Five Influences Trump Will Have on the Employee Experience
There are many pieces of legislation or policy matters affecting the Employee Experience that are likely to be in flux during the first part of Mr. Trump’s presidency. At stake are the following five key topics:
- Changes to the Obama Administration’s Overtime Rule
- Modifying the Affordable Care Act
- Changes to Family Medical Leave
- Increasing the Minimum Wage
- Closing the Gender Wage Gap
The Overtime Rule
The 900-pound gorilla in our mix of issues is the overtime rule that was put into place by the Obama administration. President Obama’s executive order increased the minimum salary threshold for certain overtime exemptions from $23,660 to $47,476 (the “Overtime Rule”). However, right before the Overtime Rule was set to go into effect (December 1, 2016) a federal judge issued an injunction blocking its enactment. The injunction’s upshot is that the old threshold of $23,660 still applies.
With a new administration set to take over, many workers are left wondering what President Trump will do with the Overtime Rule. Considering President Trump’s political mandate, it seems likely he will look to amend the Overtime Rule to make it more business friendly (i.e., reducing the threshold number). Nonetheless, our best guess is some increase to the minimum salary threshold will happen, as the qualifying level has not been adjusted in years.
On a side note, other small businesses might have faced what we did at our firm a few weeks ago. In anticipation of the Overtime Rule going into effect, in July we started working with our employees to manage the transition. By November, we had increased a few salaries and had spent time training our employees on a new time-tracking system.
Suddenly, with the injunction blocking the Overtime Rule, we were left with the option of going back to our prior policy or moving forward based on the new expectations that had been formed by our employees.
Knowing that aligned expectations and the psychological contract we maintain with our employees is the cornerstone of a well-built Employee Experience, we chose to keep the salary increases and to track and pay overtime even though we were not legally obligated to do so.
For us, keeping trust was most important. We had already sent the message to our employees that we could afford the increases. So, regardless of the legal technicalities, we felt they would view our decision to delay as benefitting management’s pocketbook and not theirs, which is never a good place to be when building a strong company culture.
Modifying the Affordable Care Act
It goes without saying that the Affordable Care Act (ACA), sometimes referred to as “Obama-care,” is one of the most complex pieces of legislation ever passed by Congress. There are several key provisions that remain popular, and it seems unlikely that an outright repeal will take place. For example, while Trump has indicated he supports the ACA’s full repeal, such a push would come at a cost, with 30 million Americans losing their health insurance coverage.
Our best estimate is that in the next six months, not much will take place with the ACA, but Congress will eventually attempt to eliminate some of the legislation’s more unpopular provisions, such as the “Cadillac Tax” on high-cost healthcare plans.
As it relates to the Employee Experience, changes to the ACA are more compliance-oriented. Therefore, we advise employers to take a “wait-and-see” approach; they do not need to do much more than monitor what is happening.
Changes to Family Medical Leave
Mr. Trump’s campaign platform included a proposal to increase paid family medical leave. Paid family medical leave is an initiative that is popular among the general population. Who knows whether a Republican-led Congress is willing to look at this issue since it’s a proposal typically championed by the left.
As it impacts the Employee Experience, however, employers should give serious consideration to how they can incorporate the spirit of this initiative into their compensation packages. Whether it’s time to care for a loved one undergoing cancer treatment, or the chance for a parent to welcome a newborn, family medical leave represents a way for employers to acknowledge the whole employee, not just whatever value can be extracted from their workforce.
Increasing the Minimum Wage
As you would expect, the most recent presidential campaign featured both candidates advocating that the federal minimum wage be increased. Some want to see it raised to $15 per hour, while Mr. Trump supported an escalation to $10 per hour. The federal minimum wage is currently $7.25 per hour and was last raised in 2009. Many states have laws on the books that establish a minimum wage higher than the federal minimum.
Even though some states are pushing forward with increases, this remains a difficult outcome to predict. The policy debate over the minimum wage is intense, and it’s safe to say there are few consensus points.
For those whose wage structure is significantly impacted by the minimum wage, we suggest you work on your employer brand and employee value proposition to gain insight and understanding into who you hire, why they want to join your organization, and what you can do to attract, retain, and engage the best talent at various levels across your compensation structure (i.e., across your pay-bands).
Closing the Gender Wage Gap
Politicians are all over the map on this issue, depending on their audience. But the reality is that women earn 77-79 cents for every dollar a man earns. President Trump’s stance on this issue is unknown. Consequently, this is another area where we advise our clients to take a “wait-and-see” approach.
Still, there is no reason for organizations to wait for government officials to mandate a solution. Business leaders should take the initiative on this issue and demonstrate real leadership.
For your Employee Experience to be effective, it must be built on trust and on properly aligned expectations. Nothing is more damaging to these principles than for an organization to allow a pay discrepancy to exist among its workforce with no legitimate rationale to support the disparity. It’s simply not right. We advise all business leaders to make 2017 the year in which we eliminate the gender wage gap, without being required to do so by the government. Let’s do what’s right, just because it’s the right thing to do.
Whether you love him or hate him, one thing is for sure with a Trump Presidency: change will happen. Over the past few years, we have proclaimed that we have entered the “Age of the Employee.” Employees have more power and options than ever before. It may be that the Trump Administration will implement efforts to turn the tide in favor of the employer.
Regardless, we don’t think regulators and government officials have enough influence to alter this power shift. We are in a knowledge-based economy where technology gives workers greater flexibility, information and, ultimately, power. Thus, it is imperative that business leaders work hard to build an Employee Experience that helps their organizations attract, retain, and engage the type of talent that will help them succeed in 2017 and beyond.