Salary Threshold Increases

The U.S. Department of Labor (DOL) recently issued a rule increasing the salary threshold for overtime exemptions. Currently, under the Fair Labor Standards Act (FLSA), there are “white collar” exemptions and “highly compensated employee” exemptions for employees to be classified as exempt from overtime pay requirements.  

“White collar” exemptions apply to executive, administrative, and professional employees who meet the salary threshold and perform certain duties. This threshold is currently $684 per week or around $35,568 per year. The DOL’s recent rule will increase the threshold to $844 per week or around $43,888 per year on July 1, 2024. The threshold will increase again to $1,128 per week or $58,656 per year on January 1, 2025.

“Highly compensated employee” exemptions will also see a threshold increase. These employees must customarily and regularly perform executive, administrative, or professional duties and meet a higher salary threshold. The current threshold is $107,432, which will increase under the new rule to $132,964 per year on July 1, 2024 and then rise to $151,164 per year at the start of 2025.

Employers relying on these exemptions must either ensure that their employees are paid sufficiently to meet the relevant threshold or explore other ways to comply with the FLSA, such as by tracking hours and paying overtime.

Nation-Wide Noncompete Ban

After a hotly contested proposed rule which drew over 26,000 public comments, the Federal Trade Commission (FTC) issued a final rule banning noncompetition agreements for virtually all U.S. workers, with special rules for senior executives. The ban is set to go into effect September 4, 2024. According to the FTC, an estimated 30 million workers—almost one in five—have noncompete agreements.

Covered workers include employees, independent contractors, externs and interns, volunteers, apprentices, or sole proprietors who provide a service. The new rule will ban future noncompetes and will render unenforceable the millions of existing non-competes for all workers other than senior executives. 

The noncompete ban will also affect senior executives, who are defined as workers earning more than $151,164 per year and who are in policy-making positions. Once effective, the rule will ban new noncompetes with senior executives, but existing noncompetes with senior executives can remain in force.

In addition, the FTC rule requires employers to give written notice to their workers with existing noncompetes (other than senior executives) that the agreements will not be enforced.

If you would like to discuss how these significant recent developments might affect your workforce, we at Carver Darden are happy to help.

FOR MORE INFORMATION, PLEASE CONTACT THE AUTHORS:

Russell L. Foster
(504) 585-3837
foster@carverdarden.com

Peter J. Segrist

(504) 585-3882
segrist@carverdarden.com

Conor Lutkewitte

(504) 585-3822
lutkewitte@carverdarden.com