By now, you probably have heard that an election will be held November of next year to determine who will serve as the 45th President of the United States. What you may not have heard, however, is how the election of our next President could impact employers across America. As candidates from both of the major parties simultaneously court powerful unions for endorsements while also seeking to curry favor with corporations willing to lend financial support to their respective campaigns, prudent employers should be mindful of the issues in the upcoming election that could have a significant impact on their businesses. This article will discuss three of those issues and how employers can best prepare themselves ahead of the election.
One of the biggest issues facing employers across the country, and an issue that will certainly remain at the forefront of the 2016 Election, is the growing sentiment for a minimum-wage increase. The laws governing the federal minimum-wage are set forth in the Fair Labor Standards Act (FLSA), found at 29 U.S.C. sections 201, and following. Generally, businesses that either have $500,000 or more in annual sales or engage in “interstate commerce” are subject to the FLSA’s minimum-wage requirements.
While a number of state legislatures have implemented their own minimum-wage standards (see, e.g., Alaska, Arkansas, Nebraska, and South Dakota), the current federal minimum-wage is $7.25 per hour, or roughly, $15,000 annually. The demand for wage increases has long been a progressive battle cry, as evidenced by the fact that Democratic primary candidates Martin O’Malley and Bernie Sanders have wasted no time coming out in favor of raising the minimum-wage to $15.00 per hour over the next several years. Interestingly, however, Democratic front-runner, Hillary Clinton, has been noticeably reluctant to state a definitive position on increasing the minimum-wage. In keeping with the GOP’s national platform, most of the Republican candidates, thus far, either oppose increasing the federal minimum-wage or have proposed eliminating the minimum-wage altogether.
In September, U.S. News & World Report reported that 87 percent of general election voters surveyed said they supported at least one proposal for a federal minimum-wage increase – to $9, $10, $12 or $15 – including 77 percent of Republicans and 97 percent of Democrats. Similarly, a Washington Post/ABC News poll conducted earlier this year found that half of all adults say they would be more likely to vote for a congressional candidate who supports increasing the minimum wage. These numbers suggest that, regardless of who is elected President in November 2016, a minimum-wage increase during his or her first term is not only likely, but imminent.
Because a drastic increase in the minimum-wage could cause massive layoffs or substantial price increases for products and services, thereby weakening the economy, any increase in the minimum-wage will almost certainly be gradual. In any event, employers should be proactive in preparing for these increases to help temper the impact the wage increases will have on their respective businesses. One approach would be to begin making slight adjustments to wages before a mandate is in place to lessen the impact of a federal increase.
It is also imperative that employers begin reevaluating the salary levels for their exempt employees and reexamining their pay structures. This is particularly critical in states like California where the minimum salary for an exempt employee who does not qualify for overtime is determined by the minimum wage. Employers in states that permit tip credits for certain types of employees should also be mindful of whether a minimum-wage increase could affect the credit they can take against an employee’s hourly wages.
Paid Family Leave
Another issue at the forefront of the 2016 Presidential Election is paid family leave. Currently, employees are allowed up to 12 weeks of unpaid leave while retaining their employment under the Family Medical Leave Act. Over the last year, both Republicans and Democrats in the U.S. Senate have proposed acts that would allow employees paid sick days to care for themselves or family members. The measure proposed by Democrats, known as the Family and Medical Insurance Leave Act, would create a federal insurance program, financed by payroll taxes, that would fund up to 12 weeks per year of paid leave for workers meeting certain family or medical requirements. The Republican-backed measure, known as the Family Friendly and Workplace Flexibility Act, would allow employers and employees in the private sector to agree to allow hourly workers to use the overtime they earned towards paid leave rather than receive extra compensation. Essentially, the Republican proposal would amend the FLSA to allow employers to voluntarily offer an hour and a half in compensatory time off for every hour of overtime worked. The employee could choose whether to accept the leave time or the overtime pay.
As a majority of voters from both parties are in favor of a national paid leave law, and companies such as Apple, Google, Netflix, Microsoft, and Chipotle develop their own paid leave policies, it is not surprising that presidential candidates from both parties have expressed support for paid sick leave. Whether a federal insurance program is created or the FLSA is amended to allow employees to exchange earned overtime for paid sick leave or some other proposal is introduced, the passage of a law requiring private sector employers to offer paid sick leave to their employees appears likely in the next four years. Accordingly, one should expect spirited debate among the 2016 hopefuls about what the law will entail and how it should be implemented.
In anticipation of this likely shift in the law, conscientious employers should begin devising paid leave policies that are gender-neutral and equally available to all employees. Employers should be particularly careful to ensure that the policies are not written in a manner that appears to discourage the hiring of women, a concern that has been expressed by a number of legal scholars.
Labor Policy Reform
Unlike the minimum-wage increase and paid family leave, labor policy reforms are not likely to be a source of compromise among the 2016 presidential candidates. In August, the National Labor Relations Board (NLRB), an independent agency led by presidential appointees, issued one of the most significant labor decisions of President Obama’s tenure in office, making it easier for employees working at franchises like McDonald’s to hold parent companies responsible for labor violations. One of the effects of the NLRB’s decision is that if a franchisee were to unionize, its employees would be entitled to negotiate not just with the owner of the franchise, but also with the corporate headquarters. This decision and others similar have transformed the President into a hero of the labor movement, and the 2016 Democratic hopefuls appear to be eager to continue that momentum.
The Republican candidates, however, have different ideas with respect to labor and have embraced a more anti-union sentiment in the coming election. Because members of the NLRB are appointed to five-year terms and require Senate approval, appointments have become more politicized in recent years. Therefore, the election of a Republican President could have sweeping effects on recent pro-union NLRB decisions, which could ultimately be reversed by a more conservative board.
In addition to appointing members of the NLRB, the President may also take direct executive action, which can have a tremendous impact on labor. The Obama administration, for example, recently launched a major crackdown on employers that misclassify employees as independent contractors. A Republican administration, however, could easily roll back these types of initiatives by simply choosing not to enforce them. In any event, 2016 candidates on both sides will be forced to walk the tight rope of appealing to pro-union voters while also being mindful of the monetary incentives that corporations can provide to candidates who vow to protect their interests.
While there will certainly be numerous issues debated among the 2016 candidates which could potentially impact employers, the minimum-wage, paid family leave, and labor policy reform are three issues that could have a significant impact on employers in the short term. As you enjoy your popcorn with family and friends during the debates, listen carefully to the candidates’ positions on these issues and be mindful of how their ideas, if implemented, could affect your business’s relationship with its employees.