New changes in three employment laws may have a significant impact on your business. Here’s what you need to know. 

3 NEW FINAL RULES

1. FTC Rule Bans Non-Compete Agreements. ⚠️Effective: August 21, 2024. Non-compete agreements were first developed to restrict workers' ability to work for competing employers within their industry. Recently, the Federal Trade Commission's (FTC) passed a new rule which bans all non-compete agreements and non-compete clauses.

The new rule prohibits any condition of employment that prohibits a worker from or penalizes a worker for seeking or accepting employment. A “worker” includes anyone who works or previously worked, regardless of the worker’s status as an employee, independent contractor, volunteer, etc.  

 An exception applies to employees classified as Senior Executives who have entered non-compete agreements/clauses before August 21, 2024.  Senior Executives are defined as being in a policy-making position and receiving total annual compensation of at least $151,164 in the preceding year (or $151,164 when annualized if the worker was only employed during part of the prior year). 

What the Final FTC Rule Means to Employers: The new FTC rule means workers are no longer restricted by their current employer from exploring opportunities at competing companies, prompting more competitive wages and benefits. And employers will no longer be able to enforce or issue new non-compete agreements.

Link #1Link #1➡️➡️Read More: HR Compliance Issues Than Can Cost Your Business

To stay compliant, employers should consult with their legal counsel to take the following steps: 

🔹Review existing agreements with current and former employees to determine whether any contain provisions that may operate as non-competes, even if they do not include that term. Also, review all clauses or provisions for language that may be interpreted in a way that violates this rule.

🔹Review and revise any agreements/provisions related to offer letters and employment to ensure they do not contain restrictive language.

🔹Identify individuals who need to receive the required notice that previously executed non-compete agreements/clauses are now null and void.

🔹Prepare the notice and document your compliance efforts, such as including a copy of the individualized notices, employee name, date sent, and physical and email address.  

Because the FTC rule may face legal challenges, stay updated with the latest information by following the FTC site. 

2. New Overtime Final Rule Increases Salary Thresholds. The Department of Labor’s (DOL) final rule raises the minimum salary threshold for employees to be classified as exempt from overtime pay. Phased increases under the new rule are intended to prevent worker misclassification and ensure fair treatment and compensation. 

⚠️Effective Dates: 

🔹Exempt Employees:

🔹Highly Compensated Employees: 

What the Final Rule Means to Employers: Because the final rule significantly raises the minimum salary threshold to qualify for overtime exemptions under FLSA, more employees may be entitled to overtime pay.

Employers should audit exempt employees’ salary rates by July 1, 2024. Note that this rule may face multiple legal challenges, including the potential for injunctions delaying the effective date. Visit theLink #1Link #1 DOL website to stay updated on potential legal developments. 

3. PWFA Rule Finalizes More Protection for Pregnant Workers. ⚠️Effective: June 18, 2024. The EEOC’s Pregnant Workers Fairness Act of 2022 (PWFA) requires covered employers to provide reasonable accommodations to qualified workers or applicants with limitations related to pregnancy, childbirth, or related medical conditions. Reasonable accommodations are changes made in the work environment. A few examples under PWFA include providing additional, longer, or more flexible breaks, changing a work schedule, offering telework, and providing leave for healthcare appointments or to recover from childbirth and other related medical conditions. 

➡️➡️Link #2Link #2Read More:  6 Areas Where Businesses Frequently Overspend

The final rule applies to all public and private employers with 15 or more employees and more broadly defines those covered and which conditions apply, different from current federal pregnancy regulations. New protections include, but are not limited to, all medical or mental conditions related to pregnancy or childbirth, whether new or pre-existing conditions affected by pregnancy or childbirth; this also includes infertility/fertility treatments, miscarriage, and abortion.

While the PWFA only applies to accommodations, the EEOC also enforces additional laws that make it illegal to fire or discriminate against employees or applicants based on pregnancy, childbirth, or related medical conditions. PWFA also does not replace federal, state, or local laws that are more protective of workers affected by pregnancy, childbirth, or related medical conditions. 

What the PWFA Final Rule Means to Employers: Under the new rule, employers must provide accommodation without delay. Employers are also prohibited from requiring supporting physician documentation or blanket documentation. Because legal developments with this new rule may change, follow the EEOC PWFA for the latest updates and more information about your responsibilities. 

Stay Compliant 

As changing labor laws become more complex and the challenge of HR responsibilities continues to grow, compliance is an area where employers can benefit from the help of an IRS-certified Professional Employment Organization (PEO) like Propel HR. A PEO can help reduce risks and prevent costly compliance violations. This includes complying with the labor laws and regulations governed by the state where your employees work, not just where your business is based. If you need help or more information, just give us a call at 800-446-6567.

➡️PLEASE NOTE: This information is for general reference purposes only. Because laws, regulations, and filing deadlines are likely to change, please check with the appropriate organizations or government agencies for the latest information and consult your employment attorney and/or benefits advisor regarding your responsibilities. In addition, your company may be exempt from certain requirements and/or be subject to different requirements under the laws of your state. (Updated May 9, 2024)

About Propel HR. Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for 25 years. Propel partners with small to midsized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs. Visit our new website at www.propelhr.com.