President-elect Trump’s Impact on the Financial Workplace

Overtime Regulations Stayed

I. The Election and the Trump Impact – Change

            How will the election of Donald Trump impact the financial workplace?  In addition to the uncertainty about the overtime salary threshold, gender identity discrimination, the expanded meaning of protected concerted activity, the immigration “wall,” and countless other HR rules and regulations, should a financial HR professional really care about the enactment of the Choice Act, a reprioritizing of the CFPB, and the President-elect’s intent to restore community banks as primary business lenders?

            Does the Trump Administration mean “The US is Back in Business?”  If so, must HR assume greater hire, fire, train, manage and pay duties?  As for technology, how will the new President balance cyber security against privacy?  How will Mr. Trump’s new FCC Commissioners change the Internet environment?  Do these possibilities really matter to financial HR?

Change

            Change will continue.  Undoing government regulations will require change.  Regulators must understand and implement the new Administration’s financial priorities.  Dodd-Frank’s regulated entities (aka banks) must relearn and prepare for a new emphasis and style of examination and reporting (such as OMWI and indirectly the new EEO-1 categories, affirmative action data collection, and compensation analysis).  The acceleration of innovation means the risk management programs for social media, third-party vendor, and cyber security/privacy will require hyper-collaborative teams that include HR. 

            As discussed in this report, President-elect Trump will alter the trajectories of the NLRB, EEOC, OSHA, DOL, HHS and other workplace-regulating agencies.  At a minimum, the Trump Administration will modify the CFPB, FSOC, SEC, OCC and Federal Reserve.  For workplace professionals in banks and other financial institutions, Mr. Trump’s election accelerates the rate of change.    

Division         

            Going into the 2016 primaries, many Americans had staked out positions that naturally aligned with the Democratic and Republican Presidential candidates.  When the November 8 election mercifully arrived, the American public had grown weary of campaigning, but had not relinquished its polarizing values, cultures, aspirations, and fears.  The election of Donald Trump rekindled the energies of the extreme right and left. 

            The workplace contains Trump and Clinton opponents who reflect the extreme differences within the American public.  This division exists in the workplace and will take its toll on something.  HR professionals must confront and deal with the extreme division inside the workplace. 

Solution –  Reconciliation

            The President-elect championed success.  Neither candidate broached meaningful reconciliation.  Financial organizations can achieve success if the HR community can achieve reconciliation.  This report discusses the primary impact of President-elect Trump on the financial workplace. 

II. Cabinet (to date)                   

            President-elect Trump must select more than 4,000 political appointees in the executive branch.  The Senate confirmation process of more than 1,200 appointees will involve a review of the candidates’ financial, tax, business, and public records as well as vetting under ethics laws and security clearances.  Even for uncontroversial candidates, the confirmation process will take months.

            Although Mr. Trump’s nominees will face opposition, the Senate Democrats removed the threat of filibuster for most of Trump’s nominees.  Historically, presidential nominees required 60 votes for Senate confirmation.  In 2013, Democrats played the “nuclear option” and voted 52 to 48 to allow the president’s judicial and executive nominees to be confirmed with only 51 votes.  Supreme Court nominees were excluded from the change and remain subject to the 60-vote threshold. 

            Through December 17, 2016, Mr. Trump’s top appointments include: 

  • Chief of Staff – Reince Priebus
  • Chief Strategist – Stephen Bannon
  • National Security Advisor – Dir. Defense Intelligence Gen. Michael Flynn
  • Attorney General – Sen. Jeff Sessions
  • CIA Director – Rep. Mike Pompeo
  • UN Ambassador – Gov. Nikki Haley
  • Education Secretary – Betsy DeVos
  • White House Counsel – Donald McGahn
  • Deputy National Security Advisor – Kathleen Troia (“K.T.”) McFarland
  • Secretary of Health and Human Services –Rep. Dr. Tom Price
  • Administrator of the Centers for Medicare and Medicaid – Seema Verma
  • Transportation Secretary – Former Sec. Labor Elaine Chao
  • Commerce Secretary – Wilbur Ross
  • Treasury Secretary – Steven Mnuchin
  • Deputy Commerce Secretary – Todd Ricketts
  • Secretary of Defense – Gen. James Mattis
  • Secretary of Housing and Urban Development – Dr. Ben Carson
  • Small Business Administration – Linda McMahon
  • Head of EPA – Okla. Atty. Gen. Scott Pruitt
  • US Ambassador to China – Gov. Terry Branstad
  • Department of Homeland Security – Gen. John F. Kelly
  • Energy Secretary – Gov. Rick Perry
  • Labor Secretary – Andrew Puzder
  • Economic Advisor – Gary Cohn
  • Interior Secretary – Rep. Ryan Zinke
  • Senior Director of Strategic Communications – Monica Crowley
  • US Ambassador to Israel – David D. Friedman
  • Office of Management and Budget – Rep. Mick Mulvaney

            Confirmation of President-elect Trump’s nomination of Steven Mnuchin as Treasury Secretary and Andrew Puzder as Labor Secretary will directly influence the financial workplace.  Their bios follow:

Labor Secretary Appointee Andrew Puzder

            Andrew F. Puzder is the 66-year-old chief executive of CKE Restaurants, the parent company of Hardee’s and Carl’s (the company that franchises the fast-food outlets Hardee’s and Carl’s Jr.), and an outspoken critic of the worker protections rolled out by the Obama administration.

            Puzder opposed the recent overtime rule raising the salary threshold for the white-collar exemptions to the FLSA overtime requirements.  He has criticized the new paid sick leave requirements for federal contractors and supports repealing the Affordable Care Act.

Mr. Puzder also view increased automation as a welcome development and has been quoted as saying machines are “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”

Treasury Secretary Steven Mnuchin

            Most recently, the 53-year-old Mnuchin served as Trump’s campaign finance chairman. Following his graduation from Yale in 1985, Mnuchin worked for Goldman Sachs for 17 years.  In 2002, Mnuchin worked briefly for Soros Fund Management, a hedge fund led by George Soros, before leaving to start his own investment firm, Dune Capital Management.  In 2009, Dune Capital was a participating purchaser of failed mortgage lender IndyMac.  IndyMac failed in 2008 with assets of $32 billion.  After the purchase, Mnuchin chaired IndyMac under its new name, OneWest, until its sale to CIT Group in 2015.

III. Supreme Court and Judicial Appointments

            A major legacy of President-elect Trump may be his impact on the Supreme Court.  Mr. Trump has announced a list of 21 candidates from which will come his nominee to fill the seat previously held by Justice Antonin Scalia.  Trump could wind up appointing three additional Supreme Court justices.  The three oldest sitting justices are Justice Ginsburg (83), Kennedy (80), and Breyer (78); all are liberal or moderate.  At a minimum, Trump will restore a conservative/liberal balance and possibly recreate a conservative bench before the end of his first term in 2020.  Unlike the confirmation process for most presidential appointees, Supreme Court nominees still require 60 votes in the Senate. 

            Trump will place his stamp on lower-court judges as well.  As of December 12, 105 federal judgeships are vacant:

  • 13 US Court of Appeals
  • 83 US District Courts (includes territorial courts)
  • 2 US Court of International Trade
  • 6 US Court of Federal Claims
  • 1 US Supreme Court

            With only a 51 vote Senate threshold, Trump should be able to navigate most of his lower-court nominees to confirmation.

            As a comparison, by the end of his term President Obama will have successfully placed over 330 Article III judges including two Supreme Court Justices, 55 judges to the U.S. Courts of Appeals, 268 judges to the U. S. District Courts, and four judges to the U.S. Court of International Trade.  There are approximately 100 vacancies in the federal judiciary, including 1 Supreme Court vacancy, 13 on the U. S Courts of Appeals, 80 on the U. S. District Courts, and two on the U. S Court of International Trade.

IV. Executive Orders                 

            Over staunch Republican opposition, President Obama exercised his Presidential power to issue numerous executive orders.  Obama has signed more than 235 executive orders on topics ranging from national security to climate change.  Trump has declared his intent to purge Obama’s executive orders in the new Administration’s first 100 days.

            At various times and depending on the source, the press has declared that the President-elect’s revocation of executive orders will include climate change and the Paris Agreement, various EPA regulations, Clean Power Plan, the North American Free Trade Agreement Trans-Pacific Partnership Negotiations, DACA, Obamacare, the Iran Sanctions, amnesty for illegal aliens facing deportation, and Title IX guidance equating “gender identity” with “biological sex.” The President-elect will not come close to eradicating the expanse of executive orders forewarned by the press. Political power groups will coalesce to oppose Trump.  Even if Trump could repeal most of Obama’s executive orders, doing so would upset too many citizens and trigger major change, creating a major drag on the American economy.  On the other hand, not making a statement about the Obama use of executive orders risks a backlash from conservative voters.  A strategic revocation of executive orders seems likely. 

            A repeal of executive orders will affect the financial workplace.  For example, striking the Fair Pay and Safe Workplace orders would indirectly reduce the risk that data, collected under the mandates of OMWI and other federal directives, would find its way into equal pay claims and lawsuits.  In the area of affirmative action, Trump’s business experiences could dampen the DOL’s enthusiasm to expand affirmative action and its current goal to police compensation practices.  On the other hand, if Mr. Trump takes unilateral action in affirmative action, he will face unified opposition by those fighting for minority (especially equal pay) rights.

            Financial employers should not develop a workplace strategy based on the anticipation of an immediate and broad reduction of workplace-related executive orders.  A more prudent approach would be to wait until the President-elect takes action rather than to rely solely on an oral declaration.

V. Equal Employment

            Federal Law prohibits workplace discrimination based on race, sex, pregnancy, religion, national origin, age, disability, military status, genetics, and retaliation.  What about discrimination based on sexual orientation, gender identity, marital status, criminal history, financial condition, and unemployment?  What about hate crimes, virtual discrimination, and whistleblowing?  These unanswered questions permeated the workplace until November 8, 2016.  

            Following his election, Mr. Trump has not signaled a significant change to federal employment discrimination law.  At times, the new President has openly supported LGBTQ rights.  For example, at the Republican Convention in August, Trump offered support for LGBT rights including featured speaker, Peter Thiel, PayPal’s gay co-founder.  While Trump’s agenda will not forge new categories of protected rights, neither does he portend to champion “traditional values.”  Despite Trump’s seemingly agnostic positions, HR professionals may feel Trump’s influence on employment discrimination in two areas: 1) the rule of law; and 2) the “Trump Effect.” 

Rule of Law

            The significance of Trump’s apparent deference to the rule of law is highlighted in several employment discrimination cases that resulted in conflicting opinions.  In September, the Eleventh Circuit Court of Appeals ruled that race should be based on an “immutable characteristic” and not an individual expression or cultural practice.  The Eleventh Circuit’s position conflicts with other federal decisions that view race as including choice and social/cultural conditioning.  In July, the Seventh Circuit Court of Appeals ruled that Title VII’s ban on sex discrimination does not extend to sexual orientation.  The EEOC continues to file Title VII lawsuits asserting that the meaning of sex includes sexual orientation and gender identity.

            Mr. Trump’s words and behavior tends towards acceptance of the rule of law, even in the workplace.  While Trump may advocate aggressive negotiation to achieve a business objective, he appears to defer to the results and process of the law.  From the vantage of an employer, reliance on the traditional legal process to vet an expansion of workplace rights offers more certainty, a condition preferred by most HR professionals over the day-to-day social pronouncements of the Obama Administration.

Trump Effect

            A well-regarded Plaintiff’s lawyer best described how the Trump Effect may impact the workplace.

[Trump’s] win does not overturn the civil rights laws, and he does not claim he will repeal these laws. The United States Constitution still promises equal protection under the law. [A] Trump win means that the biases that were once hidden deeply are being flaunted by those biased individuals. … The new reality is that the workplace is likely to become more permeated by explicit discriminatory conduct and harassment, leading to more—not less—violations of the established laws.

The Trump Effect: The Impact of the 2016 Presidential Election in Our Workplaces, Amanda Farahany, Daily Report, (December 2, 2016).  

            In its report on the “Trump Effect”, the Southern Poverty Law Center discusses the impact of Trump’s election in the schools.

[A survey of over 10,000 teachers] indicates that the results of the election are having a profoundly negative impact on schools and students. Ninety percent of educators report that school climate has been negatively affected, and most of them believe it will have a long-lasting impact. A full 80 percent describe heightened anxiety and concern on the part of students worried about the impact of the election on themselves and their families.

Also on the upswing: verbal harassment, the use of slurs and derogatory language, and disturbing incidents involving swastikas, Nazi salutes and Confederate flags.

“The Trump Effect, the Impact of the 2016 Presidential Election on Our Nation’s Schools”, SPLC (2016 https://www.splcenter.org/sites/default/files/the_trump_effect.pdf).

            The financial workplace could parallel the experience of many American schools. If so, the Presidential primary season ending in the November 8 election will have infused anxiety among some workers and emboldened others to engage in bullying.  The source of both anxiety and bullying comes from the conduct of the candidates including the brash and bullying behavior of Mr. Trump.  Like teachers, HR professionals will have an oversized job this year as they work to heal the division within the workplace.

VI. Wage and Hour

            Mr. Trump’s primary impact on the Fair Labor Standards Act will occur in the unfolding drama of the DOL’s final regulation increasing the salary threshold for the overtime white-collar exemptions.  Currently, the executive, administrative, and professional exemption from the FLSA overtime requirements must satisfy three tests:

  • The salary-basis test: (a requirement since 1940);
  • The duties test: (a requirement since 1938); and
  • The salary-level test: (a requirement since 1949).

           Since 2004, the minimum salary level has been $455/week or $23,660 annually.  The proposed regulations would have increased the minimum salary level to $913/week or $47,476 annually.  Beginning January 1, 2020, the salary-level would increase automatically to equate to the 40th percentile of average wages for full-time, salaried employees in the lowest-wage Census region (South).

            On Tuesday, November 22, 2016, Judge Amos Mazzant, an Obama appointee to the federal court for the Eastern District of Texas, issued a nation-wide preliminary injunction barring the implementation of the DOL’s proposed overtime regulations.  The DOL sought and received an expedited appeal to the Fifth Circuit Court of Appeals.  Despite approving an expedited appeal, the Fifth Circuit established a briefing schedule to be completed by January 31, 2017.  Oral argument would follow, which delays a possible Court decision until well-after the January 20 inauguration.  An employer considering how to plan an overtime policy should base its strategy on the action of a Trump Administration.  

            The Presidential campaign has encouraged other FLSA predictions.  During the campaign, Mr. Trump declared that he would favor an increase of the minimum wage to $10 an hour.  He also favored a small-business exemption to the Fair Labor Standards Act overtime rule.  Other possibilities include:

  • Reinstating Opinion Letters
  • Increasing the “Dollar Volume” Test for Coverage (e.g.  $500,000 to $1 million)
  • Addressing the Overtime Impact of Incentive Compensation
  • Balancing Timekeeping Responsibilities
  • A Compensation-Based Exemption (without a duties test).

VII. Immigration

            During the campaign, Mr. Trump led with immigration reform.  After his election, supporters of the President-elect expect him to build the “wall” and to deport illegal aliens.  As he approaches his inauguration, Mr. Trump has issued moderating statements about his approach to immigration.

            In an interview with Time magazine, Trump seemed to retreat from his campaign promises and to adopt a more sympathetic tone toward young immigrants known as “Dreamers.”  Days after the election, the press reported that President Trump’s first 100 days will result in the elimination of DACA (Deferred Action for Childhood Arrivals), a 2012 executive order of President Obama.  Obama’s DACA order provided work authorization to approximately 750,000 individuals who entered the US as youths and met certain public safety and national security requirements.

            Recently Mr. Trump stated,

We’re going to work something out that’s going to make people happy and proud … They got brought here at a very young age, they’ve worked here, they’ve gone to school here. Some were good students. Some have wonderful jobs. And they’re in never-never land because they don’t know what’s going to happen.

            Mr. Trump is expected to act to strengthen the country’s borders against illegal entry and to restore deportation for wrongdoers.  The President, himself, can institute more aggressive deportation.  Doing so for major criminals should be expected. The extent to which he can strengthen borders and deport undocumented, but otherwise law-abiding aliens may depend on Congress.

            Companies operating inside or near a sanctuary city face an interesting dilemma.  A sanctuary city is a term for US and Canadian cities that have policies (de jure or de facto) designed not to persecute undocumented immigrants.  Mr. Trump has threatened to withhold federal funds from cities that refuse to follow federal immigration laws.  Around 40 sanctuary cities have reaffirmed their protective positions for undocumented immigrants. 

            HR professionals might apply a risk management analysis to the immigration dilemma.  A risk management strategy would assemble a collaboration of perspectives to answer the following question, “What is the effect of uncertainty of the current (and changing) immigration laws and orders on the company’s best interests?” 

            In addition to the sanctuary cloud, the new President’s immigration position could result in an increase in workplace enforcement actions, including I-9 audits and raids by the US Immigration and Customs Enforcement agency.  On the other hand, Mr. Trump’s passing comment that he would mandate E-verify for all workers, will require the assistance of Congress. (Many states, including Georgia, already require employers to E-verify workers.)

            President Trump’s campaign promises rained heavily on the country’s temporary work visa programs (such as H1-Bs). The new President’s assemblage of technology advisors (e.g. Cisco) places an interesting business objective before him.  Major technology companies look forward to the “repatriation holiday” and the opportunity to return cash to the US.   At the same time, many tech companies rely heavily on H1-B workers.  Mr. Trump’s answer to this tension will require a balancing of campaign promises with insider advisors.

            The new attention on immigration will create staffing questions for many US employers.  Many industries rely on undocumented workers.  Replacing these workers with persons of comparable commitment and skill will be a challenge.  The President will emphasize hiring Americans first.

            Workplace professionals, especially those in the financial industry, should anticipate a new regulatory focus on compliance with immigration law.  Given the political tenor in certain communities, non-compliance with immigration regulations could generate negative publicity (aka reputational risk for financial entities).  In addition, the expansion of technology and its transparency will make whistleblowing easier.  Although a relatively new tool for HR, risk management analysis could be a prudent strategy.    

VIII. Benefits

ACA

            During the campaign, President-elect Trump repeated his intent to replace the Affordable Care Act. After the election, Trump has stated that portions of Obamacare should be retained such as the rule banning consideration of pre-existing conditions and the policy inclusion of dependents up to the age of 26.  Other than a few Obamacare executive orders, the new President must depend on Congress to change Obamacare.            

            Congress has begun the process of modifying the ACA before Trump takes office.  For example, on December 12, 2016, President Obama signed the 21st Century Cures Act, an omnibus health bill containing a smorgasbord of healthcare benefits including a small business right to use “Health Reimbursement Arrangements” (HRA).  Under the new law, small employers have new means to use HRAs to compensate employees who buy their own insurance. Other healthcare strategies have surfaced to craft the ACA into a workable benefit for most companies.  The anticipated fight over Obamacare suggests certainty may not surface until 2018 or later.

Medicare

            In the period immediately after the election, Speaker of the House Paul Ryan mooted a proposal to privatize Medicare, the single-payer healthcare insurance system for Americans 65 and older. While Medicare reform has long been favored by Republicans in Congress, the issue was not a major flashpoint during the campaign.  Only recently has Mr. Trump begun to appear in public with Speaker Ryan.  Medicare privatization is strongly opposed by Democrats and should create a major battle in the coming legislative session.

Paid Leave

            Mr. Trump does favor paid maternity leave (women only, for recovery from childbirth) for six weeks.  His daughter, Ivanka Trump, will serve as an advisor in D.C. and, possibly, a surrogate First Lady on occasion.  She supports paid maternity leave. In addition, Mr. Trump expressed a desire to make child care expenses tax deductible for families earning less than $500,000 and called for establishing tax-free accounts for child care and child enrichment activities. Implementing either of these benefits in the private sector would require Congressional action.

IXWorkplace Safety and Health (Whistleblower)

            The new President has declared that business regulation will be reduced.  Mr. Trump could change the following OSHA rules and standards:

  • OSHA’s rule increasing the penalty for standard violations and annually increasing the penalties;
  • The electronic reporting rule requiring certain employers to report injury and illness information followed by posting of the report on OSHA’s public website (scheduled to take effect on July 1, 2017);
  • High-hazard industry enforcement, accident and fatality inspections, and safety outreach consultations with employers.

            A bigger impact could be Trump’s influence on moderating the incentives for whistleblowing under multiple federal statutes now adjudicated by the Occupational Safety and Health Review Commission. New Labor Secretary Puzder could discourage further expansion of whistleblowing rights and enforcement.  In addition to their oversight functions, both Mr. Trump and Puzder could use federal purse-strings to affect whistleblowing. Of course, any congressional reduction of funding for OSHRC would face negative press coverage and public opposition.  Given the political support for whistleblowing, regulated industries including the financial sector should anticipate current whistleblowing requirements to remain a significant compliance requirement. 

X. Labor Relations

            President Obama’s labor-supporting appointments to the NLRB and the resulting expansion of pro-employee decisions have achieved the Administration’s goal of reintroducing to non-union workers the rights of protected concerted activity.  In addition, the Board has sought to expand the term “employment” to include traditional independent contractor work.  Finally, the Board has reinterpreted various language of the NLRA, in some places jettisoning decades-old interpretations.  The Obama Administration has championed the expansion of NLRB oversight as a means of growing the protective role of the federal government.

            The President-elect and the appointed Labor Secretary will dampen the Board’s use of novel legal interpretations and rein in the Board’s creation and marketing of new workplace rights of workers. While Mr. Trump’s intent may be recognized by the current Board, both Trump and Puzder may not have a major impact until the expiration of the current members’ terms.  Whether immediately or eventually, Trump and Puzder will redirect the direction of the current NLRB.

            Until the new Administration can implement meaningful change to the current Board’s novel interpretations of protected concerted activity, financial employers should comply with the new NLRA interpretations. Under such a strategy, a financial organization should subject all policies, procedures, and programs including IT manuals, codes of conduct, employee handbooks, and the various banking alphabet policies to Obama’s NLRA requirements.  While the Trump Administration could influence the enforcement of NLRA law, the presence of whistleblowing rights and regular bank examinations will encourage financial HR to maintain compliance with current NLRA laws.   

XI. Banking

            Financial HR must satisfy both the traditional maze of workplace laws as well as the workplace-related banking regulations.  The Federal banking alphabet regulations (Reg A through YY) impose 3 special challenges on financial HR.  First, the alphabet regulations impose a second layer of workplace compliance requirements.  HR must understand SARS, GLB privacy, social media risk management, and Reg. JJ’s proposed incentive compensation restrictions as well as countless other do’s and don’ts intended to be deciphered and implemented by professional compliance and lending professionals.  Second, the alphabet regulations impact the traditional laws.  For example, the bank’s required background check obligations appear to conflict with the EEOC’s restrictions on background investigations.  

            Third, recent interpretations of traditional laws undermine banking requirements and place HR in the unique position of identifying core banking policies and procedures that violate traditional workplace laws.   For example, the NRLB’s expanded meaning of “protected concerted activity” competes with most GLB confidentiality policies.   The Obama Administration’s attempts to expand the meaning of “employment” bears on banking’s third-party risk management requirements.

Will Dodd-Frank be repealed?  

            Congress enacted Dodd-Frank in 2010 as a response to the financial downturn.  Until recently, the Trump Financial Services Policy team offered the following critique of Dodd-Frank:

Following the financial crisis, Congress enacted the Dodd-Frank Act, a sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies. The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression. Paychecks have been stagnant. Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether. Economic growth remains below 2%, about half the historic average. “The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed “too big to fail.”

The Dodd-Frank economy does not work for working people or small to medium size businesses. Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.

(Bloomberg reported on November 10 and 11, 2016 (https://www.bloomberg.com/news/articles/2016-11-11/trump-win-puts-a-bullseye-on-elizabeth-warren-s-banking-watchdog and https://www.bloomberg.com/view/articles/2016-11-11/wishes-dreams-and-dodd-frank ) as being formerly listed Trump website ( https://greatagain.gov/policy/financial-services.html?gi=8c4682f94c76).  See Trump Transition Website. (www.greatagain.gov)   

            Despite the Trump criticism of Dodd-Frank, Congress is unlikely to jettison the major banking law. On the other hand, Trump will work with Congress to modify portions of Dodd-Frank.   Modification could come through the framework of the pending Financial CHOICE Act, a bill sponsored by Rep. Jeb Hensarling (Chairman of the House Financial Services Committee). If enacted, the Choice Act would affect the workplace repealing registration and examination requirements for advisers to private equity funds, removing many of the Dodd-Frank executive compensation rules, and enhancing Congressional oversight of the Federal Reserve.  Dodd-Frank changes may also occur through other pending legislation such as the Financial Regulatory Improvement Act of 2015 (“Improvement Act”), Protecting American Taxpayers and Homeowners Act (“Path Act”), and Federal Oversight and Modernization Act of 2015 (“FORM Act”).

            Mr. Trump has heaped special focus on the Consumer Financial Protection Bureau (“CFPB”).  Dodd-Frank created the CFPB to oversee consumer protection in the financial sector. The prolific CFPB has issued several regulations, directives, guidelines, and other legal mandates that impact the work of financial HR. Modification of the CFPB could be a welcome relief to HR.  

            Recently, the DC Court of Appeals found the CFPB’s lack of accountability to be unconstitutional.  As a result, Mr. Trump may have the unexpected opportunity to replace Richard Cordray, the current CFPB director.  Other CFPB modifications could occur though the creation of a multimember commission, repealing several of the CFPB’s recent rulemakings, and making the Bureau’s funding subject to the usual Congressional appropriations process.

            Given the current cloud of unconstitutionality and the CFPB’s aggressive use of rulemaking, the President-elect’s influence could come quickly to the Bureau.  Still, financial organizations must satisfy current and final regulatory requirements.  At the same time, HR should remain attentive to changes.

Summary

            Under President-elect Donald Trump, financial workplace professionals will face more change in all areas of workplace compliance.   Mr. Trump’s style and his campaign supporters and opponents assure a division among workers in every organization.  The new President wins in business, entertainment, and now politics.  His campaign theme, “Let’s Make America Great Again” has already spawned an attitude of winning in business.  The success of a financial organization may be its ability to reconcile its workplace.  More than ever before, success may hinge on financial HR.

 

Ray Stanford, Jr.
SIO Law Group LLC
rstanford@siolaw.com 

SIO Law Group
Workplace Law Alert is published solely for the friends and clients of SIO Law Group (Stanford I O Law Group LLC) and should in no way be relied upon or construed as legal advice. The views expressed in this publication reflect those of the authors and not necessarily the views of the firm.  For specific information on recent developments or factual situations, a reader should obtain the advice of an attorney.

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