With the new Trump administration taking office, small business owners across the U.S. are preparing for potential shifts in HR policies, employment regulations, and workplace compliance. As policy shifts take shape, businesses should prepare for changes in labor laws, healthcare, and taxation.
At Focus HR, we help small business owners stay informed and adapt to evolving HR and employment policies with confidence. Below is an overview of the key changes and considerations to keep in mind for strategic business planning.
1. Labor Laws & Workplace Regulations
The Trump administration is expected to push for deregulation and employer-friendly labor policies, which could mean:
- Revisions to overtime rules – The previous administration introduced a rule to increase the salary threshold for exempt employees, aiming to expand overtime protections. However, on November 15, 2024, a federal court in Texas found that the DOL exceeded its authority and struck down the rule in its entirety. It is unlikely that the Trump administration will pursue an appeal on these changes, and will maintain the existing threshold.
- Changes to wage and hour regulations – Several labor policies may see adjustments, including:
- Independent contractor classification – The Trump administration is likely to reinstate prior rules that make it easier to classify workers as independent contractors rather than employees, reducing employer liability under the Fair Labor Standards Act (Source: Venable).
- Minimum wage uncertainty – Trump has not committed to changing the federal minimum wage, meaning wage decisions will likely remain at the state level.
- Tax on tips and overtime pay – Trump has proposed eliminating federal income tax on tips, which, if passed, could affect payroll structures for businesses in hospitality and service industries.
Proactive Steps for Small Businesses:
- Regularly review federal and state labor laws to ensure compliance with evolving regulations.
- Assess workforce classification policies to determine whether changes in independent contractor rules affect hiring strategies.
- Stay informed on potential tax changes for tips and overtime to ensure payroll compliance.
2. Healthcare & Employee Benefits
Changes to employer-sponsored healthcare policies may affect small businesses in several ways:
- Shifts in ACA subsidies and Medicaid funding – Enhanced subsidies under the Affordable Care Act (ACA) are set to expire in 2025, and the administration may decrease federal Medicaid funding, leading states to roll back Medicaid expansion. These changes may push more employees toward employer-sponsored coverage, increasing plan enrollment and costs. (Source: HR Executive).
- Expansion of short-term, limited-duration health insurance plans – Short-term insurance plans, which typically exclude pre-existing conditions, maternity, and mental healthcare, may be expanded, offering lower-cost alternatives to traditional employer health plans (Source: HR Executive).
- Increased price transparency requirements – Healthcare price transparency rules could be expanded, allowing businesses to negotiate lower costs by directing employees toward lower-cost providers and facilities (Source: HR Executive).
Proactive Steps for Small Businesses:
- Monitor upcoming changes to ACA policies and evaluate how they may affect employer-sponsored health coverage.
- Assess Medicaid cutbacks and determine if more employees will seek employer-sponsored insurance.
- Consider leveraging price transparency data to negotiate lower healthcare costs for employees.
- Explore cost-effective health coverage options, such as HRAs or high-deductible plans with employer contributions.
3. Tax Cuts & Business Incentives
The Trump administration is prioritizing tax reforms aimed at reducing the financial burden on small businesses. Key proposals include:
- Lower tax rates for pass-through entities and LLCs: Plans are underway to extend provisions from the Tax Cuts and Jobs Act (TCJA) of 2017, which are set to expire in 2025. This includes maintaining the 20% Qualified Business Income (QBI) deduction for pass-through entities, allowing business owners to deduct a portion of their income, thereby reducing taxable income. Additionally, there’s a proposal to lower the corporate tax rate from 21% to 20%, with a special 15% rate for domestic manufacturers.
- Deductions for business investments in workforce training and development: While specific details are pending, the administration has indicated support for enhancing deductions related to employee training and development. This initiative aims to encourage small businesses to invest in upskilling their workforce, potentially leading to increased productivity and competitiveness. Small businesses should monitor legislative developments to capitalize on these potential incentives.
Proactive Steps for Small Businesses:
- Consult a tax professional to develop a tax strategy that maximizes available deductions.
- Consider investing in employee training programs to benefit from potential tax incentives.
4. Trade Policies & Hiring Impacts
With potential tariffs and trade policy shifts, businesses that rely on international supply chains may face disruptions, including:
- Higher Costs: Increased tariffs on imports from China, Mexico, and Canada may lead to higher costs for small businesses, impacting hiring strategies, labor budgets, and supply chain decisions. While these tariffs aim to boost domestic manufacturing, they have created uncertainty for businesses reliant on imports. Some companies are already negotiating discounts from suppliers or considering shifting production to other countries, but these solutions come with delays and financial risks.
- Hiring & supply chain disruptions – Rising operational costs due to tariffs may force businesses to reevaluate hiring plans, freeze new positions, or adjust wages to offset increased expenses. Additionally, businesses struggling with supply chain uncertainty may find it difficult to plan long-term investments in workforce expansion (Source: Wall Street Journal).
Proactive Steps for Small Businesses:
- Diversify suppliers to reduce dependency on tariff-affected regions.
- Optimize workforce planning by balancing hiring needs with financial constraints.
- Consider automation and process efficiencies to mitigate rising operational costs.
- Stay informed on evolving trade policies and their impact on pricing and supply chains.
Let Focus HR Handle the Heavy Lifting
Keeping up with evolving HR policies, employment laws, and compliance requirements can be overwhelming for small business owners—but you don’t have to do it alone. Focus HR takes the burden off your shoulders, ensuring your business stays ahead of changes without the stress.
Our team of experts monitors regulatory updates, tax implications, labor laws, and compliance shifts, so you can focus on running and growing your business with confidence. We provide tailored HR solutions, helping you adapt seamlessly while staying compliant and optimizing your workforce management.
Let us handle the complexities so you don’t have to. Contact us today to learn how we can support your business through these changes.
