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EMPLOYMENT LAW UPDATES
New Minimum Salaries for Exempt Employees
Under the Fair Labor Standards Act (SLFA), employees with sufficiently high salaries are categorized as “exempt,” meaning they are not entitled to overtime pay. On April 23, the US Department of Labor (DOL) finalized a rule that will increase the minimum salary required to categorize an employee as exempt.
Currently, employees who fall under the white-collar exemption (such as administrators, managers, and teachers) must earn a salary of at least $684 per week or $35,568 annually to be considered exempt under the FLSA. Under DOL’s new rule, this minimum salary will increase twice in the next year. On July 1, 2024, the minimum salary will increase to $844 per week, or $43,888 annually. On January 1st , 2025, the threshold will increase again to $1,128 per week, or $58,656 annually.
The new rule also increases the minimum salary level for non-white collar employees who are exempt under the “highly compensated employee” exemption. Currently, an exempt non-white collar employee must be paid at least $684 per week in wages and $107,432 in total annual compensation. On July 1, the minimum weekly wage will increase to $844 per week and the minimum annual total compensation will increase to $132,964. On January 1, 2025, these minimums will increase again to $1,128 and $151,164 respectively.
Employers should be aware that under the new rule, DOL will continue to increase exempt salary minimums every three years. The next increase will occur on July 1, 2027.
DOL’s new rule will force many employers to choose between increasing the salaries of certain employees or re-categorizing these employees as “non-exempt” and offering overtime pay. The initial salary increase becomes effective this summer, so connect with us if you have questions about FLSA employee categorization.
FTC Bans Noncompete Agreements
On April 23, the Federal Trade Commission (FTC) issued a new rule that would invalidate noncompete clauses included in employment agreements. The rule has already been challenged in courts but, barring a successful challenge, is likely to take effect in late 2024 or early 2025.
Once the rule is effective, employers will have to notify employees working under noncompete agreements that the non-compete clauses are unenforceable. Notably, the rule does not affect nondisclosure agreements, nonsolicitation agreements, or agreements that protect trade-secrets.
If you are unsure whether language in your employment agreements will be subject to this new rule, we are here to help.
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