Changes to Fair Labor Standards in 2024

In 2024, changes to the minimum wage rate and salary thresholds may be proposed.

The Biden administration has proposed raising the annual salary and hourly basis threshold for employees. This change meets the salary basis component of the white-collar exemptions under the Fair Labor Standards Act (FLSA).

The salary basis level averages $684 per week or $35,568 annually. The proposal suggests increasing it to $1,059 weekly, or $55,068 annually.

This potential change would impact the classification of employees as exempt or non-exempt and their eligibility for overtime pay.

Employers must be aware of the federal minimum wage requirements and salary thresholds for exempt employees as mandated by the Fair Labor Standards Act (FLSA).

To avoid potential legal issues and ensure compliance with federal law, employers must stay updated on any proposed changes and adjust their practices accordingly.

FLSA changes to the “white collar” exemptions

The FLSA's “white collar” and highly compensated exemptions determine which employees are exempt from overtime pay. Proposed changes to the FLSA may impact these exemptions, including:

• Increases to minimum rates
• Salary thresholds
• Employee exemption compensation

There have been discussions regarding an increase in the federal minimum salary requirement for exempt employees.

Pay transparency laws across the country

The underlying goal is to address pay gaps and potential discrimination in the workplace. Here are some key points to consider regarding pay transparency laws across the country:

1. Disclosure of wage information: Many states have enacted laws that require employers to disclose information about wages and compensation to their employees.
2. Prohibition of pay secrecy policies: They prevent employees from disclosing their salary or discussing wages with colleagues.
3. Methods for inquiring about or discussing pay: Pay transparency laws often include provisions protecting employees who inquire about their pay or discuss wages with their colleagues.

If the $ per hour salary basis requirement is raised as proposed, millions of employees previously classified as exempt but earning below the new salary threshold could become eligible for overtime pay.

This puts employers in a difficult position, as they would need to either increase affected employees' salaries to meet the new weekly basis threshold or reclassify them as non-exempt and track their working hours to pay them overtime when necessary.

Potential changes to exemption:

Besides the proposed increase in the salary basis requirement, the Biden administration is also considering raising the threshold for those employees entitled to the highly compensated employee exemption from $107,432 to $143,988.

This means that individuals earning less than the new threshold would no longer qualify for the highly compensated exemption and might become eligible for paid overtime under the FLSA.

Employers need to assess how many highly compensated employees within their organizations would be affected by this potential change and plan accordingly.

While the Biden administration has proposed these changes and executive exemptions to the FLSA overtime rules, it is still being determined when or if the rule will go into effect.

It's worth noting that a similar effort to the overtime exemption and raising the minimum salary and basis threshold during the one-half times the Obama administration was struck down in federal court.

As a result, legal challenges to the proposed rule are expected. Employers should monitor updates from the Department of Labor and be prepared for potential changes to the overtime rule.

Challenges with non-compete agreements:

The National Labor Relations Board (NLRB) has also addressed the issue of non-compete agreements and other restrictive covenants for small employers.

The NLRB's general counsel has suggested that certain employers covered by non-competes and restrictive covenants may constitute unfair labor practices.

Non-compete agreements have been a topic of increasing debate.

In 2023, the Federal Trade Commission (FTC) proposed a rule to ban non-compete agreements altogether. Additionally, some states have passed laws making it more challenging to require employers to enforce such agreements.

Employers must stay informed about potential regulatory changes and legal developments regarding non-competes to ensure compliance and protect their interests.

The FTC's proposed rule to ban non-compete agreements has yet to be finalized. A vote on the final rule may occur as early as April 2024.

However, it is expected that there will be legal challenges to the FTC's proposed rule, similar to those faced by employers seeking the Biden administration's proposed overtime rule.

More issues with remote employees

Employers must consider reasonable accommodations under the Americans with Disabilities Act (ADA) when employees request to work from home due to disabilities.

When employees request to work from home as a reasonable accommodation under the ADA, employers may need to assess whether in-person attendance is an essential function of their positions.

Employers should have updated job descriptions outlining the essential functions, allowing employees to articulate why in-person attendance is necessary.

Medical documentation from employees' physicians can also support accommodation requests. Employers should explore alternative accommodations if in-person attendance is deemed essential.

Another year, another dollar.

Minimum wage rates are subject to change, with many states and localities implementing annual increases. Employers must stay updated on these changes to ensure they meet the minimum wage requirements in their state law-specific jurisdiction. Failure to comply with the state minimum wage rate, law, or regulations can result in legal consequences. The final rule is available at this link.