The Trump Effect and Business: Rise of State and Local Regulations
With much uncertainty at the federal level, there is now a rise in state and local regulations. A few that Mike Trabold, director of compliance, identifies include pay equity, paid leave laws, health care reform, and state retirement plans. Watch this conversation now.
Gene Marks: Hi, everybody. I'm Gene Marks. I write every day for the Washington Post and a bunch of other places online and in print. I am here with Mike Trabold. Mike is the director of compliance at Paychex. Mike, you have been always spending time on federal regulations, but of late, it seems like your energies and attention have been reallocated a little bit more to the states. What's going on statewide level, local level? Seems like some activity.
Mike Trabold: Yeah, there's a lot of activity at the state and local level. And that's, in many ways, in response to what President Trump is doing at the federal level, really condensing some of the regulation. So a lot of the states and localities are ramping it up in response to that.
GM: Yeah, it seems like President Trump's idea is he's a states' rights kind of guy, so he wants to give more responsibility down at the state level. And I think we're seeing the impact of that. Employers are seeing that, too. Health care is a good example. What kinds of things that are going on there?
MT: It's a great example. And everybody is aware of the ambiguity that still exists with the Affordable Care Act at the federal level. A lot of states are starting to get antsy and do some of their own things, all the way from considering ways to make sure that some of the key components of the Affordable Care Act stay in place to bolster some of the insurance markets in various states, all the way to thinking again about some of the single-payer options that are a little bit controversial, but continue to get some political traction in some states.
GM: Single payer is a conversation that we can have over beers someday, right? But not right now. Pay equity is a big issue. And I know that is becoming more and more of a state and a local issue. In Philadelphia, where I'm from, we now are not allowed to ask for a salary history for prospective employees. You're seeing this is a trend, this type of thing?
MT: We really are. And that's probably the biggest impact on an employer. A lot of people would really ask for salary history as part of their hiring process. Some states and cities, you can't do that anymore. So that's a material change for an employer.
GM: OK. How about paid time off? I mean, millennials, survey after survey, millennial generation, they make up 50 percent of the workforce. So many of them say, listen, we really want more paid time off, more flexibility. We haven't seen anything at the national level yet, although President Trump does support something nationally. But some states are taking actions, and local jurisdictions, too.
MT: They really are. There's about 45 states and cities that now have laws like that and more thinking of it. We hear a lot of difficulty from clients with that, because each rule has different nuances, different execution methods, so it's tough to stay on top of.
GM: Yeah, it really is. Now, when it comes to retirement is another area that I always, is sort of near and dear. I mean, we're not saving enough for retirement. We know that. A lot of business owners find themselves having to help out employees, even when they're at a retirement age. And I understand that, locally, some states are taking actions to do something about that. Can you give me an example?
MT: Yeah, there's about 9 states that have passed laws and are in the process of implementing. California, Oregon, Illinois are some really prominent ones. And that's what it is. There's the concern that people aren't saving enough for retirement, so the mandate is if you're an employer that doesn't offer a plan, you're going to start having to withhold money from people's pay and put it into some kind of investment vehicle. So it's another trend that employers are really going to have to keep an eye on.
GM: Not exactly a cost to the employer, but it's going to be an additional administrative task that they have to do?
MT: That's exactly right.
GM: Right. Before I let you go, pay cards have become sort of a big trend nowadays. First of all, can you explain what a pay card is and why it's becoming more important at a – some states are now starting to get involved, and even the federal government.
MT: Yeah, a pay card's a really great option for if you have employees that don't have a bank account to get them their money in a very efficient way. So we're seeing a lot of that being a very popular method in many states and for many employees. What a lot of states are doing, though, is looking to make sure there's adequate disclosure, there's adequate transparency on what some of the fees are, and making sure that an employer isn't mandating to their employees that they have to get paid in that method.
GM: And a pay card to be used anywhere, right? It's like a debit card. Money gets put onto it instead of a bank account. And it's a good vehicle for savings, as well, and I guess that's why some states are taking a closer look at that. So OK, just to wrap things up, Mike, and I'm going to throw the big softball question of this interview. Here it comes. All this stuff happening, right? Where do people go, where do business owners, HR managers, executives, where do they go to get information to stay current with this stuff?
MT: Well, as you might expect, we think we've got a really good program at Paychex that really stays on top of all these changes – federal, state, and local – and also has a really good appreciation for what small businesses go through and the plight of a small business owner. And by working with us, we really think that we're going to free up a lot of small business owners to concentrate on running their business and have peace of mind around all of this very complicated regulatory stuff.
GM: That's awesome. Well, Mike, given the nature of your job, I'm assuming we're going to be having plenty of more conversations in the months to come. But this is great information. I appreciate your time. Thank you, sir.
MT: Thank you.