On Tuesday, April 23, 2024, two final rules were passed that will have large impacts on businesses across the country. Here is what you need to know about both rules and their implications.
DOL’s Final Exemption Rule
The DOL has published a final rule to update the pay threshold to qualify for overtime exemption for Executive, Administrative, and Professional (EAP) Outside Sales and Computer Employees. With this new rule, pay thresholds will increase twice, totaling a nearly 65% increase from current levels.
| Category | Current Threshold | 7/1/24 Threshold | 1/1/25 Threshold |
| EAP Weekly Threshold | $684 | $684 | $1,128 |
| EAP Annual Threshold | $35,568 | $43,888 | $58,656 |
| Highly Compensated EAP Annual Threshold | $107,432 | $132,964 | $151,164 |
FTC Bans Noncompete Agreements
The Federal Trade Commission (FTC) approved a final rule in the Federal Register that invalidates all noncompete agreements except under very limited circumstances. This rule makes all existing noncompete agreements unenforceable. Additionally, employers must notify current and former workers that their noncompete clauses are no longer in effect.
This rule is set to go into effect on August 21, 2024 (120 days from the approval date). In the interim, there may be legal challenges against this strict ruling which could modify the final implications.
Action Items
What do you need to do to ensure you comply with these regulations?
For the updated exemption rules, review the pay of all exempt employees to see if any employees fall under the new exemption thresholds. If any exempt employees fall below the new thresholds, keep an eye on if any legal challenges change this final rule. But, if this rule proceeds, you have two options:
- Increase the employee’s pay by July 1, 2024 and again by January 1, 2025 to meet the new minimum pay threshold for exemption.
- Provide one large increase by July 1, 2024 to meet both new minimum wage thresholds.
- Recategorize the position as non-exempt and begin recording employee time worked and paying overtime by July 1, 2024.
For the new noncompete ban, begin reviewing your noncompete clauses. Be ready to modify them in or remove them from your agreements by August 21. But, do not take any formal action at this time until the time for legal challenges has passed and the law becomes effective.
Want to discuss the implications of these laws on your business? Contact our HR Specialists today!
