Finance

Financial reform has not been at the top of President-elect Donald Trump’s stated policy agenda. During the campaign and in the days since the election, Trump has focused instead on hot-button items including health care, immigration, infrastructure, and trade.

That is not to say that President-elect Trump has ignored the issue entirely, however. During the campaign, candidate Trump said he would “get rid of” Dodd-Frank, the financial reform legislation that Congress passed in the wake of the 2008 financial crisis. President-elect Trump, like many Republicans, has often been critical of regulation in general, which he says is burdening too many businesses.

But the newly elected president has also shown a willingness to buck free-market orthodoxy, including in the financial reform arena. For example, he supported the reinstatement of the Glass-Steagall Act, the Depression-era law that prohibits banks from engaging in both commercial and investment banking activities. At President-elect Trump’s urging, the GOP included that proposal in this year’s party platform.

In short, there are contradictory signals about how soon-to-be President Trump will regulate the financial sector. Part of the tension owes to the candidate himself, who has made seemingly conflicting statements about a range of issues. Moreover, unlike other presidents before him, Trump has no political record as a legislator or governor that suggests how he is likely to act as president.

Complicating matters, there are also differences of opinion within the GOP about whether the party focuses too much on Wall Street at the expense of Main Street and Middle America. The base of supporters responsible for President-elect Trump’s victory in places like the Midwest, Rust Belt, and Deep South are not likely to prioritize financial deregulation, at least as compared to other pocketbook issues like the Affordable Care Act.

Moreover, President-elect Trump himself has shown a willingness to channel populist anger, saying on the campaign trail in Iowa, “I’m not going to let Wall Street get away with murder. Wall Street has caused tremendous problems for us.” Yet even while boasting of his independence from big donors on Wall Street, Trump counts several such figures as close allies, including his national finance chairman, Steven Mnuchin, former Goldman Sachs employee and now hedge fund CEO. It has been reported that Mnuchin has been recommended by President-elect Trump’s transition team to serve as Treasury secretary.

How the newly elected president will navigate these internal tensions, and how he will choose to work with his GOP colleagues in Congress, are far from clear. President-elect Trump’s appointment of Republican National Committee Chairman Rence Priebus as his White House Chief of Staff is a sign that he will seek to cooperate to some extent with establishment Republicans in Washington, D.C.

After a steep drop on the night of the election, stock markets have responded positively to President-elect Trump’s win. Most observers believe the Trump administration will be broadly favorable to business and skeptical of regulation. This will likely apply to the financial sector as well. But if we have learned anything this year, it is to be skeptical of what conventional wisdom predicts will happen. President-elect Trump has repeatedly demonstrated an ability to shatter expectations.

Here, then, are our modest predictions about how President-elect Trump will regulate the financial sector.

  1. Repeal a portion or all of Dodd-Frank. President-elect Trump’s website still says that he will dismantle all of Dodd-Frank. Yet his advisers have already begun tamping down expectations that the new president will seek to have the entire law repealed. Instead, many expect the administration to implement targeted reforms aimed at specific areas of the law. On this and many other issues, President-elect Trump’s campaign rhetoric might prove to be more dramatic than the way he actually governs once in office. Even members of the Wall Street elite, such as Goldman Sachs CEO Lloyd Blankfein, have gone on record saying they do not wish to see the law repealed in toto. Like it or not, many Wall Street firms have already done the hard work of adjusting their businesses to conform to the law’s complex regulations. Scrapping it entirely and starting over would be a difficult and time-consuming process for everyone involved: Congress, the White House, regulators, and the financial sector.
  2. Volcker Rule. Many expect the Trump administration to jettison the Volcker Rule, which prohibits commercial banks from engaging in certain types of proprietary trading activity. The Volcker Rule was implemented pursuant to the legislation known as Dodd-Frank.
  3. CFPB. Look for President-elect Trump and the Republican Congress to weaken the Consumer Financial Protection Bureau (CFPB), a regulatory body created by Dodd-Frank. The CFPB has broad authority to regulate a wide variety of financial actors, including banks and non-banks (e.g., payday lenders, auto lenders, debt collectors, etc.). The CFPB has attracted vociferous opposition from many leaders in the GOP and the financial industry since its founding. A federal appeals court recently held that the CFPB’s structure was unconstitutional because it vested too much authority in the agency’s director.
  4. New Legislation? One big question is whether President-elect Trump will seek to enact new major financial legislation to replace Dodd-Frank. The most likely candidate would be a bill drafted by Republican Congressman Jeb Hensarling, current chair of the House Financial Services Committee. Called the CHOICE Act, the bill would (among other things) allow certain financial institutions to opt out of the current Dodd-Frank regulatory regime if they met certain requirements, including maximum leverage ratios. President-elect Trump and Hensarling met at least once during the campaign, and Hensarling is on the short list of people being considered for the post of Treasury secretary.
  5. Lighten the Regulatory Burden in General, Especially on Community Banks. President-elect Trump has said that for every new regulation under his administration, he wants two existing regulations repealed entirely. Expect him to relax the regulatory burden on business in general, but especially with respect to community banks. Many believe that community banks are being unfairly burdened by regulations designed for bigger institutions. Both Democrats and Republicans have shown support for giving a break to community banks, which often have a difficult time competing with larger banks that have bigger legal and compliance budgets, making it easier for small banks to comply with the complicated patchwork of state and federal regulation.

Tax

During his campaign, President-elect Trump pledged major federal tax changes, including significant reductions in individual and corporate income taxes and the elimination of the estate tax. The Trump Tax Plan would cut the individual income tax on most taxpayers by lowering the marginal rates, particularly for higher income taxpayers, and by eliminating the alternative minimum tax. However, not all individuals would receive a tax reduction. Certain taxpayers in lower tax brackets could have a tax increase, in particular single parents with dependent children. On the corporate side, the plan would lower the maximum corporate income tax rate from 35 percent to 15 percent, representing a greater than 50 percent reduction in corporate tax rates, and significantly modify the corporate income tax base.

Here’s a brief summary of some of the more important provisions of the Plan:

Individual Income Tax

Currently, there are seven individual tax brackets with the highest rate equal to 39.6 percent. Trump’s plan would consolidate tax brackets into three brackets, with graduated rates on ordinary income taxed at 12 percent, 25 percent and 33 percent.
The highest long-term capital gains rate would continue to be 20 percent, but “carried interests” would be treated as ordinary income and taxed under the new rates.
The 3.8 percent additional Medicare tax on net investment income and the alternative minimum tax would be repealed.
The plan would increase the standard deduction, but cap itemized deductions at $100,000 ($200,000 for joint filers).
The plan would introduce a number of new child care expense-related credits and deductions, but eliminate the personal exemption and head of household filing status (which has more favorable rate brackets than single filing status). Hardest hit by these changes would be single parents with dependent children and no child care costs, although married households with several dependents might also be adversely affected.
Hardest hit by these changes would be single parents with dependent children and no child care costs, although married households with several dependents might also be adversely affected.

Estate Tax

The estate and gift tax would be repealed, and the tax basis “step up” upon death would be eliminated for estates over $10,000,000.

Business Income Taxes

The plan would reduce the maximum corporate income tax rate from 35 percent to 15 percent and repeal the corporate alternative minimum tax, but eliminate most corporate tax credits except for the research and development credit.
The plan would permit untaxed corporate profits held offshore to be transferred to the United States at a one-time tax rate of 10 percent. President-elect Trump has also mentioned ending deferral on income earned abroad.
There are a number of other important business-related provisions, the form of which are not very clear. One such item is that businesses engaged in manufacturing in the United States would be allowed to choose between deducting interest expenses and claiming a full deduction for capital improvements.

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15% ?

A number of the provisions described in the plan are vague and in need of further clarification. In particular, it is not entirely clear whether the 15 percent tax rate is limited to C corporations or whether it also applies to business income of pass through entities (e.g., S corporations and partnerships) that are taxed to the owners of such entities. We expect that President-elect Trump’s plan will be further revised as he assembles his cabinet and appoints other advisers.

The challenge the Trump administration will face is finding ways to plug the revenue loss that will result from these tax cuts. In any event, with the Republicans in control of both houses of Congress, there is a greater likelihood that some of President-elect Trump’s tax policies will be enacted next year as tax reform will be priority item in 2017. Individuals and businesses should factor this possibility into their year-end planning and consider pushing net income into future years.

Health Care

The Affordable Care Act (ACA) has long been targeted by Republican leadership. Now, with a Republican majority in both houses of Congress, it is expected that President-elect Trump will make dismantling the ACA a top priority for his administration. That said, he has already backed away from some of what he had said about the ACA on the campaign trail and is contemplating keeping two of the law’s most popular provisions — ending the pre-existing condition exclusion and allowing children to stay on their parents’ insurance until age 26. Also, a clear division is brewing between Congressional Republicans who simply want the ACA to be repealed at the earliest possible moment and those who would like to wait until they have, if not a replacement health package, at least a plan for transitioning people away from coverage.

$41 billion

While having a Republican majority in both the House and Senate is a boon for President-elect Trump, his ability to achieve the above goals is not certain. Politically, it can be hard to take away a benefit people already have (such as the 20 million people who have health care coverage as a result of the ACA), there are many powerful stakeholders in the health care industry who benefit from the current law and will oppose the above changes (particularly price transparency), and most of the proposals would increase rather than reduce the deficit — to the tune of $41 billion.

On the other hand, many health care changes will be possible for the newly elected president, even without the 60 votes usually required in the Senate, through an obscure procedure called budget reconciliation. Also, much can be done purely at the regulatory level without intervention from Congress.

The president-elect’s stated goal is to “bring much-needed market reforms” to the health care industry. Beyond some version of repealing the ACA, President-elect Trump plans to reform the industry through the following measures:

  • Modifying existing law that inhibits the sale of health insurance across state lines. Were this modification to happen, nearly all health insurance regulation would cease, including all of the current state mandates, such as the requirement that insurers provide insulin to diabetics;
  • Allowing health insurance premium payments to be fully tax deductible for individuals as well as businesses;
  • Permitting individuals to pay for health care through Health Savings Accounts (HSAs), which would be tax-free, transferrable, and allowed to accumulate;
  • Requiring “price transparency” from all health care providers, so that individuals can “shop to find the best prices for procedures, exams or any other medical-related procedure”;
  • Block-granting Medicaid to the states, which ultimately would eliminate the entitlement nature of the program. In other words, once a block grant or per capita cap were imposed on the program, recipients would not be guaranteed a certain set of benefits if granted coverage and could be denied coverage regardless of their situation once the state had spent its money for a given year; and
  • “Remov[ing] barriers to entry into free markets for drug providers that offer safe, reliable, and cheaper products,” including those from overseas.
Written by:

Ahaviah Glaser

Member / Health Care

Mark L. Alderman

Chairman / Cozen O'Connor Public Strategies

Immigration

President-elect Donald Trump has promised to “prioritize the jobs, wages, and security of the American people.” His immigration plan involves establishing new immigration controls to boost wages and to ensure that available jobs are first offered to American workers, and his 100 day plan includes several immigration-specific measures.

First, President-elect Trump has stated that in his first 100 days in office, he will “cancel every unconstitutional action, memorandum, and order issued by President Obama.” President-elect Trump counts President Obama’s executive actions on immigration, which granted temporary deportation stays to some immigrants, among those he plans to rescind. Second, President-elect Trump plans to “cancel all federal funding to sanctuary cities.” Third, he has vowed to “begin removing the more than 2 million criminal illegal immigrants from the country and cancel visas to foreign countries that won’t take them back.” Finally, his 100 day plan includes “suspend[ing] immigration from terror-prone regions where vetting cannot safely occur” and he has said that “all vetting of people coming into our country will be considered extreme vetting.”

President-elect Trump has promised to protect the economic well-being of lawful immigrants already living in the United States by curbing uncontrolled foreign worker admissions. He will “select immigrants based on their likelihood of success in the United States and their ability to be financially self-sufficient.” As noted above, President-elect Trump plans to impose an “extreme vetting program” applicable to everyone immigrating to the United States.

President-elect Trump will target regions “where adequate screening cannot take place” and stop processing visas from those areas until it is “deemed safe.” While he has not specifically stated his position on certain visa programs, he has criticized the H-1B visas and claimed that H-1B visas are “decimating” U.S. workers. During his primary campaign, President-elect Trump called for reform of the system, stating he is committed to eliminating rampant, widespread H-1B abuse and vowed to “end forever the use of the H-1B as a cheap labor program.” However, he has also stated that he is in favor of bringing skilled foreign workers into the United States legally. President-elect Trump has advocated for increasing the prevailing wage paid to H-1B workers as a way to put pressure on U.S. companies to hire domestically.

The newly elected president has also vowed to either renegotiate the North American Free Trade Agreement (NAFTA) or withdraw from it. The TN visa, which is a work visa available to Mexican, Canadian, and U.S. workers under NAFTA, very well may be a casualty of any such renegotiation.

Many of the changes to immigration policies President-elect Trump has promised require legislative action. With a Republican majority in both the Senate and the House, passage of immigration legislation is possible as long as the Republican Party is united. It is possible, however, that some Republicans will oppose President-elect Trump’s proposals, especially if the party tries to win back voters it lost during this election. The immigration policies President-elect Trump has suggested will also require an increased budget, which must be authorized by Congress. This could be a tough sell among Republicans dedicated to reducing the size of the federal budget.

On balance, while we do expect President-elect Trump to try to pass the immigration reform measures he has espoused, the extent to which Congress will do so is far from certain.

Among President-elect Trump’s other immigration proposals are the following:

  1. Construct a physical wall on the southern border between the United States and Mexico.
  2. Detain everyone who illegally crosses the U.S. border until they are removed from the United States. President-elect Trump intends for his administration to triple the number of ICE agents to ensure that anyone who enters the United States illegally will be deported.
  3. “Ensure that biometric entry-exit visa tracking system is fully implemented at all land, air, and sea ports.”
  4. “Turn off the jobs and benefits magnet” that he has said attracts illegal immigration.
  5. “Reform legal immigration to serve the best interest of America and its workers, keeping immigration levels within historical norms.”

Infrastructure & Municipal Finance

President-elect Donald Trump has referred to America’s infrastructure as “crumbling” and has plans to pursue an “America’s Infrastructure First” policy intended to “support[] investments in transportation, clean water, and modern and reliable electricity grid, telecommunications, security infrastructure, and other pressing domestic infrastructure needs.” However, while President-elect Trump has stated what he intends to accomplish, details on how he will do so remain elusive.

The newly elected president has made clear that his goals include refocusing government spending on infrastructure; providing “maximum flexibility to the states”; creating jobs; “implementing a bold, visionary plan for a cost-effective system of roads, bridges, tunnels, airports, railroads, ports and waterways, and highways”; ensuring that projects proceed on time and on budget through incentive-based contracting; and modernizing American airports and air traffic control systems. He also plans to “incorporate new technologies and innovations into our national transportation system such as state-of-the-art pipelines, advancements in maritime commerce, and the next generation of vehicles” and “develop a long-term water infrastructure plan with city, state, and federal leaders to upgrade aging water systems.”

President-elect Trump intends to fund his infrastructure plan with a proposed $1 trillion, 10-year plan.

The plan would rely on approximately $137 billion of tax credits that would seek to attract private investments in roads, bridges, seaports, and airports.

The tax credits could be used to leverage approximately $167 billion in private funds to finance infrastructure projects. Beyond this, details of Trump’s infrastructure financing plan have yet to be seen, though they seem to hinge on funds raised by private partners. Additionally, President-elect Trump has said that all projects built under his plan would be required to generate cash flow, and that equity investment partners would take the revenue.

Attorneys at Cozen O’Connor carefully avoid generic solutions and reject a this-is-how-it’s-always-done mentality. Rich Silpe

It is possible that issuance of municipal transportation bonds could grow under the Trump administration if the government is able to direct federal money through state and local grants or loans, which could lead to more municipal bond issuance. However, if the federal government bears the full cost of such improvements, local bond issuers would not need to issue debt for the projects, thereby reducing the need for municipal bond financings during Trump’s term.

The Trump presidency might also have a negative impact on the municipal bond market generally. Given that President-elect Trump’s tax plan is expected to lower taxes for the highest earners, it is likely to weaken the municipal bond market. Generally, tax-exempt bonds tend to benefit the highest earners the most when tax rates increase, because the highest earners are incentivized to buy them to qualify for the tax-exemption. Given that tax rates are expected to decrease during President-elect Trump’s term, demand for tax-exempt bonds from the highest earners is also expected to decrease. If President-elect Trump’s policies lead to a decreased interest in municipal bonds, borrowing costs for state and local governments could rise. Those increased borrowing costs could, in turn, decrease the use of municipal bonds to fund infrastructure, leading to a lower volume of municipal bond financings during Trump’s term.

President-elect Trump would pay for the lower tax rates by reducing or eliminating many tax exemptions or deductions. While details have not yet been specified, some market participants worry that the exclusion for municipal bond interest could be eliminated. President-elect Trump could also potentially eliminate the alternative minimum tax (AMT), which may be seen as a positive result for municipal bonds as private activity bonds are subject to the AMT and command higher borrowing costs as a result. However, if tax-exempt interest on municipal bonds is either eliminated or capped, the elimination of the AMT would not be seen as a positive for municipal bonds.

Energy

President-elect Donald Trump campaigned on “An America First Energy Plan” that calls for energy independence from foreign nations, the creation of millions of new energy-related jobs, and the protection of clean air and water. Energy policy is a prominent part of “Donald Trump’s Contract with the American Voter.” In it, he promises to: (a) “lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas, and clean coal”; (b) “lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward”; and (c) “cancel billions in payments to U.N. climate change programs and use the money to fix America’s water and environmental infrastructure.”

Rescission of Executive Actions and Regulations

President-elect Trump intends to eliminate unnecessary regulations and impose a temporary moratorium on new regulations that are not compelled by Congress or the public safety. He plans to streamline the permitting process for energy infrastructure projects to foster economic development and job creation. By eliminating unnecessary bureaucracy, he hopes to foster shale energy and coal production in states such as Pennsylvania, Ohio, and West Virginia.
Specifically, the Trump administration intends to rescind the coal mining lease moratorium and the U.S. Department of the Interior’s “Stream Protection Rule,” which restricts how close mining can occur near waterways. A top-down review of all coal-related regulations and executive orders issued by the Obama administration will be conducted. The EPA’s “Waters of the United States Rule,” which is intended to clarify which waters are protected by the Clean Water Act, is targeted for elimination.
President-elect Trump intends to select a director of the U.S. Environmental Protection Agency (EPA) who will refocus the agency on its core mission of ensuring clean air and clean and safe drinking water. He believes that the current EPA has ventured beyond this mission and pushed a “Climate Change” agenda that is more politically motivated than based in true science — resulting in higher energy prices, the loss of jobs, energy dependence on hostile foreign nations, and the stymying of technology and innovation.

By eliminating unnecessary bureaucracy, he hopes to foster shale energy and coal production in states such as Pennsylvania, Ohio, and West Virginia.

Support for Oil and Gas Development and Open Onshore and Offshore Leasing on Federal Lands

President-elect Trump strongly supports domestic oil and natural gas development. Currently, less than 10 percent of federally managed surface and mineral rights are leased for oil and gas development. Likewise, approximately 90 percent of American offshore acreage is off-limits to energy production. The Trump administration intends to open more onshore and offshore leasing on federal lands. It is estimated that there is approximately $50 trillion dollars in shale energy, oil reserves and natural gas on federal lands and that there are hundreds of years of coal energy reserves. The Trump administration also means a more limited role for the federal government in the day-to-day regulation of oil and gas developers. President-elect Trump has plans to roll back recent federal initiatives targeting the industry and will likely defer more to the states to regulate exploration and production activities, including hydraulic fracturing, within their borders.

Elimination of Climate Action Plan, Clean Power Plan, and Paris Climate Change Agreement

The Trump administration will push to eliminate the Obama administration’s Climate Action Plan and the Clean Power Plan (CPP). These plans, according to President-elect Trump, are increasing monthly electric bills without any measurable improvement to the climate. Additionally, generation plants are being closed — resulting in the loss of jobs, increased generation supply costs, and less-reliable electric service.
The CPP is on hold in the face of various legal challenges. The Trump administration could allow successful challenges to stand rather than seek modifications to the CPP that might accomplish similar goals. The EPA could also revise or eliminate regulations related to the CPP that are currently on reconsideration.
Along similar lines, President-elect Trump has promised to rescind involvement of the United States in the Paris Climate Change Agreement. The agreement was ratified by executive order and could thus be rescinded by executive order; however, withdrawal from the agreement would take several years under its terms. He has also promised to stop payments of U.S. tax dollars to United Nations global warming programs.

Keystone XL Pipeline

A Trump administration will support the Keystone XL Pipeline, noting that the project could create and support more than 42,000 jobs. He believes that the environmental risks of the pipeline have been overstated and that it can be constructed safely.

Renewable Energy

President-elect Trump supports the development of renewable energy to spur economic development, job creation, and energy independence. He supports nuclear, wind, and solar energy — but not to the exclusion of other forms of energy. He believes that winners and losers should be determined by the free market and not through government subsidy programs.

He supports nuclear, wind, and solar energy — but not to the exclusion of other forms of energy.

Water/Wastewater Infrastructure Improvement

The improvement of water and wastewater infrastructure will be a major focus of the Trump administration. President-elect Trump expressed concern during the campaign that our nation’s water and wastewater infrastructure has deteriorated to an unacceptable level (particularly in large cities), resulting in significant health and environmental risks. He has pledged to improve the infrastructure through reduced bureaucracy and a deficit-neutral plan that calls upon public-private partnerships (P3) for needed investments. Such policies are intended in part to attract capital to investor-owned utilities in order to spur needed infrastructure repair and replacement, and to encourage acquisitions of financially troubled municipal systems that have fallen into disrepair.

Written by:

David P. Zambito

Vice Chair, Energy, Environmental & Public Utilities

In the first 100 days of his administration, President-elect Trump has committed to work with Congress to introduce, and fight for passage of, the “American Energy and Infrastructure Act.” The Act would leverage public-private partnerships, and private investments through tax incentives, to attempt to spur $1 trillion in infrastructure and energy investment over 10 years.

Labor & Employment

Employers can expect President-elect Donald Trump to drastically change the liberal policy agenda of his predecessor, to appoint officials generally favoring business interests over organized labor and individual employee rights, and to rollback many federal regulations issued over the past eight years. But President-elect Trump avoided committing himself to specific policy pronouncements during the campaign, so employers must wait to see how he will move toward enacting his policy preferences.

What personnel changes should be expected?

The first urgency for any new administration is to fill key administrative positions. Besides the secretary of Labor post, there are many sub-cabinet level positions and agency appointments that are critical. Vacancies now or will soon exist at the director of the Office of Federal Contract Compliance Programs, the general counsel of the Equal Employment Opportunity Commission, and the solicitor of Labor. It is also anticipated that the administrator of the Wage and Hour Division will leave his post at the end of the Obama administration.

The five-member National Labor Relations Board is operating with two vacant seats. The term of current NLRB General Counsel Richard Griffin expires in November 2017, and an additional Republican-held Board seat will become vacant in December 2017. There are strong feelings among some of the Republican senators on this issue. Either on their urging or on his own initiative, President-elect Trump might decide that leaving the NLRB without a quorum is better than filing the vacant GOP-held seats, or he may move forward with GOP nominees that will seek to overturn many of the Board’s recent rulings and interpretations that largely favored employees. Whatever course of action he decides will likely be met with support from the GOP-led Senate.

What regulatory changes are in the offing?

The immediate decision point for the new administration will be whether to continue to defend court challenges to Obama administration regulations addressing a wide variety of issues, such as the increased salary threshold for exemption from overtime pay requirements, imposing fiduciary obligations on firms providing services to ERISA-covered plans, governing transgender bathroom usage, extending new rights to employees of federal contractors, and imposing new burdens on those contractors (in terms of higher pay requirements and the obligation to report alleged labor violations).

In addition to addressing court challenges to existing regulations, employers should expect the Trump administration to overturn other Obama administration regulations through a variety of processes. Executive orders on federal contractors can be rescinded swiftly by new orders after President-elect Trump takes office. The Congressional Review Act, a 1996 federal law, permits Congress to overturn certain administrative regulations through expedited legislative vehicles that are not subject to a filibuster in the Senate and can quickly be presented to the president’s desk. In addition, many policies and regulations enacted as part of the Affordable Care Act can be stricken through the Congressional budgeting procedure, which is also not subject to the filibuster.

Whatever the vehicle, employers should expect some changes to Obama-era regulations and should be prepared to examine whether their own policies (regardless of whether they were created in order to comply with the new regulations) should continue if those regulations are revoked. These questions can present employers with complex issues. For example, what is the employer’s desire or ability to roll-back changes made to comply with the new exemption level threshold that is set to take effect December 1? What about employers who made changes to meet revised affirmative action obligations to employ veterans or people with disabilities?

What about new legislation?

With Republicans in control of both the House of Representatives and the Senate, we can expect them to push for legislative changes to enact a conservative policy agenda. But it remains to be seen how the newly elected president will handle the various factions within the Republican Party who might have policy preferences at odds with his own. Another wild card is whether the Republican-led Senate will continue to adhere to the filibuster rule in the Senate — if the filibuster remains in place, Democrats could seek to block major legislative changes that do not have 60 affirmative votes. Two legislative tasks that will quickly confront the new administration are bills to fund the government and to raise the debt ceiling; how the administration and Congress address these issues may provide some insight into how they will govern legislatively.

Who will be affected?

Both large and small employers will likely be affected by any changes to federal regulations and by changes to federal law. Employers that have been the target of federal enforcement efforts in the past, employers that are active in their use of non-traditional workers or the “gig” economy, or employers that also serve as federal contractors will likely face the effects of the new president first — but eventually all employers should expect to see some benefit from the incoming administration’s new personnel, new regulatory mindset, and/or new legislation that is more business-friendly.

How quickly will changes happen?

Any changes previously made by executive order can be changed within days of the inauguration, changes to federal regulations will likely take a few months because of the need to observe notice and comment periods under the Administrative Procedure Act, and substantive legislation will likely take longer. Nominees for all of the sub-cabinet offices will likely take months to get confirmed. However, these processes can be shortened or increased depending upon how aggressively the new administration acts, how cooperative Senate Democrats are, and whether the new administration seeks to rollback Obama-era regulations completely or rather seeks to revise or amend them in some form.

Both large and small employers will likely be affected by any changes to federal regulations and by changes to federal law.

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