DOL RAISES SALARY THRESHOLD FOR WHITE-COLLAR EXEMPTIONS
Under the Fair Labor Standards Act (FLSA) and Virginia law, employers must pay non-exempt employees at least minimum wage for all hours worked and an overtime premium for all hours worked in excess of 40 hours in a week. The Department of Labor has announced new regulations that will take effect on July 1, 2024, increasing the salary thresholds required for employees to be considered an exempt executive, administrative, or professional (EAP) employee or an exempt highly compensation employee.

Effective July 1, 2024, employers must pay employees a salary of $844 per week (which is the equivalent of $43,888 annually) to qualify as an exempt EAP employee. As of January 1, 2025, the salary threshold will further increase to $1,128 per week (which is the equivalent of an annual salary of $58,656). To take advantage of the highly compensated employee exemption, employers will be required to pay total compensation of $132,964 as of July 1, 2024. Effective January 1, 2025, the threshold for highly compensated employees increases to $151,164. Additionally, the DOL’s rule provides a system for automatically updating the salary thresholds every three years.

Recently, a group of businesses and business associations filed a lawsuit in federal court in Texas, challenging the DOL’s authority to enact the new salary thresholds and asking the court to set aside the DOL rule. The DOL has indicated that it believes the phased increase in the salary threshold appropriately responds to business concerns. K&C will be keeping on an eye on this litigation and its potential impact on the DOL rule’s deadline for implementation.

PRACTICAL POINTER

Employers should start planning now. Do not wait for the outcome of the court challenge to the DOL’s rule. First, employers should make sure their currently exempt employees meet all requirements for the exemption, including the performance of exempt duties. While employers do not need to raise salaries now, they should see where current salaries stand in relation to the new, higher threshold and start making plans for how to handle employees who fall short of the threshold as of July 1, 2024, and then again on January 1, 2025. Employers should also start training supervisors to deal with those employees who do not receive overtime now but will when the new rule takes effect.

EEOC ISSUES LONG-AWAITED HARASSMENT GUIDANCE
On April 29, 2024, the US Equal Employment Opportunity Commission (EEOC) released new Enforcement Guidance on workplace harassment. Since the last EEOC Guidance on workplace harassment was released almost 25 years ago, a lot has transpired regarding harassment in the workplace. Accordingly, the new Guidance recognizes new areas of focus, new legal opinions, and new work environments. For example, this Guidance incorporates compliance with the US Supreme Court’s 2020 decision in Bostock v. Clayton County, wherein it was recognized that Title VII protects employees against discrimination based on sexual orientation and gender identity.

The Enforcement Guidance makes it clear that harassment due to any characteristic protected by the laws enforced by the EEOC can be illegal. Accordingly, the Guidance covers harassment based on race, color, religion, sex (including pregnancy, childbirth or related medical conditions, sexual orientation, and gender identity), national origin, disability, age (40 or older) and genetic information. The new Enforcement Guidance also addresses required policies, training, and instruction for supervisors on when and how to report harassment.

The Guidance also includes and addresses a number of practical scenarios faced by employers. In that regard, the new EEOC Charlotte District Director, Elizabeth “Betsy” Rader, was contacted regarding this article and commented “HR Professionals in particular may be interested in the numerous specific fact patterns addressed in the Enforcement Guidance”.

FYI

To help update employers at ELU on this new Enforcement Guidance, the K&C Employment Team has invited Betsy Rader to participate in its upcoming 40th Annual Employment Law Update on July 16th at the Hampton Roads Convention Center. Betsy will be available to answer questions about this new Guidance and she will help present a workshop on effective workplace harassment investigations.

LAWSUITS CHALLENGE FTC BAN ON NONCOMPETES
On April 24, 2024, the FTC unveiled its Final Rule banning noncompetes, scheduled to go into effect on September 4, 2024. However, most experts agree that the rule is unlikely to become effective then based on multiple pending lawsuits.

Key provisions of the Final Rule:

• It is an unfair method of competition for an individual or entity 1) to enter into or attempt to enter into a noncompete clause with a worker or senior executive; 2) to enforce or attempt to enforce such a provision against a worker (or against a senior executive after the effective date); or 3) represent that such a provision is enforceable against a worker (or against a senior executive after the effective date).
• Employers are required to rescind existing noncompetes that are unfair methods of competition and provide notice to workers that they are no longer in force.
• A “noncompete clause” is a term or condition that prevents the worker after the end of the relationship from seeking or accepting employment with a person or operating a business after the end of the worker’s employment with the employer.
• The term “worker” is used because employers would not only be prohibited from using such clauses in agreements with employees, but also with other individuals like sole proprietors, interns, externs, volunteers, and independent contractors.
• A significant exception to the ban is a noncompete clause a person enters into pursuant to a bona fide sale of the following: 1) a business entity, 2) of that person’s ownership interest in a business entity, or 3) of all or substantially all of a business entity’s operating assets.

FYI

As mentioned above and anticipated in our previous Alert on the FTC ban, soon after the Final Rule was announced, parties filed lawsuits in Texas challenging the ban and seeking to enjoin its taking effect. K&C’s Labor & Employment Team is closely monitoring that litigation which may be decided as early as July 3, 2024.