Reprinted from Law360
How Trump’s Return Could Shift The Wage-Hour Landscape
Former President Donald Trump’s return to the White House could mean dropping appeals in rule challenges, implementing business friendly enforcement strategies and ending taxes on tips and overtime, among other impacts on wage and hour issues, attorneys said.
Employment law experts said they expect Trump’s second-term wage and hour policies will be friendlier to employers, including through more compliance assistance, than those under President Joe Biden. “One of the things that we saw in the current administration is a very heavy emphasis on penalties, on liquidated damages, on embarrassing employers publicly when there’s a violation in order to put pressure on the employers,” said Paul DeCamp of management-side firm Epstein Becker Green.
“I don’t think that the incoming administration will approach things that way,” said DeCamp, who was U.S. Department of Labor Wage and Hour Division administrator under former President George W. Bush. “I think there will be much more of an understanding for how violations can happen and an appreciation for the fact that not every violation is willful and intentional and in bad faith.”
Here, Law360 explores what to expect from the new administration.
Dropping Rule Appeals
Court challenges to numerous Biden-era DOL wage rules are ongoing, including at the appellate level, and the agency under Trump could drop such defenses and appeals. This has previously happened when parties changed over, including at the start of the Biden and previous Trump administrations. At the Fifth Circuit, the DOL could drop its attempt to undo a lower court’s finding that a minimum wage increase for federal contract workers violated the Federal Property and Administrative Services Act, for example. Also at the Fifth Circuit, the DOL is seeking a rehearing after a panel decided against the agency’s tipped wages rule.
The DOL under Trump could also stand down in the lower courts, such as in an ongoing challenge to an independent contractor rule in Texas federal court. “That is a fairly standard playbook,” said Celine McNicholas, director of policy and general counsel at the left-leaning Economic Policy Institute. “You don’t end up using your resources to defend the outgoing administration’s rulemaking that’s being challenged.” The dropping of those defenses and the subsequent undoing of rules could clear the way for new regulations and a return to previous Trump era standards, attorneys said. Those could include a regulation on joint employment, which was the subject of a previous Trump DOL rule that the agency under Biden rescinded but did not replace.
“It’s a thing that has always vexed employers,” said Dave Dorey of Liff Walsh & Simmons, who served in the DOL under Trump. “To the extent the department can in the second iteration of the Trump administration put some rules around that, that provide for consistency and clarity, that would be a good thing.”
Melanie Stratton Lopez, senior attorney for strategic enforcement at Northwestern University’s Workplace Justice Lab and a former attorney at the Biden DOL, also said to look for movement on joint employment under the Fair Labor Standards Act. She said she expects the incoming administration to seek to “return to a narrow definition of joint employer, meaning that fewer employers would be covered under the FLSA.” She also said she will be watching to see what happens to the Jan. 1 effective date for phase two of the Biden DOL’s rule raising the salary threshold for overtime exemptions. “It will be interesting to see if there’s any action in courts to enjoin that,” she said.
New and Old Policies
Beyond undoing Biden-era policies, the new administration could take new approaches. Trump during his campaign vowed to end taxes on tips, for which legislation is pending but would need to be reintroduced, and also end taxes on overtime, a move that employment law experts have said needs to be fleshed out and could complicate payroll practices.
There are more wage policy ideas from the conservative Heritage Foundation’s Project 2025, including enabling workers to swap overtime pay for paid time off. Trump sought to distance himself from Project 2025, though a former DOL official from his administration authored the labor recommendations. The DOL under Trump could also return to policies and strategies from his first administration, including the Payroll Audit Independent Determination program. That allowed employers to potentially avoid litigation and penalties by auditing themselves and self-reporting wage violations and paying back wages. “I do expect PAID to come back, and I think that it is deeply concerning to anyone who cares about workers’ ability to actually get paid for violations,” EPI’s McNicholas said. “This is going to essentially allow employers to self-report those violations, and then they have no legal consequences.”
Dorey said he expects more compliance assistance for employers, which he said can help them navigate complex laws and be good to workers. “The more compliance assistance we can have and the less ‘gotcha,’ the better off everyone in this country is going to be when it comes to employment matters,” he said.
Path to Minimum Wage
With Trump in office and Republicans gaining control of the Senate, though the fate of the House of Representatives remained unclear Wednesday afternoon, Republican legislation could have an easier time becoming law. That could potentially include increasing the federal minimum wage for the first time since 2009, albeit to a number lower than Democrats and their allies have wanted. Republicans including Sen. JD Vance of Ohio, Trump’s vice presidential running mate, introduced a bill to raise the hourly federal floor to $11, with immigration verification.
“We’ve seen a very aggressive assertion of populist themes from the campaign, and both the president-elect and the vice president-elect have been aggressive in courting blue-collar workers,” Epstein Becker Green’s DeCamp said. “I think that they would see it as consistent with their overall policy view, to increase the federal minimum wage, so long as they’re doing it in a way that it doesn’t destroy a lot of jobs.”
McNicholas said a wage floor hike seems unlikely to happen. “It is true that prior Republican administrations have managed to, in a deal with a lot of sweeteners, work out a minimum wage increase that tends to be more moderate and, frankly, less economically feasible,” she said. “But I don’t think that you’re going to see that there,” she added, citing the tone of Project 2025.
Meanwhile, Democratic priorities, such as establishing federal paid family and medical leave, ending the subminimum wage for workers with disabilities, expanding equal pay requirements and barring mandatory arbitration more broadly, now seem unlikely to pass for at least four more years.
Labor Officials Swap
With a Republican-led Senate, Trump will likely have an easier time getting labor secretary and Wage and Hour Division administrator nominees confirmed than Biden did with a divided Senate. Though Biden’s first labor secretary, Marty Walsh, was confirmed early in the administration, the subsequent nomination of Julie Su for labor secretary stalled, despite the Senate having previously confirmed her as deputy secretary. Su is currently the deputy secretary, acting secretary and labor secretary nominee. Biden similarly had a difficult time confirming a Wage and Hour Division administrator. He withdrew his first pick after three Democrats joined Republicans in blocking a move to a vote on the nomination. The Senate subsequently confirmed Biden’s second nominee, Jessica Looman.
“Given the likely composition of the Senate, I think Trump’s nominees will have an easy pass to confirmation, and that is deeply concerning to me as a workers’ rights advocate,” McNicholas said. “No matter who the person is, they will be anti-worker.”
–Editing by Nick Petruncio.
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Liff, Walsh and Simmons’ Labor and Employment Group continually tracks labor and employment developments that may impact you or your business. For questions, please contact Dave Dorey, partner and head of the Group.
This alert provides general information and is not a full analysis of the matters discussed. It may not be relied on as legal advice. Dave Dorey, a Liff, Walsh & Simmons partner licensed to practice law in Maryland, the District of Columbia, Virginia, and California, contributed to the content of this alert.
