One-Two Punch

Tuesday was a busy day for your friendly neighborhood employment lawyers, as both the DOL and the FTC made major announcements.

1. First, the DOL announced increases to the minimum salary threshold for exempt employees.  On July 1, the threshold is set to increase from $35,568/year to $43,888.  On January 1, 2025, the threshold will increase to $58,656.  The duties tests for exempt employees do not change – just the minimum guaranteed amount.
2. Similarly, the minimum salary threshold for highly-compensated employees (which has a relaxed duties test) is set to increase on July 1 from $107,432 to $132,964.  On January 1, 2025, that threshold is set to increase again to $151,164.
3. Second, the Federal Trade Commission outlawed most non-compete agreements Tuesday.  If and when the rule takes effect – slated for August – you will not be able to have a non-compete agreement for anyone making less than $151,164.  Prior to the effective date, you can still enter into non-competes for someone making more than that amount provided they are in a policy-making position.  While you will be able to enforce policy-maker agreements after the effective date, you will not be able to make anyone sign a non-compete agreement.

What does this mean for you?  As to the non-compete rule, it has already been challenged and there is a good chance that it will never actually take effect. Does anyone here remember the OSHA vaccine mandate? We recommend that you do nothing about your agreements at this point other than monitor the news. On second thought, if your existing form is more than 2 years old, you probably ought to check in with your favorite board-certified employment lawyer to make sure your agreements are state-of-the-art. With respect to the FTC shenanigans, if the rule has not been enjoined as we approach the effective date, we will supplement our recommendations.

How about the salary threshold requirements?  Like the non-compete rule, there is pending litigation that may mean that these changes will not go into effect. However, we do recommend that you analyze your overtime exempt positions to see if you are paying anyone a salary who makes less than $43,888 (as well as $58,656).  For those employees, start thinking about whether it makes sense to raise their salary so that they meet the new threshold, or whether they should be converted to overtime-eligible positions, if these new thresholds take effect. (Or ensure they do not work more than 40 hours per week.) And while we are on the topic of the FLSA , if you have not done an audit of your FLSA compliance in the last 2 years, let us help you make sure you are fully compliant with that highly aggravating law.