Expect Major Changes to Employment Benefits Under the Incoming Trump Administration

Details

Although President-elect Trump provided few, if any, specific details surrounding his proposed changes to policies affecting employee benefits during his 2024 presidential campaign, employers and employees should expect a loosening of regulation across government agencies during a second Trump presidency. This will likely bring significant, employer-friendly changes to employment benefits, especially for employee health care plans. They should also anticipate changes in tax and investment policies that may affect retirement benefits, along with the implementation of regulations that make it easier for employers to classify individuals as independent contractors.

Potential Changes

Trump, with the support of a Republican majority in both chambers of Congress when he is expected to take office in January, will likely seek to weaken provisions of the Affordable Care Act (ACA). For example, Trump may seek to eliminate the employer shared responsibility requirement or reduce the penalty for noncompliance to $0 — a policy position that he has included in his prior campaign platforms. Currently, the employer shared responsibility provisions require employers with at least 50 full-time and full-time equivalent employees to offer affordable minimum essential coverage. Trump may also choose to support ending or reducing the ACA’s individual health premium tax credit, which was expanded in 2021 under the American Rescue Plan Act and essentially offers government subsidies to health insurance providers for the purpose of reducing insurance premiums for consumers. Reducing or eliminating the health premium tax credit would almost certainly increase premiums for individuals insured through an ACA health insurance exchange.

The incoming Trump administration has also signaled support to change tax policies that further incentivize employees to contribute to their employers’ 401(k) and 403(b) plans. Similar legislation — including the 2019 SECURE Act, signed by President Trump, and the 2022 SECURE 2.0 legislation, signed by President Biden — has seen bipartisan support. Trump also vowed, in a February 2023 campaign video, to repeal the Department of Labor 2022 final rule, which allowed but did not mandate employee retirement plan advisors to consider environmental, social and governance factors in their investment choices. Similarly, we expect the Trump administration to repeal the recently published final rule titled the “Retirement Security Act,” which is also referred to informally as the “fiduciary rule.” This rule has been the subject of much debate for several years and has historically been revised coincident with changes to Presidential administration.

Finally, Trump will also likely direct the Department of Labor to implement a rule, proposed during the first Trump administration, that would ease the requirements for employers to classify workers as independent contractors. The first Trump administration directed the Department of Labor to enact a rule enshrining the test set forth in the National Labor Relations Board’s 2019 decision in SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019), to determine whether an individual is an independent contractor. Notably, the SuperShuttle standard tends to favor classifying “gig economy” workers (e.g., Uber drivers) as independent contractors. However, the Biden administration never implemented the proposed rule. The implementation of this proposed rule could mean that the millions of gig workers throughout the U.S. are not entitled to employee benefits or the more-robust employment-related legal protections applicable only to “employees.”

Steptoe & Johnson PLLC’s Labor & Employment attorneys are here to answer your questions and help you navigate the shifting legal landscape relevant to employee benefits and other employment matters. Please contact the authors of this alert if you need any counsel on these benefits or other employment law matters.