Important Employment-Related Compliance Updates

The U.S. Department of Labor (DOL) has issued its long-awaited updated rule on white-collar salary exemption standard. This rule sets the minimum salary threshold that employees must earn if they are to be exempt from minimum wage and overtime regulations within the Executive, Administrative, or Professional wage orders, commonly referred to as “White Collar Exemptions.”

To quickly review, employees must meet three criteria if they are to be considered exempt under the White-Collar Exemption. The three criteria include:

1. The Duties Test: establishes that the employee performs the required functions set forth in the designated exemption.
2. The Salary Basis Test: requires that the employee is paid the same salary each week, regardless of the quality or quantity of work performed.
3. The Salary Threshold Test: requires employees be paid a prescribed rate of pay.

If any of these tests are not met, employees may be eligible for overtime payments when they work beyond 40 hours in a week.

The current salary threshold is $35,568 annually, which employers typically pay incrementally throughout the year. Effective July 1, 2024, the salary threshold will increase to the annual equivalent of $43,888 and increase again on Jan. 1, 2025, from $43,888 to $58,656.

The July 1 increase is based on the methodology used by the prior administration in the 2019 overtime rule update. On Jan. 1, 2025, the rule’s new methodology takes effect, resulting in the additional increase. The new Rule also adjusts the salary threshold for highly compensated employees from its current threshold of $107,432 to $132,964 by July 1, 2024, and increase from $132,964 to $151,164 by Jan. 1, 2025.

Beginning July 1, 2027, salary thresholds will update every three years using up-to-date wage data to determine new salary levels.

G&A Recommendations

Prepare for this change by determining how you will address individual employee’s wage rates. Employers may choose to increase an employee’s salary to the required minimum (or more, if they choose), no later than the date on which the change becomes effective, thus preserving their employee’s exemption status.

Alternatively, employers may determine that they will not increase the employee’s wages to the required minimum salary threshold, in which case, the employee must be transitioned to a non-exempt status. This will require the employee to begin tracking work hours, including:

• Arriving at and departing from work;
• Providing paid rest breaks as required by federal and/or state law;
• Providing meal period breaks as required by federal and/or state law;
• Maintaining records of hours worked for each non-exempt employee; and
• Paying overtime rates of pay for all hours worked in excess of 40 in a week, or as required by applicable state law.

Have questions or concerns? Please contact your dedicated client advocate or your on-demand G&A support team, AccessHR, at 1-866-497-4222.

FTC Announces Rule Banning Non-Competes

Pending Publication of the Rule and Outcome of Legal Challenges

Overview:
The Federal Trade Commission (FTC) announced adoption of its final rule regarding non-compete agreements. The purpose of the rule is “to promote competition by banning noncompetes nationwide, protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.”

High-Level Details:

• The Commission has determined that non-competes are an unfair method of competition.
• The final Rule prohibits employers from entering into new non-compete agreements with workers on or after the Effective Date.

Once the Rule Becomes Active:

• Non-compete agreements currently in effect will become void.
• Employers must notify workers under a non-compete agreement that the current Agreement is no longer enforceable.
• Existing non-competes for senior executives may remain active, subject to certain requirements.
• Employers are prohibited from issuing new non-compete agreements to executives.

This ruling has already been challenged in court, leaving applicability uncertain. G&A Partners will continue to monitor developments and provide relevant updates should facts change.

If you have further questions or require assistance, please seek advice from your employment law attorney.

EEOC Issues Final Rule Regarding the Pregnant Worker Fairness Act (PWFA)

Effective Immediately

The Equal Employment Opportunity Commission (EEOC) issued its final Rule regarding the Pregnant Worker Fairness Act (PWFA), which went into effect in June 2023. This Rule provides clarification and guidance to employers as they implement the required employee protections under this law.

To recap the broad provisions of the law, employers with at least 15 employees must provide the same consideration to employee requests for accommodations related to pregnancy, childbirth, and related medical conditions, that they provide to employee requests for accommodations under the Americans with Disability Act (ADA).

The final Rule broadly defines “pregnancy, childbirth, or related medical condition” using a list of illustrative examples, not intended to be exhaustive, including:

• Pregnancy, including current, past, and potential;
• Infertility and fertility treatments;
• Termination of pregnancy, regardless of method (miscarriage, abortion, or stillbirth);
• Pregnancy-related illness, including conditions that may be exacerbated by pregnancy;

The EEOC has reiterated that “nothing in the PWFA requires, or forbids, an employer to pay for health insurance benefits for an abortion.” However, the rule protects employee’s rights when or if they choose to obtain an abortion. The EEOC states that employers raising religious-based exceptions to this Rule will be evaluated on a case-by-case basis.

As with employee accommodations under the ADA, employees must be able to perform the essential functions of the job, with or without a reasonable accommodation. Accommodations under the PWFA, though, apply to a broader range of employees. Employees who may only be temporarily impaired, and the ability to perform the essential functions of the job will resume “in the near future” are included in the PWFA’s scope of protected employees.

Employees are protected under the PWFA if they have a “known limitation” in their ability to perform the essential functions of the job. This simply means that the employee, or the employee's representative, must have disclosed to the employer that they have a limitation. In this context “limitation” has been defined as meaning “a physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions that the employee or employee’s representative has communicated to the employer” regardless of whether it meets the definition in the ADA.

G&A Recommendations

As with the ADA, employers who are notified that an employee is pregnant, gave birth, or is suffering from a medical condition related to pregnancy must engage in an interactive process to determine what, if any, reasonable accommodation may be made to assist the employee in their ability to perform the essential functions of the job.

It’s a good reminder that, under the PWFA and ADA alike, time off work, including a leave of absence, can be considered a reasonable accommodation. However, any determination regarding appropriate accommodations must be reached through the interactive process, which requires both parties to participate in the search for a solution.

Lastly, if an employee requests time off, whether for personal or health-related reasons, the employer should refrain from asking about the specific reason for their time off request. Employer inquiries into employee time off requests, including leaves of absence, should be limited to the duration of the leave and, when allowed under state or federal law, the documentation necessary to initiate protected leave parameters.

Have questions or concerns? Please contact your dedicated client advocate or your on-demand G&A support team, AccessHR, at 1-866-497-4222.