ANALYSIS & COMMENTARY
If you entertained any doubt that employers have been discombobulated by President Trump’s policy peregrinations, a major law firm’s recent survey of its employer clients should help set you straight.
If many employers are confused, that shouldn’t be surprising. Starting on inauguration day, the new Administration ignited a rolling barrage of executive orders, federal agency firings and policy proclamations that have been hard to keep up with, much less understand before the next wave of directives and actions fills the air.
Also finding it difficult to keep up have been Democrats in Congress and the party leadership and judges at every level of the federal judiciary when many of the more sweeping actions taken by the Administration become ensnarled in litigation.
Currently, Trump’s attempt to replace sitting members of independent federal agencies and commissions has put those bodies in something of a policy limbo, where some commissioners remain removed from their positions and new appointees have not yet been able to take their seats, resulting in a lack of quorum and agency paralysis in some cases while the Supreme Court ponders the President’s powers.
“This year’s survey data shows that employers are closely tracking the news headlines, while also feeling the pressure as regulatory uncertainty in numerous areas continues to build,” observes James A. Paretti Jr., co-chair of Littler Mendelson’s Workplace Policy Institute, commenting on the company’s employer survey report, which was released in May.
“Though it may be some time before the dust settles, employers would be wise to actively revisit their policies and make strategic adjustments based on where this new regulatory regime is likely to be headed in the months and years to come,” he added.
The law firm surveyed close to 350 inhouse lawyers, business executives and human resources professionals—36% of whom are in C-suite positions. They came from a range of company sizes and industries, including those in the technology, manufacturing, retail, healthcare and hospitality sectors.
When it comes to the independent federal agencies regulating employment, one of the most prominent is the National Labor Relations Board (NLRB), which previously was the tip of the spear in the Biden Administration’s campaign to promote labor unions and unionization. However, now that Trump is President, fewer than half of respondents believe that changes to federal workplace policy and regulation related to union activity and labor relations (47%) will impact their businesses over the next year.
Over half of respondents expect NLRB policy shifts on workplace rules and employer handbook policies (61%), independent contractors and contingent workers (60%), non-compete agreements (55%), and joint employment rules (54%) in the next 12 months, Littler found. In recent weeks the Department of Labor (DOL) already has rolled back a more limited definition of lawful independent contractor definition that was adopted by the Biden DOL.
Immigration Enforcement Worries
Of course, the biggest hot button issue in America today is immigration, a concern that is more widespread among the nation’s employers, even if the intensity of that apprehension is not universal in its manifestations.
“It is no surprise that 58% expressed some level of concern about potential staffing challenges resulting from these regulatory changes,” Littler reports. “At the same time, as employers prepare for more raids and other enforcement actions, 70% expect enforcement by ICE/HSI (Homeland Security Investigations) and the Department of Homeland Security (DHS) to have a significant or moderate impact on their workplaces over the next 12 months.”
However, it is important to note that this concern is anything but universal. Only 6% said they were “very concerned” about workforce staffing challenges as a result of the Trump administration’s immigration policies, while 20% said they were moderately concerned and 32% claimed to be only slightly concerned—along with a whopping 42% who declared that they were not concerned at all.
Littler’s lawyers expect that the Administration will increase ICE/HSI I-9 audits to up to 15,000 a year and ICE raids to more than 100 a year. However, they note that as of the report, workplace enforcement actions had not yet resulted in any formal ICE raids of employer worksites. “Rather, ICE has engaged in activities like serving administrative warrants and Notices of Inspection and subpoenas that in the coming months will likely ramp up, with ICE raids potentially starting in the next six months,” they predict.
In fact, an initial wave of those worksite inspections kicked off after the survey was completed with raids on more than 100 Washington, DC, restaurants and massage parlors in Baton Rouge, LA. These efforts are expected to increase in number and intensity because of orders given by Trump in the wake of violent protests against ICE.
“With the expected uptick in worksite enforcement, it is important for employers to proactively conduct reviews to check that I-9 forms are up to date, that they know where they’re located, and that there is a crisis management team in place in the event of a site visit from ICE or another government agency,” warns Jorge R. Lopez, chair of Littler’s Immigration and Global Mobility Practice Group.
Of course, much of the concern was registered by representatives of companies with the most exposure to the new emphasis on undoing the massive immigration wave created by the Biden Administration. Employers in manufacturing and retail/hospitality were those most concerned about Trump’s immigration policies in the survey. Immigration also topped the list of policy changes that manufacturers most expect to impact their businesses over the next year (83%, compared with 75% of all employers).
Littler’s poll also found that for retail and hospitality employers, 89% expect enforcement by ICE and DHS to have a significant or moderate impact on their workplaces (compared with 70% of all employers). In addition, those responding who represent large employers said they are more concerned than their counterparts about ICE/DHS enforcement (with 84% expecting a significant or moderate impact on their workplaces) and workforce staffing challenges (with 69% expressing concern, in comparison with 58% overall).
Diversity, Equity, or Inclusion?
The Administration’s energetic full-frontal assault on Diversity, Equity & Inclusion (DEI) also has raised widespread concern among private sector employers who had chosen to continue their own DEI programs. In what could be interpreted as a concerted attempt to blunt some of the more pointed criticism of DEI policies and activities, Littler has chosen to give the practice a new name: Inclusion, Equity & Diversity (IE&D).
Prior to issuing the survey report, the law firm explained that the reason that it came up with the new name was to place greater emphasis on the inclusion aspect of such practices. (The ampersand probably was added because the acronym IED is normally used to stand for an improvised explosive device.)
“This shift emphasizes the importance of creating a workplace where everyone feels included, valued and supported, going beyond simply having a diverse workforce,” the law firm explained. “IE&D framework highlights the proactive efforts needed to ensure a truly inclusive environment where everyone can thrive. This approach aligns with their belief that a culture that prioritizes inclusivity leads to better outcomes for both the firm and its clients.”
The Littler survey found that 84% of its employer clients expect the Trump Administration’s anti-DEI actions will impact their businesses. Also, 45% of respondents said their organizations are not considering new or further rollbacks of their IE&D programs in response to executive orders issued by the Trump administration. Just over half (55%) are considering changes to some extent, with only 7% doing so to a large extent. The law firm said this mirrors results of an earlier survey it released in February.
“With IE&D programs facing existential threats and unprecedented scrutiny from federal agencies, we’re seeing many employers wisely step back and analyze their IE&D practices with an eye toward compliance and effectiveness,” admits Littler attorney Jeanine Conley Daves. “Yet even as some organizations modify their programs in response to the administration’s priorities, it’s unlikely that IE&D will disappear any time soon. It remains an important talent recruitment and retention strategy at many organizations.”
As other lawyers have warned in recent years, some states are picking up the slack where employment policy changes have stalled or been pulled back on the federal level in areas like DEI, and employers should remain wary of this trend, Littler says. More than eight in 10 of respondents expect legislative activity and regulations impacting the workplace at the state and local levels to increase over the next 12 months. Among large organizations, 93% expect to be impacted by state and local legislative activity.
Littler says that key areas to watch include ongoing efforts to raise the minimum wage and allow employees to earn paid sick leave, as well as legislation aimed at mitigating the risk of an employer’s use of artificial intelligence (AI) systems resulting in algorithmic discrimination.
“From AI to LGBTQ+ rights to wage and hour practices, state and local policymakers across the country are increasingly introducing regulation that is in tension with federal law,” says Shannon Meade, executive director of Littler’s Workplace Policy Institute. “As employers wait for the courts to provide clarity, they must navigate complex compliance challenges, which in turn requires staying hyper-vigilant about monitoring new developments and maintaining best practices.”
Of course, nothing can drain executives’ energy and company resources like litigation, and most will go to great lengths to avoid it. The Littler survey found that employers are understandably most concerned about disputes related to discrimination/harassment (63%), workplace accommodations (50%), and IE&D (45%, up from 24% last year).
However, substantially fewer reported concern about litigation involving wage and hour/pay practices (42%, down from 59% in 2024), labor/management relations (24%, down from 30%) and employee data privacy (18%, down from 25%).
Remote Work and Mental Health
One area where employers are experiencing negative impacts is the end of remote work in general and especially for federal government workers. The most frequently cited negative consequence of requiring more in-person work is the increase in requests by employees for remote work accommodations (56% across all respondents, and 65% for large employers) because of mental health concerns.
“Managing such requests can be time-intensive and fraught with both legal and practical risks, making it particularly important for companies to understand their legal obligations and insights from recent court cases when evaluating accommodation requests under the Americans with Disabilities Act (ADA), Pregnant Workers Fairness Act (PWFA) and/or similar state or local laws,” Littler says.
In fact, employers responding to the survey said mental health reasons far exceeded any other reason for employees requesting leave and other accommodations. Over the past year, the employers reported a 70% increase in such requests. This builds on the already high percentage of employers (74%) who were seeing an increased volume of such requests in Littler’s 2024 survey.
“The pandemic not only led to a fundamental transformation in employees’ expectations for remote work, but it changed the way the people view the essentiality of in-person work. For companies looking to increase in-office work, it’s important to have a plan in place for the likely influx of remote work requests,” according to Alexis C. Knapp, co-chair of the Littler Leaves of Absence and Disability Accommodation Practice Group.
“In managing these requests and communicating processes, it’s important to distinguish between legal obligations to provide reasonable accommodations to employees with disabilities under the ADA or PWFA—such as mental or physical health conditions—and employee requests for flexibility for other personal reasons that do not involve a legally binding accommodation obligation.”
Given the influx of accommodation requests, it is not at all surprising that 50% of all respondents and 61% of large employers expressed concern about the threat of workplace accommodation lawsuits over the next year, which Littler notes is the second most prevalent area of concern for employment-related litigation. In addition, some employers are worried about the prospect of lawsuits pertaining to paid (32%) and unpaid (14%) leaves of absence.
“It’s clear that mental health remains a serious problem impacting the American workforce, as requests for accommodations and leaves of absence continue to rise dramatically year after year. Employers must anticipate and address these challenges, which are not going away any time soon,” stresses Littler attorney Devjani H. Mishra.
