Legal Update

We are only in May and already we have seen a number of employment law updates this year that have a huge impact on employers. Johnson, Paseur, & Medley, LLC shared the info in the images below with us:

 

Fair Labor Standards Act

The #1 change everyone is talking about and preparing for is the recent update to FLSA. Effective July 1, 2024, the salary threshold for a position to be eligible for exempt status will increase to $43,888 ($844 per week) and will increase again effective January 1, 2025 to $58,656 ($1,128 per week). This is almost a 65% increase in the threshold and will have a significant impact on many employers and employees. In addition, the highly comped threshold will increase from $132,964 to $151,164 effective January 1, 2025. 

As the first deadline is quickly approaching, employers should be reviewing the current salaries of all exempt staff to determine how many employees this will impact and how to proceed with each position. Below are a few things to consider:

  • If an employee’s current salary is close to the new January 2025 threshold, would it be more beneficial to increase their salary to meet the new requirement. 
  • If an employee’s current salary is between the July 2024 and January 2025 thresholds, when should you move them to a non-exempt status and how far in advance should you communicate that change to the affected employees? 
  • For those employees that you will need to convert to non-exempt, is moving them to a salary non-exempt position the right option for your organization? This means that you guarantee an employee their full salary for hours worked up to 40, but would still be required to pay them overtime for hours worked in excess of 40 per work week. 
  • When do you need to have these converted employees set up in your timekeeping system so that they can begin to track their hours, and do you need to schedule training for these employees on how to use the timekeeping system? 
  • Does your organization have highly comped employees who will be impacted by the threshold increase and if so, what is the best way to navigate that impact? 
  • And the biggest question employers must ask is what financial impact will this change have on your organization and how can you mitigate that impact? 

Also, employers need to be prepared for the long-term effects of the most recent FLSA changes, as it also includes an increase every three years, with the next increase going into effect July 1, 2027. The rate of change has not been determined and will be calculated every three years based on current calculation methods, so the full impact of future increases is still unknown. 

To assist employers with understanding the new FLSA rules, the Department of Labor has scheduled two webinars that employers can sign up to attend for free. 

Non-Compete Agreements

In April, the Federal Trade Commission (FTC) issued a ruling banning most non-competes effective September 4, 2024. This ban includes non-competes for all employees, including senior executives. Current non-competes become null and void for most employees, with the exception of senior executives. If senior executives have a current non-compete, they can remain in force if those individuals earn at least $151,164 and are policy makers. However, effective September 4th, no new non-competes can be entered into with senior executives. 

As part of this ruling, companies who have current non-competes in place will be required to notify all employees, excluding those current senior executives, that the non-competes will be null and void effective September 4, 2024. To aid in this effort, the FTC has provided sample language employers can use. 

While employers can no longer utilize non-compete agreements, there are alternatives to help protect proprietary information, such as a non-disclosure agreement or confidentiality agreement. In addition, Federal Trade Laws provide a great deal of protection to employers. 

EEOC Guidance on Harassment in the Workplace

A few weeks ago, the EEOC released final guidance for employers on the legal standards and employer liability that apply to harassment claims. This new issuance was designed to update and consolidate the previous five guidance documents issued between 1987 and 1999. Since the last guidance was issued, there have been significant changes to discrimination laws, including the landmark decision in Bostock v. Clayton County (2020) in which the Supreme Court ruled that sexual orientation and gender identity were protected under Title VII. 

The newly issued guidance includes a significant number of examples to illustrate various forms of harassment and discrimination, not only from coworkers, but also from vendors, customers, and other third parties. It also addresses the changes in the workforce, such as remote work, increased use and modernization of technology, and social media harassment. 

In addition to these changes, there have been some significant guidance documents released recently, as well as a significant decision by the Supreme Court that impacts discrimination claims. 

What to Watch For

In addition to the updates above, there are a number of items that HR professionals and business leaders should keep on their radar this year. 

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Author

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Lorrie Coffey