The Employer E-Letter: Labor and Employment Law News
from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.
Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
- DOL INCREASES MINIMUM SALARY THRESHOLD FOR OVERTIME EXEMPTION
- FTC BANS NON-COMPETE AGREEMENTS
- NEW WORKPLACE PREGNANCY RULES SET TO TAKE EFFECT THIS YEAR
- D.C. CIRCUIT FINDS CADILLAC DEALER LEGALLY FIRED A WORKER
- TIP OF THE MONTH
DOL INCREASES MINIMUM SALARY THRESHOLD FOR OVERTIME EXEMPTION
The Fair Labor Standards Act generally requires employers to pay employees that work over forty hours per week to be paid one and one half their hourly wage for the “overtime.” The federal statute, which is enforced by the U.S. Department of Labor, does exempt certain employees from eligibility for overtime pay based on their job duties and salary. Such exemptions include employees in “administrative,” “professional” and “executive” roles, so long as the employees are paid on a “salary basis,” certain “exempt” job duties are performed and the employees are paid at least the minimum salary set by the DOL. Last week, the Department increased that minimum salary under a final rule adopted by the agency. Currently, an employee must earn at least $684 per week ($35,568 annually) to meet the minimum salary threshold. That amount will increase to $844 per week ($43,888 per year) on July 1, 2024, and then again to $1,128 per week ($58,656 per year) on January 1, 2025. Going forward from that point, the new rule requires automatic updates every three years. In addition, the final rule also increases the minimum annual salary for an exemption restricted for “highly compensated employees.” On July 1, 2024, the minimum annual salary for that exemption will go from $107,432 to $132,964. Then, on January 1, 2025, the minimum salary for highly compensated employees will raise to $151,164, to be adjusted every three years subsequent. These changes apply to all employers nationwide, though we expect legal challenges to the rule in the coming months.
FTC BANS NON-COMPETE AGREEMENTS
On the heels of Minnesota’s ban on non-compete agreements last July, last week the U.S. Federal Trade Commission issued a final rule effectively banning non-compete agreements nationwide. The FTC is a federal agency whose authority extends to all U.S. companies other than non-profits and government agencies that are exempt from its reach. The new rule renders current non-compete restrictions in existing employment agreements void, except those applicable to “senior executives,” which includes employees who earn more than $151,164 annually and are in policy-making positions. Going forward, all non-compete agreements are prohibited – even for senior executive-level employees. Legal proceedings to enforce non-compete agreements that are commenced prior to the rule’s effective date (120 days after publication in the Federal Register, which has not occurred as of this date) are permitted to proceed, but no enforcement actions after the effective date may be commenced. In addition to the ban on non-compete agreements, the new rule requires employers to notify employees (other than senior executives) who are bound by existing non-competes that the restrictions are no longer enforceable. The FTC has provided model language for this purpose, but employers may craft their own notification as well. Notably, the FTC ban on non-competes does not prohibit non-disclosure restrictions or non-solicitation agreements (applicable to customers or employees), but they will be scrutinized to ensure they do not have the same practical effect as a non-compete agreement. Legal challenges to this new rule have already sprouted up, and there will be more to come. We expect those challenges to seek injunctive relief while the courts determine the validity of the new rule, so it may be temporarily paused during that time period.
NEW WORKPLACE PREGNANCY RULES SET TO TAKE EFFECT THIS YEAR
The Pregnant Workers Fairness Act (“PWFA”) is a year-old federal law requiring employers with 15 or more employees to provide reasonable accommodations for pregnancy, childbirth, or related medical conditions. On April 15, 2024, the EEOC, the federal agency tasked with the administering the PWFA, unveiled its final implementing regulations after months of deliberation and receiving over 100,000 public comments.
The new rules have been characterized as extensive and expanding employer obligations towards pregnant workers. For example, the rules 1) broadly define “pregnancy, childbirth, and related medical conditions” to include current, past, and potential or intended pregnancy, infertility, contraception, abortion, breastfeeding, miscarriages/stillbirths, postpartum depression, menstruation, and a long, non-exhaustive list of other related conditions, that may be “modest, minor, or episodic;” 2) Under the ADA, which addressed workplace pregnancy rights before the PWFA, a person was only entitled to reasonable accommodations if they could perform the “essential functions” of the job with or without accommodation; new PWFA may afford a pregnant worker reasonable accommodation protection even if they cannot perform the essential functions of the job.
The regulations have been met with praise from women’s groups but have stirred controversy among business/industry groups. Only 10 days after publication, a group of 17 attorneys general sued the EEOC to block the rules’ implementation, citing the supposed “unconstitutionality” of the abortion-related provisions. The regulations are set to take effect June 18, 2024.
D.C. CIRCUIT FINDS CADILLAC DEALER LEGALLY FIRED A WORKER
Union worker Joe Bisbikis had significant union involvement and was allegedly fired for insulting his boss. The dispute was with the owner, Frank Laskaris, and involved a negotiation of the Master Union contract covering more than 100 Chicago area dealerships, including Cadillac of Naperville. Laskaris warned Bisbikis that “things would not be the same” if mechanics went on strike, which they did in August and later reached a contract with the dealerships. Laskaris did not want Bisbikis back and after a testy conversation with him fired him for “insubordinate conduct and inappropriate language”. During this dispute, the NLRB changed the presiding standard. It required the NLRB to look at “animus” or opposition to the employee before looking at whether or not the employee was punished for protective action. The dealership knew that Bisbikis was protected, but argued the evidence did not show animus, and Laskaris fired him because of his behavior. The NLRB panel had no trouble shooting down all arguments, indicating that Laskaris made negative comments concerning his union workers. The panel found that he was fired for outbursts during protected activity, and the DC Court of Appeals found no error in the NLRB’s decision.
Cadillac of Naperville, Inc. v. NLRB, Case Nos. 22-1288 and 22-1321 (CA DC 2024)
We recommend that your HR office or a dedicated employee or team handle any and all requests that could be an accommodation for disability or religious purposes so that determinations are consistent, enforcement is consistent and requests are not improperly denied. There is also the statutorily-required “interactive process” under the ADA, so such requests do require a level of expertise and understanding of the various legal requirements applicable to the situation.
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty. Richard Burns is now of Counsel.
The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.
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Copyright 2024 by Hanft Fride, P.A. All rights reserved. Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802. Phone 218.722.4766; Fax 218.529.2401.