Key Pay Issues to Watch in the Incoming Trump Administration

The incoming Trump administration will likely “hit the brakes” on a number of proposals that the Biden administration had in the works. Here are the key issues the Association’s Center on Executive Compensation is watching:

First, expect a shakeup of SEC leadership as Trump has pledged to replace Gary Gensler as SEC Chair. However, this may not be necessary, as SEC Chairs typically step down before a new administration takes office.

• If President-elect Trump forced Chair Gensler to step down, he would likely appoint one of the Republican Commissioners as Acting SEC Chair.

• Expect that the SEC, under its next chair, will be less likely to test its legal boundaries.

The SEC’s long-awaited human capital metrics, board diversity and Dodd-Frank incentive compensation rules on indefinite hold: Although these rules have been on the SEC's agenda for some time, a recent Supreme Court decision that makes it easier to challenge agency actions has reduced the chances of broad regulations like an HCM rule. Under a Trump administration and a Republican-led SEC, the proposal or finalization of these rules is even less likely.

• HR Policy Association has been on the record opposing overly prescriptive HCM rules and the Dodd-Frank incentive compensation rules based on member feedback.

Revived interest in proxy advisor regulation: A Trump administration may pursue revival of stricter SEC oversight of proxy advisors. The previous Trump administration adopted rules in 2020 to increase oversight of the advisory firms, but legal challenges ensued after key aspects of the 2020 rule were rescinded.

• HR Policy Association supported the modest reforms in 2020 regulating how the advisors do business with corporations. 

Federal contractor pay transparency rules will likely be reversed: The Biden administration’s FAR Council issued a proposed rule (still expected to be finalized by the end of the year) that would require federal contractors to disclose compensation and benefits on job postings and prohibit them from seeking an applicant or existing employee’s compensation history.

• HR Policy Association argued against this proposed rule, citing the impracticality of compliance and the absurdity of employers pretending not to know the pay levels of their current employees.

EEOC’s pay data collection will not return: The agency recently announced its intent to revive “Component 2” pay data collection as part of the EEO-1 filing. The previous Trump administration declined to collect this data, citing concerns over the utility, the administrative burden on employers, and potential confidentiality issues as the data could be accessed using the Freedom of Information Act.

• The Association has previously pointed out flaws of the aggregated data collection process and has asserted that the data will not be helpful to the EEOC in enforcing pay discrimination violations.

The bottom line: Many of the most high-profile regulations and policies affecting company pay strategies will be rescinded or never finalized. State action on these issues, however, will continue to cause compliance headaches for companies operating across state lines.