Along with sunshine and (hopefully) warm weather, summer brings employment law and HR changes to employers!
The U.S. Department of Labor (DOL) announced it will increase the Fair Labor Standards Act (FLSA) annual salary level threshold for executive, administrative, and professional exemptions (typically referred to as the white-collar exemptions). Under these rules, employees should generally be classified as non-exempt (and therefore eligible for overtime) unless they meet certain criteria such as the duties test and salary threshold.
The current threshold is $35,568 ($684 per week). Effective July 1, 2024, the salary threshold will increase to $43,888 ($844 per week). Highly Compensated Employee (HCE) threshold will increase to $132,964 per year, which includes at least $844 per week.
Effective January 1, 2025, the annual salary threshold will rise to $58,656 ($1,128 per week). The HCE threshold will increase to $151,164 per year, which includes at least $1,128 per week.
What’s Next? Many legal experts predict the new rule will be challenged. In the meantime, employers must take stock of current exempt employees that do not meet the upcoming new threshold of $43,888 and make a plan while staying tuned to developments.
On 4/23/24, the Federal Trade Commission (FTC) voted to prohibit most new noncompete agreements in employment contracts. It also makes all existing noncompete agreements (except those covering senior executives) unenforceable.
What’s Next? The rule is supposed to be effective in late August, but is already facing opposition which may extend this timeline. If the rule survives legal challenges, employers will be prohibited from entering into most new concompete agreements and prohibited from enforcing existing noncompetes (except in limited circumstances).
Minnesota Employers. Remember that Minnesota made changes limiting noncompete clauses, effective 7/1/23.
The PWFA went into effect on June 27, 2023. The EEOC (Equal Employment Opportunity Commission) issued final regulations, which go into effect on June 18, 2024. The PWFA applies to employers with 15 or more employees. Covered employers must provide reasonable accommodations for an employee’s or applicant’s known limitations related to pregnancy, childbirth, or associated medical conditions, unless the accommodations would cause the employer an undue hardship. An employer may only request the “minimum documentation” necessary to confirm the employee has a physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions and describe the adjustment or change at work due to the limitation.
The final regulations recognize four “predictable assessments” that will not impose an undue hardship in “virtually all cases”:
The regulations require reasonable accommodation for lactation beyond what may be required under the Providing Urgent Maternal Protection for Nursing Mothers Act (PUMP Act).
Minnesota Employers. Remember that Minnesota made changes requiring pregnancy and lactation accommodations, effective 7/1/23.
The Department of Labor (DOL) implemented a final rule (rule or final rule) for the analysis of independent contractor (IC) status, effective 3/11/24. The rule marks a return to the “economic realities” test previously utilized by the DOL during the Obama Administration. The rule revises the DOL’s guidance on how to analyze the employee versus contractor classification under the Fair Labor Standards Act (FLSA). The rule rescinds the IC prior rule published in January of 2021.
What is the Economic Realities Test? To analyze if a worker is an employee or independent contractor, the final rule provides six factors that organizations should consider when analyzing the economic realities of the working relationship. This six-factor test does not concentrate on any particular factor and instead focuses on an individual’s activity as a whole to determine IC status. This “totality-of-the-circumstances” approach includes the following:
What’s Next? Legal challenges to the ruling are already in the mix. However, if your organization utilizes independent contractors, it is critical to pull together a list of your ICs and review classification under the final rule. Closely evaluate the six-factor test with a “totality-of-the-circumstances” approach and be prepared to implement decision making on what to do with a worker that no longer fits under the IC umbrella for the FLSA. The consequences of misclassification may include a hefty price tag for your organization in back pay, penalties, liquidated damages, and attorneys’ fees.
This is a brief synopsis of complicated and hotly contested regulations. Stay tuned for updates and consult with a trusted advisor to fully understand how the final rule impacts your organization.
Originally published in the June edition of Business North.
Human Resources thought leader, Stacy Johnston, provides innovative solutions with a mission to support organizations in understanding and engaging their biggest competitive advantage… their employees. Johnston is a licensed attorney and holds the SHRM-CP credentials.
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