Anne W. Chapman Esq., Labor & Employment Law
In 2024, we witnessed two federal agencies issue rules that would have had a significant impact on employers. The Federal Trade Commission (FTC) issued a rule banning non-compete provisions in most circumstances and the Department of Labor (DOL) issued a rule significantly increasing the minimum salary for employees exempt from overtime pay. Neither rule went into effect as each was separately enjoined by a federal court prior to its respective effective date. While the future of the proposed rules remains unclear, it is clear that the issues of FLSA exemptions and non-competition agreements will remain subject to scrutiny in the future.
In April 2024, the DOL issued a rule to increase the minimum salary for exempt employees. The rule provided a two-step process to increase the minimum salary with an initial increase in July 2024 and then a much more significant increase effective January 1, 2025. The rule also provided for automatic increase in the salary threshold level in the future. Shortly before the July 2024 effective date, a federal court issued an injunction in a lawsuit challenging the rule and prohibited the rule from going into effect. As a result, for now employers do not need to worry about an increase of the current $36,000 salary threshold.
However, employers should be mindful that it is inevitable that this salary threshold will be increased at some point in the future. Furthermore, employers should remember that the salary basis is only one component of the exemption criteria. An employee’s job duties must meet the criteria for an exemption for the employer to avoid overtime obligations. Thus, paying an employee on a salary basis (as opposed to an hourly basis) does not mean an employee is automatically ineligible for overtime compensation. Employers should routinely confirm that their exempt employees meet all the criteria for an exemption from overtime pay.
In May 2024, the FTC issued a rule that would have effectively banned non-competition provisions in agreements for employees and contractors. The rule did not prohibit non-solicitation provisions. Shortly before the September 2024 effective date of the rule, a federal court issued an injunction prohibiting the rule from going into effect. The legal case is still on-going, and the National Labor Relations Board has expressed its intention of joining in the initiative to curb the use of such agreements. The agency’s position concerning the ban on non-competes may change with the new administration. However, it still appears prudent for employers to review their current agreements and place more focus on refining non-solicitation and confidentiality provisions in employment agreements.
We will continue to monitor the developments on employments issues and keep you apprised of new development. If you require any assistance related to employment law related matters, contact Florida Board certified labor and employment attorney Anne Chapman at 941-748-0100 or achapman@blalockwalters.com.
