What will the new Trump administration mean for employers?
CWS 3.0 - Contingent Workforce Strategies
What will the new Trump administration mean for employers?

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While President-elect Trump said little on the campaign trail about his plans for labor and employment laws, it is likely there will be a significant shift from the pro-union policies of President Joe Biden to Trump’s pro-business agenda. Some clues as to what employers can expect from the next Trump administration come from his stance on issues during his first term of office from 2017 to 2021.
Misclassification. The Trump administration’s Department of Labor sought to make it easier for businesses to classify workers as independent contractors with its Final Rule on IC misclassification, issued in January 2021. This provided guidance on how to analyze who is an employee or independent contractor under the Fair Labor Standards Act by reaffirming the “economic reality” test. It cited two “core factors” as the most important in determining whether a worker relies on someone else’s business for income (an employee) or runs their own business (an independent contractor):
- The nature and degree of control by the employer over the work; and
- The worker’s opportunity for profit or loss based on initiative and/or investment.
However, this rule was replaced by a Final Rule put in place by the Biden administration in January 2024, which adopts a six-factor, totality-of-the-circumstances test that “focuses more broadly on a worker’s economic dependence on an employer.”
It is likely the 2021 Rule will be reinstated, but employers should remember that many states have their own tests for state wage and hour claims, which are often more stringent than federal law.
Joint employer. Another Final Rule that may see a comeback is the 2021 Fair Labor Standards Act joint employer rule (which the Biden DOL rescinded and did not replace). The Trump-era rule set a higher bar for a joint employer finding, requiring companies to exercise actual control over hiring and termination, supervision and scheduling, maintenance of employment records, or setting of pay rates to be deemed a joint employer.
The National Labor Relations Board proposed a Final Rule in 2023 that would have changed the test for determining who is a joint employer under the National Labor Relations Act. Under the proposed Final Rule, a business would be a joint employer if it has the right to exercise control over specified terms or conditions of employment, even if it never exercises such control and even if the only way it could exercise such control would be through an intermediary. This was struck down by a Texas court in 2024, so joint-employer status under the NLRA is still determined under the regulations adopted by the Board in 2020. The 2020 Rule provides that an employer will be considered a joint employer only when it exercises “substantial direct and immediate control” over the essential terms and conditions of another company’s employees.
Overtime exemptions. On Nov. 15, 2024, a federal judge in Texas blocked implementation of a DOL final rule that would have instituted increases to the salary thresholds for the “white collar” overtime exemptions under the Fair Labor Standards Act to $1,128 per week, or $58,656 per year.
Trump’s Department of Labor promulgated a rule that extended overtime pay to about 1.3 million workers even though it covered fewer employees than a previous proposal made by President Obama. It is unclear whether he will raise the thresholds, but for now, the thresholds remain at the level set by his administration at $684 per week, or $35,568 per year.
Noncompetes. On April 23, 2024, the Federal Trade Commission passed a final rule to ban most noncompete clauses in employment agreements preventing workers from taking a job at a competing business or starting their own business. A federal judge in Texas issued a nationwide injunction against the FTC’s ban, which the FTC has appealed.
Trump has not directly addressed the FTC’s attempt to ban noncompete agreements, but the expectations are that his administration will be more “business-friendly” — meaning he will not seek to curtail employers’ freedom to protect their business interests by such means. The greater threat comes from the states, many of which have already passed bans or restrictions on the use of noncompete provisions.
Diversity, equity and inclusion policies. The US Supreme Court’s decision ending affirmative action in higher education — Students for Fair Admissions, Inc. (SFFA) v. President & Fellows of Harvard College (Harvard) and SFFA v. University of North Carolina — continues to have ramifications for corporate America. Attacks against workplace DE&I efforts are gaining momentum with targeted challenges from conservative advocacy groups filing lawsuits, requesting agency investigations and pursuing other complaints.
President Biden in 2021 signed the Executive Order on Advancing Diversity, Equity, Inclusion, and Accessibility in the Federal Workforce. Its remit was broad to drive changes across many areas of the federal government, with the goal of removing barriers that have hindered the recruitment, advancement and retention of diverse employees.
In contrast, President Trump issued an EO in 2020 prohibiting “divisive concepts” in federal workplace diversity training — i.e., racism or sexism determined by an individual’s characteristics, e.g., “white privilege.” While not going as far as some of the challenges being pursued by conservative political groups, Trump is unlikely to advance the cause of DE&I.
AI. Finally, where President Biden issued an AI executive order in October 2023 to promote the “safe, secure, and trustworthy development and use of artificial intelligence” within the federal government, President-elect Donald Trump has promised to repeal this EO.
This illustrates Trump’s intention to take a more hands-off approach to AI regulation, which may include federal legislation that pre-empts state laws that have resulted in a patchwork of AI regulation across the country.
As technology develops exponentially, this could provide a challenge for multinational businesses that must manage compliance with the EU’s AI Act on one side of the Atlantic with a less regulated, more competitive environment on the other.