Trump came into the Oval Office with pen blazing. In his first week and a half in office he has signed seven executive orders, so far, in addition to 11 memoranda. He’s also fleshed out his cabinet nominees, many of whom have already been confirmed. Some of these actions have clear business implications, some less so. Personally, it’s been a while since my civics class in eighth grade, so first, a quick rundown on what it all means. Then, we’ll dig into the top three actions and their implications.
Understanding the Executive Branch
Yes, there are three branches of government, as we all learned in middle school civics. The legislative branch (Congress) makes the laws; the executive branch (the president, and everyone who reports to him) “enforces” the law; and the judicial branch (the courts) interpret the law. When we talk about executive orders, we are talking about the mechanics of how the executive branch works. The executive branch isn’t just the president; it’s the entire, vast, sprawling federal bureaucracy.
The cabinet nominees who are undergoing confirmation hearings each head one huge federal agency. And underneath each cabinet member is an org chart. All total there are something north of two million federal employees — not including the military and other uniformed services. Anyone who works for any of the executive agencies ultimately reports to the president.
While it is true that the legislature “makes the law” by passing federal statutes, that’s really only half the story. Laws passed by Congress are the “big print.” Most federal statutes include language that delegates responsibility for implementing the law to one of the executive agencies (think HUD, EPA, Department of Labor, etc.). That agency then fills in the fine print, which is where the rubber meets the road. Put simply, Congress tells the agencies what to do, but the agencies themselves get to decide how, when, where, etc. And ultimately, the president and his cabinet give the marching orders that the agency follows.
Executive orders, then, are just that: the president, as the “CEO” of the federal government, giving orders to everyone on down the org chart of the federal bureaucracy, telling them how the president wants them to do their jobs. Executive orders can’t override or contradict statutory edicts from Congress. Congress draws the lines inside of which the president gets to color. Obama spent eight years issuing executive orders coloring everything blue. Now Trump is coloring red. This happens every time control of the White House changes. It’s nothing new, and it’s not surprising. This is business as usual.
The one check/balance that remains on all of this is the courts. Statutes, regulations and executive orders can all be challenged in federal court as unconstitutional. Federal judges have the power to void any of those things that violate the constitution.
So with all that in mind, let’s take a look at the top three orders our newest CEO-in-chief has made for his executive organization.
Top 3 Actions That Impact Business
On day one, Trump signed his first order, an order aimed at starting the process of repealing the Affordable Care Act. Essentially the order directs the Department of Health and Human Services to interpret the regulations loosely to avoid economic burden. At the same time, the order emphasizes that agencies still have to uphold the law. The message is clear: uphold the law… for now.
What’s this mean for businesses? No change yet. It’s still business as usual for organizations of at least 50 people, when it comes to upholding the requirements to offer insurance to those employees working at least 30 hours per week. Stay tuned, but experts say it may take some time to fully repeal.
The president issued a memorandum to place a hiring freeze on federal employees, excluding military personnel. It also excludes cases where not filling an open position might create a security or safety concern. Following up on that memorandum, along a similar vein, Trump issued an executive order that for every federal regulation that is created, two must be removed. Both of these actions follow up on his stated intent to increase deregulation (or decrease regulation, depending on your perspective).
The impact is that more of the regulating activity is expected to happen at the state level. Some states (i.e. blue states) will likely have more regulations that are aimed at protecting employee rights, while other states (i.e. red states) will likely have fewer of these types of regulations. Ultimately the implications for business are that those businesses that are multi-state will have to keep a close eye on all the regulations in the works in each of their states. Some good examples? Minimum wage, pay equity and paid leave laws.
In this executive order, a ban on travel has been put in place for travel to the U.S. from any of seven Muslim-majority countries: Iran, Iraq, Syria, Sudan, Libya, Yemen and Somalia. Affected are those with dual-citizenship, those with approved visas, and any refugees from the seven countries. A number of Silicon Valley executives have already spoken out against the ban and the problems it causes for their employees.
This order directly impacts those who currently do or intend to employ people from one of the seven countries. As with many of the actions taking place right now, the full extent of this order may not be fully realized it is completely played out in both courts and big businesses.
Ultimately what businesses are facing right now is a rapidly changing landscape full of a lot of uncertainty. The best advice for now? Stay current, stay updated and develop multiple scenarios so you can pivot quickly as needed.