What to Expect in Employment Law with the New Administration

Joe Young

Good afternoon, and welcome to the twelfth episode of the GovConPay HR Round-Up, which means we are completing our first year.

Declan Leonard

Most Netflix shows are only, like, eight episodes so we’re good!

Joe Young

Yes, we got 12.

Declan Leonard

We got picked up.

Joe Young

We made it through our first year here. Thank you all again for joining us today. My name is Joe Young. I am the President of GovConPay. We're the only outsourced payroll and HR solutions firm dedicated exclusively to serving the government contracting marketplace.

As always, we are joining you live here from Tysons Corner and the studios of BMC Digital Strategies, which is the media affiliate of Berenzweig Leonard Law Firm and under the support of our incredible producer, Mr. Todd Castleberry.

I'd also like to recognize and thank our sponsor, Berkshire Associates. Welcome any Berkshire clients who are joining us today. For those of you who aren't familiar with Berkshire, they are HR compliance experts who been in the business for over 50 years. They focus on affirmative action, pay equity, DEI services… And again, we appreciate their support and welcome any of their listeners who are with us today.

I am again with my partners in crime from the law firm of Berenzweig Leonard, the founding partners, employment law experts, Mr. Seth Berenzweig. Mr. Declan Leonard. Why don't you guys do a quick introduction of yourselves to the firm before we get going?

Seth Berenzweig

Sure. Seth Berenzweig. I’m the co-managing partner of the firm and I help lead our corporate and transactional practice.

Declan Leonard

And I'm Declan Leonard. I'm managing partner here at Berenzweig Leonard. I head up our Employment Law Practice. We welcome all the government contract HR folks out there.

Joe Young

This was originally scheduled on our schedule as “staying compliant in the New Year.” We've altered to add a little bit to “staying compliant in the changing Trump landscape,” which I think is pretty timely because as we're seeing, there's a lot of stuff going on right now, a lot of things to consider, and even things that are changing as I drove over here.

Seth Berenzweig

It's going to be a busy hour.

Joe Young

For those of you joined us, I hope you’re going to find you’ll get some timely comments and feedback today. So, let's start.

For those of you who've been with us before, back in October, before the election, we held an episode where we talked about what could be, speculation about what things could happen depending on the results of the election. Now that we are here, we know we're going to have a second Trump administration. What are some of the things that stand out as newsworthy for government contractors? Some of this is pretty timely, potentially.

Declan Leonard

Yeah, it's interesting. I think back on that conversation. I think when we were talking, we were going down the mainstream: If it's a Democrat reelected, here's what's going to happen. We'll have some continuity. If it's a Republican, if Trump was elected, some of the more traditional things that we would have expected.

And I think as we talked today, there are some curveballs that have been thrown in there, not unexpectedly perhaps, by a Trump second presidency. But it'll be interesting talking about it today.

You mentioned late, breaking developments. The talk right now is – didn't think this was going to happen, but – apparently it looks like there could be a government shutdown.

Now, again, things can change, but as of today, there is a momentum going towards that. Elon Musk apparently is putting a lot of pressure on lawmakers not to pass the current spending bill that originally had some support. So, we may find ourselves leading into the Christmas and the holiday season in a shutdown.

Seth Berenzweig

Yeah, and I think about this as the government's about to go on Ozempic. We're going to go from fat to skinny and this nice juicy filet that was just full of extra helpings of potatoes, including $3 billion of money to help billionaires pay for a stadium upgrade in Washington...

Declan Leonard

What's wrong with that? I think that's a great idea.

Seth Berenzweig

Nothing wrong. I'm sure the taxpayers would love nothing better than to help fund that. But enter the fact that people are going to want to, as they would say, “drain the swamp.” And that's going to be a major change. There's going to be a new sheriff in town and with a whole bunch of deputies. One of those deputies… Well, we'll talk about it whenever the time is right, although I know there's so much to cover in a limited period of time.

But I think the big picture is that they want to go skinny, and they want to go pro-business friendly in a couple of areas that we can talk about, including within the technology space.

Declan Leonard

And so when I mentioned curveballs, we're employment law. We've got HR folks out there. The agency that spearheads employment law on the federal level is the Department of Labor. You would have expected somebody who is pro-management, pro-employer – people talked about I think Johnny Taylor is his name, who heads up SHRM. But instead, Trump has put forward a – very surprising – a pro-union person for Secretary of Labor: She recently was defeated, but Representative Lori Chavez-DeRemer.

This is a real head-scratcher for businesses and Chambers of Commerce. Everybody's saying, “why this person?” So, we'll see. We'll see whether or not she gets confirmed, but we'll talk about this a little bit later on. It will have reverberations for government contractors.

Also crypto is a big area.

Seth Berenzweig

Yeah. So, what the prior administration or, soon to be the prior administration, the approach on crypto and AI was to really damp it down and to create restrictions. The new administration wants to lift it up and remove barriers. And the new White House czar for AI and crypto is David Sacks. He is from podcast fame and the show, “All-In,” which I think is one of the top three podcasts on the planet.

 

I believe the data bears that out, or at least that's what they say when they’re on the air. But I'm a follower.

Joe Young

We're number four.

Declan Leonard

We’re rapidly approaching.

Seth Berenzweig

Yeah, watch out, David, we're coming up on you. But the reason why this is important is because he is within the realm of Silicon Valley. He's going to come in and create a very pro-business, pro-AI and crypto agenda. I believe what that means for companies in the technology space is that there will be a lot of interesting new opportunities.

And instead of the government trying to cram down restrictions and making it harder to use AI, there's going to be an unleashing of new technology and new opportunities for companies in this space.

I think one of the top two reasons why I think that in the private sector of federal government contractors, why they're going to really get a lift up coming over the next year is because, first of all, I think downsizing and slimming the government means that a lot of things are going to have to get outsourced to get done.

And secondly, from a technology standpoint, there's going to be more R&D, there's going to be more roles, there's going to be more opportunities. So, in my view, although there's a little bit of a crack in my crystal ball, I think that it'll present some really interesting opportunities after the first of the year.

Declan Leonard

Some other things before we dive into this a little bit deeper.

I think back to a lot of our topics over the last 12 episodes, the last 12 months. We talked about things like the noncompete ban. People were on pins and needles about the noncompete ban by the FTC. The Corporate Transparency Act, this thing where corporations were supposed to do these FinCEN filings by the end of the year.

These things have all been stopped by judges.

But remember, judges issue injunctions, but then litigation rolls on. I think what's going to happen is all of those are going to go by the wayside. The joint employer standard for the National Labor Relations Board, we talked about that in a particular round-up and how primes and subs may very well be seen as one employer. That was, in our opinion, pretty seismic for the government contracting industry.

Those things have all been, like I said, stopped by judges through injunctions. I think under a Trump administration they'll never see the light of day, so they'll be permanently gone… Well, permanently for at least the next four years.

Seth Berenzweig

And one other aspect that I would add in terms of what's happening with the new sheriff in town is the notion of “by America, buy America, hire America.” There's going to be a real tightening and a renewed focus on immigration. From an HR standpoint, keep that in the back of your minds, our fellow HR industry professionals, because this is something that, from a compliance standpoint and really just from an application standpoint, is going to be under the lens next year. There'll be a lot of attention drawn to that. There will be more of a renewed focus, I suspect, on compliance in terms of visas and the like. Staffing and immigration are things that are probably going to be brought into a new focus coming in the new year.

Joe Young

Yeah. We jumped into some of these topics, as you said, here over the past year and now it's like, “well, what are the new seismic events that are happening?” These were seismic six months ago. And as you said, now they kind of go by the wayside or will not be as much in focus.

Let's dive into some of these new potential seismic events, and let's go back.

We touched on the Department of Labor. Unionization has been a hot topic for a while. What could the DOL and union activity look like now in 2025 with this new approach by the Republican Party?

Declan Leonard

I got to tell you, I never thought with a Republican win that we'd be talking so much about unionization. And it's all being spurred by the nominee that he's put forth. Now, again, that nominee could very well just get in line and just toe the anti-union, sort of typical stance that the Republican Party takes.

And I shouldn't say anti-union, but they're not the biggest proponents of it. Trump during his first term, certainly was not a big friend of unions. He sought to weaken the unions, particularly at the federal level. And so that's relevant because federal contractors obviously are sort of an extension of the federal level. His DOGE appointees, Department of Government Efficiency – you can't turn on TV without hearing about DOGE – Elon Musk and Vivek Ramaswamy, neither one of them are fans of unions. In fact, Musk has a legal challenge right now for Space X one of his companies. They're challenging the entire existence of the National Labor Relations Board, which is the entity that really facilitates union and union organizing.

But then you have this labor nominee who we just have no idea where this is going to fit in. This is somebody who has been endorsed by the Teamsters president, the national Education Association president. So it just really kind of makes very, very strange bedfellows.

Seth Berenzweig

I think that you're going to see two very different sides of the union coin, as Declan said. In the private sector, for the companies that are serving the federal government and for the employment realm at large, there's going to be a very interesting apparent shift where if this nominee gets accepted and brought in, that there will be some pro-union sentiment that's coming in in that area of the market.

But on the other side of the coin, you see what's known as the Schedule F Initiative. That is on the other side with regard to federal employees. And that's where the Ozempic gets pumped in because what they want to do, which is a very different side of the coin, is to change the old archaic, sclerotic, with all due respect, merit system bedrock of protections, where you have these career, union employees of the federal government.

And what the Trump administration wants to do is to convert a deep layer of that, tens and tens of thousands of people, into so-called Schedule F employees that can be terminated with or without cause. That's going to be a big deal. There's going to be legal questions about whether it can be done by executive order or whether it has to be done by statute.

But since the Republicans own both houses, albeit the House by a slimmer margin, that's something that still is very much in the offing. So, that is really going to be potentially a very big change. And if that comes about sometime over the next year, that's going to create an entirely different landscape as will be seen by the government contracts community.

Joe Young

For our audience out there, because we hear about unions in the government contracting space a lot, think of Service Contract Act employees, out of contract or union, the rules for both of those and how they apply… For our listeners out there, they're maybe like, “Well I don't have any service contract trade union employees in there.”

What are some of things, though, that this change in mentality and change in strategy will they still need to be thoughtful of?

Declan Leonard

Yeah, no, it's a great point because you're right: Traditionally, in the government contracting context, when you see unions, it's usually a Service Contract Act. It's a security-type contract; it's a janitorial service-oriented contract. And that's where you see the unions and the collective bargaining agreements. What we have seen, though, is unions are targeting other government contractors, non-SCA government contracting companies.

Seth and I have been involved in a lot of these and we had a client whose employees out of state, they were IT employees – certainly not Service Contract Act. They were IT employees doing really kind of high-level national security work and they held an election to unionize.

Seth Berenzweig

Of a relatively small office in Hawaii.

Declan Leonard

In Hawaii, Yeah. We did it by Zoom. We weren't able to go out there, which was a bit of a bummer, but we handled that. But what it probably means is this union activity is going to go far beyond the SCA contracts.

I mean, unions have been on the downswing for a very long time.

They hold their most potent power in the public sector, whether that's state or federal. That's where they are most potent. Government contracting is an extension of federal work and state work, so they're looking at that more carefully.

Seth Berenzweig

Definitely. Think of it in terms of what's been going on at Starbucks. You have stores that have the votes to decide whether or not to unionize. And you look at it, and you think, “Well, that's kind of a curve ball. How would that apply to us?” If you have small outposts within your technology company, they can unionize.

There can be a vote on whether to vote to unionize. So, I think Declan is right. I think that this is going to be something that's going to be one of the one of the many new developments that we're going to be seeing in 2025.

Joe Young

I think another one of those that obviously has been a lot of talk over the past administration, but even more recently, even before the election, a lot talk of rolling back, being different interpretations of DEI initiatives. What can we expect from the government on that front as far as DEI?

Declan Leonard

Yeah, the momentum is already started against and the backlash, frankly in many circles against DEI. I've always maintained DEI is very misunderstood. You know, the companies that are putting in quotas and stuff like that are getting it wrong every time. If you look at DEI as a way to increase your relevant labor pool and then make merit-based hiring decisions, I think that's where it works.

But I don't think that's what's happened. And I think it has been, particularly in this past administration, it's been a lot more potent in terms of going towards that quota. Trump's going to do away with it. I mean, absolutely going to do away with it. And he can do away with it very easily with these executive orders, rescinding executive orders.

He had an executive order in his first term that he's likely going to reinstate that bans DEI training – what he calls divisive DEI training – for government contractors. Biden had put this back in place where government contractors had to go through DEI training. Trump's going to do away with that.

He is going to have a big – I mean, for our great sponsor and our folks at Berkshire – affirmative action plans. Those are going to come under scrutiny. I suspect they're going to be very busy these next four years helping their clients, helping government contractors, sort of maneuver through what happens there. That is not going to go business as usual, I believe, for the office of CCP, affirmative action plans.

There'll be a lot of developments there, I believe.

Joe Young

Along those lines, if Trump does do away with the DEI like you're discussing, won't that just be a license for GovCons to discriminate? Is that kind of how people would interpret that?

Declan Leonard

Yeah, I can see people making that argument. But no, because there are already so many laws on the books. I mean, Title VII, and ADA, and ADEA governing age discrimination. You already have so many laws on the books that cover this that I think this was an extra sort of a push to perhaps go beyond the real goal and aim of what the anti-discrimination laws are.

I still think you have that. The federal acquisition regulation is very strong and flowing those down to primes and subs. And so yeah, no, I think for HR folks out there, while I think this will take up a lot of oxygen, I think you still are going to have to focus on maintaining discrimination-, harassment-free workplaces, free of retaliation, too.

I don't think it's going to be that seismic. I just think there'll be a lot of talk about it because it seems to garner a lot of attention.

Joe Young

We touched on it a little bit. Obviously, one of the hottest topics on the news is Elon Musk, Vivek Ramaswamy, DOGE Committee… With my company, the company name of GovConPay and “gov” in the name, I always find a lot of people coming up to me like, “What do you think this means for you? Is this good? Is this bad?”

Are there opportunities for government contractors? What do we see the impact of this mission being

Seth Berenzweig

Yeah, it's funny, I saw on the internet today one of Musk's new nicknames is he's now known as “the best buddy,” or “the first buddy.” I think that that DOGE, or the Department of Government Efficiency, in my view, is misunderstood on a couple of different fronts.

There's been a lot of talk about whether or not this is really relevant and if it would really come into play because they're technically not a specific federal agency. Well, there have been advisory commissions and committees that you can list throughout history that have the ear of the president. And the president is in charge of how to run his executive branch.

So, I think that's a distinction without any meaningful difference. On a substantive aspect, if you want to understand how meaningful it is, then just turn on your radio or just turn on your podcast or your television today. Joe, as you were mentioning earlier, Elon Musk stepped into the fray on this largely pork barrel plan for budgeting for 2025.

And now all hell's broken loose on Capitol Hill.

Declan Leonard

Tell us how you really feel, Seth. See if you get season tickets for Commanders.

Seth Berenzweig

I don't think I'm going to get those anyway. But I think that DOGE is going to really play a very important role. And it is a hallmark of the administration that's coming in on a wave of people who have felt, like it or not, that it's time to clean house, that it's time to drain the swamp.

And there's a lot of money that's being spent. We have a $35 trillion national debt, and this is really going to be a meaningful change. When you combine the mission of DOGE, which is really going to be mostly a fact-finding inquiry exercise of 2025, together with other associated steps such as initiating the Schedule F Initiative, which might start at least through an executive order, DOGE is going to be a really big deal.

It's going to come into play, and I think a lot of it, for the initial major thrust, is going to involve, in my opinion, is just transparency. The first impression is not going to be “What are we going to cut?”, but “What have we been spending on? How much money have we been spending on this?”

We know today that billionaires in the NFL were going to get $3 billion for a stadium renovation. I don't think that we would have even known that if it wasn't for Musk coming in. He's pretty controversial. I like this. But like it or not, this is part of the new system and there's a new game that's going to be played in 2025.

Declan Leonard

I think there are opportunities for government contractors. I do think that if they loosened the regulations on the bidding process and just generally the regulations and the hoops that you have to jump through on the HR side and every other aspect of government contracts, I think it is going to free up some budget for some of the small and mid-sized government contractors to go for bigger and better contracts, perhaps as a prime and maybe have a little bit more of an operating income to increase their work.

We're talking about a lot of challenges. I personally believe that there's going to be a lot of uncertainty and perhaps some chaos for a while. But I think the way you have to look at it is to take these challenges and turn them into opportunities. You should look at it that way.

Another big thing for HR folks out there in the government contracting realm: Trump's Agenda 47. He is talking about moving a lot of government contractors, a lot of agencies, a lot of this work out of state. So much of it is coalesced in the DMV, although, it has spread out a lot more. When we do these handbooks and we have 26 state addenda, we certainly see that folks out there are operating in many states already.

 

So, it's not going to be so seismic, but that's another thing that I think that the companies have to be ready for.

Seth Berenzweig

Well, and for the HR folks, that's going to be a big deal because if you have to diffuse your personnel into different regions, then just from a practical standpoint, that's going to mean that you're looking at majorly changing logistics virtually overnight, right?

Joe Young

Yeah. And I think there was a bill that I saw last night. I think it was Nancy Mace. Don't quote me on that. I think the acronym is “Drain the Swamp.” And the focus of that, again, was relocating 100 plus thousand… plus also, everybody is focused on the fact that 10% of the government workforce is in the office and they say you're either in five days a week or you're not here at all.

So, yeah, let's talk about something that could be impactful and everybody has to be prepared for people relocating or mass resignations and all those things and how it impacts the contractors.

Seth Berenzweig

Get ready for federal leases to be terminated. They're going to have a field day terminating these federal leases of these empty buildings with people who are working from home. And again, I'm not offering an opinion to try to criticize. I'm just saying that from a practical standpoint, what they're going to say is – sorry, this will be the last time I raise Elon Musk today – but he saw a message one day about whether essential personnel need to report. And his question was, “If you're not essential, then and you don't have to go to the office, then why are we paying your salary?” So I think you're going to see changing personnel. You're going to see office closures for federal leasing.

And a lot of it's going to be shifting out to the field. And they're going to be relying on more technology.

Declan Leonard

In terms of HR preparing for this, and again, whether this goes through, whether Trump's Agenda 47, which is officially it's called, moving agencies across the country and everything like that… Whether it goes through or not, we see already that most government contractors are already operating in so many different states.

We handle handbooks all the time. We handle employment matters all the time, where you've got to take into account where these employees are located, because it’s every state now. We spent a whole round up on pay transparency, things of that nature. One piece of advice I would say is if you don't have your A-game from a recruiting side, that is really, really, really where you need to step it up because you may find that your work is being relocated to another state.

You may have to sort of scramble and ramp up in another jurisdiction that you may have no real visibility in. I don't think it's going to matter, though, for headquarters. Headquarters can be really anywhere nowadays, your back office and your headquarters. It's really your people out in the field.

Seth Berenzweig

Yeah.

Joe Young

So in our remaining time here, I know we have a lot of our clients, folks that you guys deal with, heavily invested in working in the defense and the security space. What are some of the hot topics there or things people need to be maybe refocusing on?

Seth Berenzweig

I think cyber is going to continue to be a hot topic and technology solutions for cyber, which will be in part powered by AI. There's going to be increased need for pen testing, penetration testing, for environments. There was an announcement a day or two ago by one of the folks that was a nominee for the new administration that China has penetrated a lot of additional agency devices that we were previously unaware of.

Declan Leonard

Through routers, I think, right?

Seth Berenzweig

Yeah. So, again, the technology space related to AI and cyber is going to continue to be huge. It's going to be increasingly critical. That's going to be one of the aspects from a national defense and security standpoint. And I think that also ties into one of Declan points that he made a moment ago, which is: Think about this as a business opportunity.

How can you explain from a security, but also from a business and cost effectiveness standpoint, how this should be viewed from a bid and proposal perspective? I think that there's just a lot of new opportunities out there.

Declan Leonard

I know we only have a few minutes, but I just want to touch on this. We could we could talk for hours on this and I suspect we'll be hitting this in our next year of the Round-Up. But “Buy American, hire American,” that is going to be a big initiative under the Trump administration. Outsourcing jobs is going to be a no-no anymore if that goes through.

So, again, recruiting efforts through the HR folks.

Seth Berenzweig

Lot of this falls squarely on HR, doesn’t it?

Declan Leonard

100%. Yeah, yeah, yeah. And immigration enforcement, that's another huge one.

Seth Berenzweig

Another HR, yeah.

Declan Leonard

Whether or not these things take the place in the form of workplace raids – who knows if it'll be that drastic, but I suspect there's going to be a lot more scrutiny on who you are employing and whether or not those people… I mean, your I-9 system, which has gone through some technological changes, it's no longer always just the paper process that we're so used to in the past, that better be up to snuff.

So all of those areas, I think HR is going to have to be very proactive going into 2025.

Joe Young

Well, I think over the course of the last 12 months, the one thing we've consistently done is show that for our HR professionals out there that are joining us, your jobs, your lives, are not getting any easier. Things are going to remain complicated as the rules and the priorities continue to change. And we certainly hope over the past 12 months in this first year of doing it with Seth and Declan, we've hopefully brought some value due to kind of answer some of those questions and give you some advice and guidance. That's hopefully made the challenging work that you do every day a little easier and we are happy to announce we do plan to do year two.

Declan Leonard

We got picked up is really what it is. Our major sponsor, Berkshire, has picked us up for a season two.

Joe Young

Season two!

Declan Leonard

Yes, yes, yes.

Declan Leonard

Yellowstone is done. So yes, tune in to us.

Joe Young

So we will be dropping in January. Same with our targets of these third Thursdays. In January that will be January 16th. I will not tease what the topics are going to be because I think we're still going to work on our topics and our schedules for next year.

But for those who are subscribers out there, one announcement we do have is you will be getting an email for us because we are going to be kind of changing our platform that we deliver our podcast on.

You will see an email from webinars@berenzweiglaw.com. There's nothing that you need to do, but when you get that, you'll be getting information on our schedule, registration opportunities, as well as our agenda that we'll be putting together here soon.

So last thing I'd like to do: Again, it's been a pleasure working with Declan and Seth.

We have an amazing team behind us that really makes this happen. I've mentioned Todd Castleberry, our producer. I would also like to specifically mention Rachel Goodnight from the Berenzweig Leonard team and Marcia McGeachie from the GovConPay team who do such a great job to make us look good, get the information out, and help deliver some great content.

So, everyone, thank you so much. We hope you've enjoyed today. We hope you enjoyed your time this year. We look forward to seeing you next year. Have a great holiday season and we look forward to getting together in 2025.