US Presidential Administration Changes: How Much Can the President Impact Employment Laws?

Employment laws in the United States are a mixture of local, state, and federal laws, with all states and localities being subject to federal law, known as the “supreme law of the land,” but retaining flexibility to craft additional laws and policies in the gaps not covered by federal law. This blend has resulted in a patchwork approach to employment regulation in which states each impose varying obligations on businesses and provide differing rights to employees. This construct also means that policy shifts brought on by changing presidential administrations impact businesses operating in some states more than those operating in others, depending on whether any given state’s policy is aligned with the analogous federal one.

For example, over the past three presidential administrations, we have seen flip-flopping approaches concerning how much salary an employee must be paid to be exempt from rules mandating overtime. Overtime rules are quite different in the US than in the UK, and employees who earn below a certain salary threshold must be paid 1.5 times their base hourly rate for every hour they work in excess of 40 in a work week. In 2016, the Obama administration passed a rule that would have more than doubled the salary threshold below which employees are entitled to overtime (from $23,660 annually to $47,476 annually). That rule was invalided by a Texas court before it took effect. The Trump administration subsequently imposed its own rule in 2019, raising the salary threshold at a lower rate to $35,568 annually. Recently, the Biden administration raised the threshold from the Trump-era rate to $43,888 annually, largely aligning to the Obama-era rule and with future increases scheduled (note this Biden-era rule is currently under court challenge with its fate unclear). None of this mattered in California, however, where the salary threshold has been above the federally required one and is currently at $66,560 annually. In contrast, the changes were impactful in Texas where the salary threshold tracks the federal one. As this example illustrates, employers with a US-based workforce will need to look to both federal and state laws to determine the impact of any employment law changes imposed by the next administration.

If past is prologue, wage laws won’t be the only area of difference between a Harris and a Trump administration. A Harris administration might continue the Biden administration’s focus on protecting employees’ right to form a union or limiting the circumstances under which employers can require employees to sign non-compete agreements. Policy priorities from the first Trump administration suggest that a second Trump administration might take steps to loosen some employment regulations, such as those related to classifying workers as “employees” or as “independent contractors” (i.e. consultants) or related to workplace safety. However, federal policies cannot be viewed in a vacuum and without reference to analogous state ones.

I’ve written recently on trends in US employment laws, and most of those trends are at the state level: 2024 US Employment Law Trends (mbmcommercial.co.uk). How these trends will be impacted by federal presidential policy remains to be seen, but of one thing employers can be certain: maintaining employment law compliance in the US, and lessening a business’s risk exposure, requires a careful study of local, state, and federal laws. Although this patchwork approach can be challenging, the US remains a favourable market for many businesses, and employment laws in the US continue to be, on balance, more employer-friendly than those in the UK. Regardless of who wins the election in November, companies interested in US expansion should be ready to leverage opportunities as they arise.