The Latest: Interest Rate Cuts, Pregnant Workers, Federal Contractors, Crypto in 401(k)s, and Rising Healthcare Costs
During his Aug. 22 address to an annual economic conference in Jackson, Wyoming, Federal Reserve Chair Jerome Powell signaled that the Fed was preparing to cut interest rates at its September meeting, although he did not explicitly say so.
“The balance of risks appears to be shifting,” Powell said during his much-anticipated speech, indicating that a soft labor market and inflation “may warrant adjusting our policy stance.”
While Powell highlighted the recent slowdown in monthly jobs growth, he questioned whether it was due to companies seeing less demand or to a reduction in workers resulting from Trump’s immigration policies.
“This unusual situation suggests that downside risks to employment are rising,” Powell said. “And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”
After reviewing a constitutional challenge of a 2024, Texas district court ruling that blocked enforcement of the Pregnant Workers Fairness Act (PWFA), the 5th U.S. Circuit Court of Appeals reversed the ruling, reinstating enforcement of the law.
What does the law require?
In 2023, the PWFA became law when it was added to the 2023 Consolidated Appropriations Act, signed by President Joe Biden. The PWFA requires employers with 15 or more employees to provide reasonable accommodations for job applicants and employees with known limitations related to pregnancy, childbirth, and related conditions. In 2024, the EEOC issued a final rule that stated that abortion is a protected medical condition under the PWFA.
Is this the last word?
Not at all. The PWFA, and especially the rule requiring abortion to be a protected medical condition, has been under continual challenge since its passage. But since the EEOC currently lacks a quorum (which has been the case since Donald Trump fired three Democratic EEOC commissioners in January), it cannot respond to those challenges—even though Acting EEOC Chair Andrea Lucas has publicly supported them.
However, Trump nominated a new commissioner for the EEOC— Brittany Panuccio—in May, and that nomination is pending Senate confirmation. Panuccio’s appointment would form a quorum, enabling the EEOC to conduct new business.
What should I do?
For now, the PWFA is the rule of the land, and organizations must uphold its provisions to be in compliance.
If your job plays any role in the management of federal contractors, listen up.
After the White House’s 2026 fiscal year budget proposal for the U.S. Department of Labor (DOL) appropriated no funding for the Office of Federal Contract Compliance Programs (OFCCP), the DOL has confirmed that the OFCCP will be shuttered next fiscal year, which begins October 1, 2025.
The OFCCP, which is part of the DOL, is responsible for ensuring that federal contractors adhere to federal anti-discrimination laws and regulations. To do this, the OFCCP administers and enforces laws that make it illegal for contractors and subcontractors doing business with the federal government to discriminate against employees on the basis of disability; protected veteran status; and race, color, religion, sex, sexual orientation, gender identity, or national origin.
The DOL says it plans to reassign the OFCCP’s responsibilities to protect people with disabilities and veterans to the EEOC and Veterans’ Employment and Training Service, respectively.
The Trump Administration has stated that its January 2025 executive order rescinding a 1965 law that prohibited federal contractors from discriminating against employees and job applicants on the basis of protected characteristics removed the “primary basis for OFCCP’s enforcement authority and program work.”
But this doesn’t apply to me.
Even if you do not deal with federal contractors in your role, the federal government’s widespread elimination of laws and regulations that had forbidden discrimination against employees with protected characteristics is likely to spawn similar efforts in some state, regional, and local governments. Have proactive conversations with your organization’s leadership to discuss how your organization may want to respond if any of the anti-discrimination laws that apply to your vendors are challenged or rescinded. prepare for ripple effects on pay compression.
Earlier this month, Donald Trump signed an executive order paving the way for giving U.S. citizens the option of investing their 401(k) retirement savings in cryptocurrency, private equity, and real estate.
The move is in opposition to the Biden Administration’s instruction to 401(k) plan fiduciaries to exercise “extreme care” before adding cryptocurrency to their investment options for employees.
Trump’s executive order directs the Secretary of Labor to reexamine the Department of Labor’s (DOL’s) guidance on a fiduciary’s duties regarding alternative asset investments in 401(k) plans and to clarify the DOL’s position on alternative assets. The Security and Exchange Commission has been directed to facilitate access to alternative assets for retirement savings plans by revising applicable regulations and guidance.
Not everyone thinks this is a good idea.
While some have called for more options for investing retirement savings that could potentially have higher returns, others advise caution, saying investment in alternative asset classes such as crypto is too risky. Because employer sponsors of employee retirement accounts are required to act in the best interests of their plans’ participants, they will bear some of that risk.
Employers would bear the burden of educating their plan participants about complicated assets that involve higher fee structures and are governed by looser regulations and reporting requirements. The higher risk of loss may also lead to potential employee litigation against employers if alternative assets perform poorly.
What if employees start asking me about investing their 401(k)s in crypto?
For now, many economic advisors urge that employers take a “wait and see” approach. When the Trump Administration provides more guidance about these investment options, companies will need to carefully weigh the risk and benefits of offering them to their employees.
According to the annual Employer Health Care Strategy Survey conducted by The Business Group on Health, a network of large employers that advocate for sensible healthcare policy, employers predict that their healthcare costs in 2026 will increase a median of 9%. The survey was completed by 121 employers that offer insurance to 11.6 million employees.
It’s possible that these projected costs may wind up being higher. In 2023, an expected 6.5% rise in healthcare costs for employers ended up being 7.5% at the end of the fiscal year.
Put into perspective, healthcare costs are projected to be 62% higher in 2026 than they were in 2017.
Pharmaceuticals, which represented 24% of healthcare dollars spent by employers in 2024, are expected to increase another 11%-12% in 2026. Part of this dramatic increase, said employer respondents to the survey, can be attributed to potential tariffs, proposed changes to Medicare and Medicaid, and other dynamics at play in the pharmaceutical market.
Survey respondents said their top priorities in the coming year are healthcare costs overall, followed by affordability for their organization and affordability for employees.
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The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
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Published On: February 5, 2025
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