With the return of Donald Trump to the presidency, California employers should evaluate how key workplace issues could be influenced under a Trump administration. Here’s an analysis of how these critical areas may be affected:
1. Immigration and Enforcement
Under a Trump administration, there could be an intensified focus on immigration enforcement. This might include stricter oversight and increased workplace audits, which could significantly impact sectors that rely on immigrant labor. Employers would need to be prepared for heightened compliance measures and potential disruptions to their workforce. For California businesses, this could mean ramping up internal audits and ensuring that their employment practices are in line with federal immigration laws to avoid penalties.
2. EEOC Pay Data Reporting: EEO-1 Component 2
The Trump administration’s track record has shown a general reluctance to implement stringent regulatory measures, and it is likely that under a renewed presidency, the EEOC would deprioritize federal pay data reporting requirements, such as EEO-1 Component 2. This could mean fewer obligations for employers at the federal level regarding wage reporting. However, California’s state pay data requirements, which are due on May 14, 2024, are more rigorous and California employers still must comply with these requirements.
3. Diversity, Equity, and Inclusion (DEI) Initiatives
The Trump administration has historically taken a critical stance on DEI initiatives, aiming to restrict or even ban training and policies perceived as “divisive.” Employers in California could see a pushback on federally driven DEI requirements, aligning more with the recent efforts by 13 Republican attorneys general who issued warnings to Fortune 100 companies about DEI policies. Shortly after this letter was published, 21 Democratic attorneys general sent a letter to the Fortune 100 companies encouraging diversity programs. However, under the Trump administration’s critical view on these programs could have companies reevaluate and potentially limit DEI initiatives based on potential federal repercussions. Nonetheless, differing state views on this issue will lead to a complex environment for employers navigating state versus federal priorities.
4. Labor Relations and Unionization Efforts
The Trump administration could continue efforts to limit the influence of unions, supporting legislative measures or policies that favor employers over organized labor. California employers, who already face strong union presence in certain sectors, would need to monitor federal developments that might embolden management rights or make union organizing more challenging. However, employers should watch JD Vance’s involvement in this area, as he and Marco Rubio did propose a bill, Teamwork for Employees and Managers Act of 2024, promoting employee involvement organizations, and the blue-collar workers strongly supported Trump helping him get reelected.
5. Minimum Salary Requirement Under the FLSA and California Law
The Trump administration has typically supported policies that prioritize flexibility for employers, and changes to the Fair Labor Standards Act (FLSA) under Trump could delay or reduce the increases in the federal minimum salary threshold for exempt employees. While the Department of Labor’s set increase in the minimum salary levels for exempt employees to $58,565 by January 1, 2025, would still be expected to proceed, there might be efforts to stall or revise these figures. However, these changes would not impact California employers directly, where the exempt salary threshold is already higher. California’s exempt salary will increase to $68,640 per year by January 1, 2025 (contingent on the outcome of Prop 32, which appears to have failed), state laws will remain the governing force for California employers in this regard.
6. No Tax On Tips
The Trump administration has shown interest in supporting policies that reduce tax burdens, including the idea of eliminating taxes on tips. This aligns with both Harris’s and Trump’s previous platforms advocating for the removal of tip taxes. While California employers would likely see nominal impact due to existing state wage laws, potential federal legislation, such as the No Tax on Tips Act, could create nationwide standards eliminating tip taxes while maintaining the tip credit in certain states. This could be beneficial for certain employers, but the overall effect would be limited by California’s own stringent labor policies which does not recognize a tip credit. However, a no tax on tips would still place market burdens on California employers in certain industries that customarily include tips, and there could be advantages in certain tip pooling policies that permit employees to receive additional compensation through tips.
The Trump administration could introduce changes that lean toward deregulation and policies favoring business flexibility. While this may relieve certain federal compliance burdens, California employers will still need to navigate state-specific requirements that often go beyond federal standards. By keeping a close watch on potential federal shifts, especially in areas like immigration enforcement, labor relations, DEI policies, and wage regulations, California employers can better anticipate and adapt to a potentially evolving legal and regulatory environment.