificial intelligence Standardize the use of HR and AI tools
• after termination non-competitor (As mentioned above).

Please contact your Baker McKenzie lawyer to plan your 2025 curriculum in line with these significant changes, and stay tuned for our upcoming CLE and learning webinars.