Election Day is just days away—and in many states, the presidential election is already in full swing as millions have cast their ballot via expanded early voting and mail-in programs. There are many issues top of mind for voters this year from COVID-19 response and the economy to health care, climate change, and racial and economic inequalities. Presidential candidates Donald Trump and Joe Biden also have different viewpoints regarding important labor and tax policy issues, including issues about worker classification. Let’s examine the differences between the two presidential candidates and where they stand on labor policy issues including worker classification, organized labor, and overtime exemption.
A closer look at each candidate’s labor policy agenda
If Trump wins re-election, many expect his administration will continue deregulatory policies and finalize remaining initiatives. If Biden wins, he is expected to reverse many of Trump’s executive orders and labor policies and push to pass laws that benefit unions. Here are some other notable differences:
Trump’s labor policy agenda:
Ensure it’s easier for employers to classify workers as independent contractors
Keep the overtime eligibility threshold lower and eliminate automatic adjustments
Create a national paid family leave program
Focus on workforce development including support for industry-recognized apprenticeship programs
Biden’s labor policy agenda:
Reverse Trump’s policies including independent contractor classification flexibility
Reinstate Obama-era proposals including increased enforcement of worker misclassification, workplace safety, and diversity and discrimination protections. Promote the Paycheck Fairness Act tackling the gender pay gap.
Increase the federal minimum wage and overtime exemption salary threshold
Improve ability for collective bargaining and expand union density
Also supports paid family leave and would push to enact the FAMILY Act and the Healthy Families Act
Worker classification and the overtime exemption threshold
Another difference between the candidates involves how they approach the definition of exempt vs nonexempt employee classifications. An employee classified as exempt is not entitled to receive overtime pay by the Fair Labor Standards Act. Employers simply give exempt employees expectations for performance and tasks to complete. It doesn’t matter whether it takes the employee 40 hours or more than 40 hours to complete those tasks. Conversely, a non-exempt employee is entitled to one and a half times their regular rate of pay for any hours worked beyond the 40-hour work week.
To be considered exempt, an employee must be paid a salary rather than hourly rate, their earnings must exceed the overtime exemption threshold, and they must perform job duties with high-level responsibilities, including executive, administrative, professional, and computer roles. Prior to the Obama/Biden administration, the salary threshold for overtime exemption was set by the Department of Labor at $455 per week, or $23,660 per year. In 2016, the Obama/Biden DOL increased the exemption to $913 per week, or $47,476 per year, and included annual automatic updates to keep increasing the threshold. However, a federal court blocked the ruling from taking effect, so the $455 per week amount continued to stand. On January 1, 2020, a new rule by the Trump DOL took effect, setting the overtime threshold at $684 per week, or $35,568 per year. If elected, it is expected that Biden would attempt to return to the Obama-era rates and schedule, which would have been set at around $55,000 per year by 2020.
Worker classification issues around contract workers
As the gig economy has grown, worker classification, and specifically rules around independent contractor status, have become a more contentious political issue. Businesses hiring workers as independent contractors save money on federal employment taxes and as well as benefits costs. On the other hand, independent contractors often view themselves as self-employed entrepreneurs who don’t need worker protections extended through federal labor laws. Currently, the general rule is that “an individual is an independent contractor if the payer has the right to control or direct only the result of the work, not what will be done and how it will be done.” Businesses are urged to look at the facts in each situation and carefully consider three categories: Behavioral control, financial control, and relationship of the parties.
Many businesses, including gig economy businesses like Lyft and Uber, have been advocating for a more flexible worker classification standard that would allow an easier path of classifying workers as contractors. President Trump’s administration supports this worker classification flexibility and in light of the upcoming election, may try to fast-track and finalize a new rule this year. If Biden is elected, many expect him to reverse Trump policies and reinstate Obama-era proposals including increasing enforcement against employers who misclassify workers.
On September 22, 2020, the Department of Labor released a rule proposal that would make it harder for contract workers to be classified as employees. In effect, the proposal would raise the threshold for workers engaged in contract or gig work to be considered employees. If President Trump is re-elected, this proposal would be enacted as part of his administration’s deregulatory agenda. Labor advocates view this proposal as a blow to worker protections and believe it will exacerbate the issue of worker misclassification by employers. On the other hand, a Biden administration is expected to tighten rules around independent contractor qualification and expand the definition of a joint employer under the Fair Labor Standards Act.
Labor unions: Protecting the Right to Organize (PRO) Act
It’s important to note that if Biden wins the presidency, he will not automatically gain control over the entire workforce policy agenda. Many of the labor policies Biden supports will need Congressional approval to become law including the Protecting the Right to Organize (PRO) Act
which would significantly change labor relations law. The PRO Act would make it more difficult to classify workers as independent contractors and expand the joint-employer rule. Currently, this bill has passed the House but has stalled in the Senate. President Trump would veto this bill if it crosses his desk. Biden supports it.
The PRO Act would codify the California AB5 law which includes the ABC test for employee classification. The ABC test is that a worker is presumed to be an employee unless the company proves the worker is: (A) Free from control and direction in performing work, and (B) Performing work outside the usual course of the company’s business, and (C) Customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company.
Control over the National Labor Relations Board
Additionally, there are two other agencies involved in directing labor policy. The National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEO) are both independent agencies with appointees serving staggered terms. In a recent webinar, the speakers pointed out that the NLRB currently has a 3-1 Republican majority until August 2021 and the EEO has a 3-2 Republican majority until June 2022. When given the opportunity, Biden is expected to appoint union-friendly members to the NLRB who would support tighter qualifications for independent contractors.
Support for worker classification and labor law compliance
If you want to ensure your policies regarding worker classification are up to date, Asure can help. Asure offers a range of expert HR services, including a comprehensive online HR library, access to on-call HR professionals, and fully outsourced HR. These services are designed to help small and midsize businesses build great teams, support their people, and ensure compliance with workforce laws.