There is no shortage of headlines coming out of the Trump administration. In addition to keeping a close eye on trade and tax policy, manufacturers should also recognize the impact the new administration’s policies could have on their workplace and human resources operations.
While not all policy details are fully spelled out, the president has signaled where he might come down on many key issues, including immigration, overtime pay, health care, family leave and pay equity laws.
To avoid legal penalties and costly fines, it is important that manufacturers proactively work to understand all of the possible changes and prepare to act quickly to comply. In some cases, a wait-and-see approach will be most appropriate, while in others, manufacturers should take action to improve HR processes and minimize risk.
Crackdown on Illegal Immigration
Combatting illegal immigration was one of the central issues of President Trump’s campaign and will include much more than a border wall. Currently, the federal government does not require employers to use E-Verify to confirm that employees are authorized to work in the United States, but that could change.
If caught hiring employees who are in the country illegally, employers can face both fines and damage to reputation. First offenders can be fined between $250 and $2,000 for each employee who is not authorized to work in the U.S. And it goes up from there. Second offenses can cost companies up to $5,000 per employee, and third offenses can cost up to $10,000 per employee. Violations can also result in the loss of business licenses, and in extreme cases, even prison time.
Manufacturers should pre-empt any federal action and proactively use E-Verify today to check the employment status of their entire workforce. This is an important and necessary step to prevent potential severe consequences down the road. However, manufacturers need to be ready for sudden upheaval to their operations if E-Verify reveals employees to be ineligible to work in the U.S.
Additionally, since I-9 audits are a major source of revenue for the government, manufacturers need to ensure they are following all rules related to the handling of I-9 forms verifying employment eligibility.
For instance, they need to make sure these forms are completed in a timely and accurate manner and adhere to retention guidelines, which can be complex and vary by employee.
Goodbye to New Overtime Rules
The Department of Labor’s delayed overtime rule—which would have increased the salary threshold needed to qualify for overtime exemption from $455 per week ($23,660 per year) to $913 per week ($47,476 per year)—will likely never be implemented.
The injunction from a Texas federal district court blocked the rule on the eve of its effective date. So, this is a case where procrastination was rewarded. While some manufacturers never made changes to overtime pay in accordance with the rule, some planned ahead and did.
Manufacturers that already reclassified employees and raised wages should not revert back to the old overtime pay structure. Employee dissatisfaction and decreased morale would outweigh any financial benefit to the company.
It’s important to note that while this rule will likely fall by the wayside, the DOL will likely slightly increase overtime pay thresholds--which haven’t been changed since 2004--during President Trump’s time in office. Manufacturers should keep a close watch for any updates from the administration.
An Uncertain Future for Health Care
A recent effort by congressional Republicans to repeal and replace the Affordable Care Act failed, leaving many wondering, “What now?” The ACA is still the law of the land for the time being. There are some indications, however, that Republicans will make another attempt at repealing and replacing the law, though timing and details of the legislation are uncertain.
The solution in the end will likely be more of a “rollback and reform,” as many elements of the law will be difficult to completely erase. But for now, uncertainty reigns. Many manufacturers monitored the health care debate, not only to learn the substance of the law that was being considered, but also to see how Republican leadership handled the process of navigating a complex bill though Congress. The setback on health care raises questions over whether Congress can move forward with other major legislation, including tax reform. Therefore, at this point, manufacturers will need to adopt a wait-and-see approach and continue to keep a close watch on any legislative action on health care.
In the meantime, manufacturers can and should evaluate their relationship with their benefits broker to ensure they have the best possible partner. Companies will need a strong broker in place if legislation changes.
Possible New Regulations (and Deregulation)
In his address to Congress in February, President Trump called for making child care “accessible and affordable” and ensuring “new parents have paid family leave.” And during the presidential campaign, he called for guaranteeing six weeks of paid maternity leave.
Currently, the Family and Medical Leave Act requires 12 weeks of unpaid leave for companies that have over 50 employees working within a 75 mile radius.
Offering paid family leave can be an effective way to attract and retain strong talent. Therefore, if a manufacturer has the financial means, we recommend offering it as a benefit to employees. However, manufacturers that currently do not offer paid family leave and may not have the financial flexibility to do so should not change their policy solely in anticipation of potential legislation.
While the president has expressed support for government action on family leave, he has not been as vocal about federal pay equity laws. His daughter Ivanka said at the Republican National Convention that her father “will fight for equal pay for equal work,” but the nascent administration has not yet made any legislative push.
While manufacturers typically favor deregulation, the lack of a federal law in this case might leave manufacturers more vulnerable to legal issues.
A federal mandate would likely clarify the requirements employers face when it comes to pay equity. Currently, manufacturers have little guidance and can find themselves unknowingly at risk of discrimination lawsuits.
Manufacturers should therefore perform a detailed compensation analysis and ensure they have a comprehensive understanding of how their employees are being paid. Some red flags manufacturers need to watch out for are large pay discrepancies between people in the same roles or major inconsistencies in pay between diverse groups in the workplace. After the analysis is complete, manufacturers should move quickly to fix any issues they uncover.
There will be many policy changes over the next several years that will impact manufacturers.
While for the most part manufacturers should wait until policy is made official to make major changes to HR practices, they must monitor and understand new proposals coming out of the Trump administration. Manufacturers should also keep an eye out for any deregulation so they aren’t in a situation where they are over-complying and wasting money and time.
Once policies are officially announced or laws are passed, manufacturers should be prepared to act quickly. Companies that do not have a dedicated HR team can partner with a third-party HR consultant to stay updated on new policies and work to ensure compliance.
But no matter how they do it, manufacturers must be proactive about making sure their HR processes evolve with the government rules and regulations that will change under this new administration.
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