Small businesses to thrive under Trump

OPINION:

If former President Donald Trump is elected again, hiring and retaining employees will become more affordable, particularly for small businesses. Here’s why.

Worker classifications

A new rule issued by the Department of Labor earlier this year changed how contractors and employees are defined, which is forcing many companies to reclassify some freelancers as employees rather than independent contractors. The rule considers several factors in this determination, including whether or not a worker is “integral” to a business. Many freelancers are upset by the regulation, which they say limits their flexibility, earnings potential and “right to freelance.”

Unions love the new rule, of course, because it makes more employees eligible to join. Employers now face paying more for employment taxes, benefits, and workers’ compensation for these newly reclassified workers.

Overtime pay

This year, the amount that employers have to pay for overtime is increasing dramatically, thanks to another Department of Labor regulation. The new rule raises the overtime wage from $35,568 to $43,888 on July 1 and then again to $58,656 on Jan. 1, 2025, for as many as 4 million qualified workers. In addition to these increased costs, classification rules regarding who is “exempt” and “nonexempt” are complicated and already require many of my clients to incur significant legal and consulting fees to review their employee lists to determine who is eligible for the added compensation.

Harassment

The Equal Employment Opportunity Commission has also been busy during the Biden administration. How busy? According to one report, “on March 12, 2024, the EEOC published its fiscal year 2023 Annual Performance Report (FY 2023 APR), highlighting the Commission’s recovery of $665 million in monetary relief for over 22,000 workers, a near 30% increase for workers over Fiscal Year 2022.”

This past spring, the commission issued new regulations around harassment in the workplace, singling out situations where LGBTQ, pregnant, religious and virtual workers may feel as if they’re in a hostile work environment and putting the onus on employers to provide new policies, training and reporting mechanisms to address these concerns, lest they face fines and lawsuits.

Unionization

The National Labor Relations Board, staffed with Biden appointees, has been relaxing rules that enable more unions to market, solicit and encourage employees to join their organizations, including campaigning on a company’s premises and making it easier to hold quicker elections. Many employees have taken advantage of this new environment to attempt unionization at large companies such as Starbucks and Amazon, while others have been creating “micro-unions” at smaller businesses over the past few years.

Safety

In the past few years, the Occupational Safety and Health Administration has raised its fines and expanded many definitions as to what determines a “safe” work environment. In addition, a contentious new ruling from the agency is allowing third parties to “walk around” a company’s private worksite along with OSHA inspectors, which has raised the alarm among employers that are concerned with breaches of confidentiality and the risk of providing ammunition to unions attempting to organize their employees.

Noncompetes

The Federal Trade Commission issued a ruling that effectively eliminates a company’s ability to make key employees sign noncompetition agreements.

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” said FTC Chair Lina Khan. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

Not all agree.

“Noncompete agreements are either upheld or dismissed under well-established state laws governing their use,” said U.S. Chamber of Commerce President and CEO Suzanne P. Clark, who filed a lawsuit contesting the ruling. “Three unelected commissioners have unilaterally decided they have the authority to declare what’s a legitimate business decision and what’s not by moving to ban noncompete agreements in all sectors of the economy.”

So what happens if Vice President Kamala Harris becomes president? All of these regulations not only stay in place but receive full backing from her administration. In addition, Ms. Harris would likely greenlight other initiatives, including new rules over pay transparency, paid time off for dependent care and sick leave. She would also get behind another push to increase the hourly federal minimum wage from $7.25.

The Supreme Court’s recent reversal of its earlier Chevron decision will allow more businesses to contest these regulations in the courts rather than blindly defer to an agency’s interpretation and implementation, so this will give businesses some defense. But a Harris administration would be sure to fight any lawsuits tooth and nail.

If Mr. Trump becomes president, the opposite will happen.

Because all of these rules are just that, rules. They’re not laws. They’re regulations under the law — such as the Fair Labor Standards Act — that are being carried out by agencies governed by the party in power. Mr. Trump has opposed these regulations both as president and currently. He will appoint new leaders of these agencies and order them to roll back these rules. He will not contest any organizations that challenge these rules in court. Given the chance, he would replace his predecessor’s appointees at the EEOC and NLRB.

Is this good for workers? That’s arguable. Worker protections are there for a reason. A fair, equitable and safe labor environment is important. What constitutes such an environment, however, is up for debate. Like President Biden, Ms. Harris wants more rules and regulations to protect workers and unions. Mr. Trump believes these rules have gone too far, with costs that outweigh the benefits to the U.S. economy. He believes that employers — and the market — should determine what defines a fair, equitable and safe workplace with minimal government guidelines.

As a small-business owner, I can see and understand both arguments. But there’s no argument about one thing: A Trump presidency would remove these costly regulations, which would decrease the cost of employing workers and running my business.

• Gene Marks runs The Marks Group, a financial and technology consulting firm near Philadelphia.