Employment Law Updates
Spring 2024 Edition
Employment law is always changing and those changes have a ripple effect on small businesses. Sometimes, the changes are minimal and just require small tweaks to policies or reports. Other times, they are more impactful and require budgetary adjustments or process changes.
Below are some recent updates that small business owners should note, along with details on how these updates might impact your existing HR policies and processes.
Overtime Exemption Threshold:
The Department of Labor’s Wage and Hour Division recently announced a major ruling that will change the overtime exemption threshold which could have a big impact on small businesses.
The final rule goes into effect on July 1, 2024 and increases the salary threshold for workers to be deemed exempt from overtime in two increments, reaching a total increase of 65% by January 1, 2025. For a number of exemption categories, the threshold will increase from $684/week to $1,128/week (equivalent to $58,656/year). For highly compensated employees, the threshold will increase from $107,432/year to $151,164/year.
What’s the impact of this ruling?
If your company is NOT paying your employees more than $58,656 annually—even if they are in a managerial or specialized role—you might need to START paying them overtime. In order to pay them overtime, you have to track their hours, so if you don’t already have a process in place for that, then you need to implement one, pronto.
Note that this is a FEDERAL level ruling, so local overtime exemption thresholds could be different.
Read all about it here.
Non-Compete Agreements:
The Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) just ruled on non-compete agreements.
Non-compete agreements and policies exist to protect companies’ intellectual property and curb competition in any given industry. The final ruling, just released, invalidates the legal legs of these agreements, making them unenforceable except in very extenuating circumstances.
What’s the impact of this ruling?
Organizations should update their handbooks to redact this policy, and will need to notify former employees of the change, which comes into effect in Fall 2024. Also, things like non-disclosure agreements and non-solicitation policies will likely become more commonplace to protect company ideas and assets. Big picture: this ruling will likely mean be more competition or colleagues in any given industry.
This ruling is already under intense scrutiny and a business group in Texas is suing the FTC to block the ban, so we’ll see what happens.
Read all about it here.
Independent Contractor vs Employee:
Another important update during the first half of 2024 involves the clarification of who is considered an independent contractor. Under the Department of Labor’s final ruling, there is now a six-factor assessment that employers need to use when determining a worker’s classification. Unlike the prior assessment, these six factors get equal weight when making a determination.
The assessment includes:
worker’s opportunity for profit or loss
investment by the parties
work permanency
nature and degree of control over their work
the worker’s skills and initiative
whether or not the work is an integral part of the employer’s business.
What is the impact of this ruling?
Spoiler alert: Under this final ruling it’s MUCH more likely that folx should be classified as employees and NOT contractors. That could mean big changes for small businesses who may have hired support staff as contractors as they grew, yet don’t have the infrastructure set up to formally onboard support staff (required state unemployment insurance accounts, workers compensation coverage, etc).
Employees could be eligible to receive overtime (unlike independent contractors),, which means time tracking systems need to be in place. And the consequences of not complying could be dire: if you are found to have misclassified a worker as a contractor as opposed to an employee, there could be a mountain of back pay owed in addition to penalties and fees, alongside any legal fees for stating your case. Yikes.
Read all about it here.
Workplace Harassment EEOC Guidelines:
The Equal Employment Opportunity Commission (EEOC) has updated and widened their guidelines around workplace harassment, which includes everything from what’s considered a “hostile work environment” to including gender identity to warning around discriminatory AI application scans.
What’s the impact of this ruling?
These updates mean more people and more situations are protected under the Title VII (Civil Rights Act of 1964). Companies may need to adjust their handbook policies to broaden who/what is included, and potentially change some workplace practices.
For instance, in the case of Muldrow vs St. Louis, the Supreme Court found that job transferring of a victim to end harassment could be considered retaliatory.
These updates are all long overdue, but I’m glad to see these updates codified at the federal level. Note again—these are specific to the federal level mandate, so some of these terms and languages might already be more inclusive depending on your local requirements.
Read all about it here.
Pregnancy-Related Accommodations:
The EEOC has also updated the Pregnant Workers Fairness Act (PWFA) to address the limiting nature of the acts application. These updates included a pre-pregnancy application, allowing accommodations for people who are limited, but not necessarily “substantially” limited, in their abilities and also for those who engage in IVF (in vitro fertilization).
What’s the impact of this ruling?
Business will need to update handbooks and policies to include these additional applications. More importantly, managers should proactively be on the lookout to address the needs of people with these conditions.
Read all about it here.
Have questions about any of these updates and how they might impact your small business? Set up a FREE 30-minute consultation here.
