With less than one month until the presidential election, we're paying close attention to where the candidates stand on key issues that are likely to have important consequences for American businesses.
Regardless of who wins the 2016 presidential race, American businesses can expect changes to employee pay laws. Both Democratic nominee Hillary Clinton and Republican candidate Donald Trump have been vocal about where they stand on key employee pay issues including the minimum wage, pay equity, and paid leaves that, if implemented, would impact businesses, regardless of size.
The federal minimum wage of $7.25/hour has stood since 2009. Many states have set their own minimum wage levels (some lower than the federal rate, many higher than the federal rate) with New York and California taking the lead in passing laws this past year to phase in state minimum wage rates up to $15/hour. The past two years have also seen a dramatic increase in the number of cities and/or counties passing minimum wage ordinances setting the minimum wage within their jurisdiction to the highest rates in the country. While employees may be covered under more than one minimum wage law, they are entitled to the highest applicable rate.
Clinton proposes to increase the federal minimum wage to $12/hour, but has expressed support for a rate as high as $15/hour where it is phased in over several years. She also has expressed strong support for states and localities to set minimum wage rates as high as $15/hour.
Trump initially came out against increasing the federal minimum wage, saying he preferred to leave it to the states, but more recently he has said he would support an increase of up to $10/hour.
Clinton has also shown support for the new Overtime Rule, scheduled to take effect on December 1, 2016, which would more than double the current salary threshold for certain white collar exemptions from overtime and incorporate a periodic increase of the threshold every three years. The new Overtime Rule is expected to significantly increase the number of employees who will be eligible for overtime pay, potentially impacting labor costs across all industries. While Trump has remained silent on his feelings about the Overtime Rule, he has expressed publicly that American workers are paid too little.
The new Overtime Rule, combined with any increase in the federal minimum wage, would likely cause major shifts in restaurants, retail, health care, office work, and other industries that rely on large numbers of non-exempt service workers paid near the minimum wage and are eligible for overtime pay.
Currently, U.S. women earn about 79 cents for every dollar that men earn. At this rate, a full-time working woman has to toil until April 12 for her earnings to catch up to what a full-time working man made the previous year. Clearly, pay equity between the genders isn't yet standard practice in this nation.
Trump has not provided specifics on the pay equity issue. He has touted the number of women in leadership positions in his businesses. At the Republican National Convention, his daughter, Ivanka Trump, said her father "will fight for equal pay for equal work."
Clinton has been a strong proponent of equal pay laws for women. She has said that as president, she would work to close the pay gap. As a New York senator, Clinton introduced the Paycheck Fairness Act in an attempt to update the 1963 Equal Pay Act, which prohibits unequal pay for equal or "substantially equal" work performed by men and women. Clinton intends to work with Congress to get this bill passed if elected president. The Paycheck Fairness Act would further limit the reasons for pay disparity between workers who perform the same job.
While the Federal Family Medical Leave Act provides unpaid time off to eligible employees for qualified family and medical reasons, several states provide paid leave for similar reasons. Most recently, New York State passed a paid family leave scheduled to go into effect in 2018. Paid sick and safe leaves have continued to surface at both the local and state level over the last two years. There are now five states, the District of Columbia, and nearly 30 different local jurisdictions who currently or will soon provide eligible employees with paid days off for illness and other reasons.
Clinton has strongly supported establishing a national paid family and medical leave policy for parenting or to care for family members. Eligible employees would receive 2/3 of their regular pay for up to 12 weeks under Clinton's proposed leave plan, which she intends to fund by increasing taxes to the wealthiest Americans. Clinton has also publicly supported a Federal Paid Sick Leave proposal that would provide eligible employees with up to seven paid sick days each year.
While Trump has been largely non-committal with regard to his plans for paid leaves, he did just recently announce a plan to provide up to six weeks of paid maternity leave to eligible women, using the existing unemployment insurance system to provide up to $300/week for eligible women. He stated this additional funding would be supported by efforts to crack down on unemployment insurance fraud.
Predicting which nominee will win the presidency in November is as difficult as knowing whether the winning candidate will hold to their stated positions. The makeup of Congress may also present big challenges to the next president and their ability to move their proposals forward legislatively. A congressional deadlock would likely result in a need for the next president to again rely on executive orders and agency regulations to move achieve their platform goals .
Perhaps what is more certain is that American businesses can reasonably expect to eventually pay a higher minimum wage, be held accountable for non-discriminatory pay practices, and see some support for providing employees with paid leave. Employees will most likely welcome what many may feel are long overdue changes, but employers may find themselves struggling to comply with a whole new set of requirements.
About the Author
Tammy Tyler is a senior compliance analyst with a focus on employment law at Paychex, Inc., a leading provider of integrated solutions for payroll, HR, retirement, and insurance services.