As discussed in our prior post, the U.S. Department of Labor (DOL) issued a final rule earlier this year that increased the salary thresholds required to classify certain employees as exempt from overtime pay requirements under the Fair Labor Standards Act (FLSA). On November 15, 2024, the federal district court for the Eastern District of Texas blocked the rule nationwide just weeks before the second phase of the salary threshold increases were scheduled to take effect. The decision reinstates the salary thresholds in effect prior to the DOL’s 2024 rule, which represent a nearly 65% decrease from the thresholds set in the 2024 rule. Continue Reading Federal District Court Vacates Biden’s DOL Overtime Rule
NLRB General Counsel: “Make-Whole Relief” for Non-Competes and No More “Stay-or-Pay”
National Labor Relations Board General Counsel (“GC”) Jennifer Abruzzo recently issued Memorandum GC 25-01 (“Memorandum”), suggesting new remedies for non-competes found to violate the National Labor Relations Act (“NLRA”) and proposing that the National Labor Relations Board (“NLRB”) presume “stay-or-pay” provisions to be unlawful. Although the Memorandum is not binding law, employers should expect GC Abruzzo to direct the NLRB’s regional offices to bring complaints and seek remedies consistent with the Memorandum. The NLRA generally only extends protections to nonsupervisory and nonmanagerial employees, and therefore the Memorandum is not applicable to non-compete or stay-or-pay provisions for employees who are supervisors or managers under the NLRA. Continue Reading NLRB General Counsel: “Make-Whole Relief” for Non-Competes and No More “Stay-or-Pay”
Is Your Workplace Election Ready? Voting Leave Laws Across the States
With Election Day just weeks away, employers should quickly brush up on laws that permit employees to take time off to vote. There is no federal law permitting time off to vote, but a majority of states and the District of Columbia have some form of voting leave law, with variations regarding the amount of time off, whether the leave must be paid, and notice and other requirements. Here’s an overview of what to look out for:Continue Reading Is Your Workplace Election Ready? Voting Leave Laws Across the States
Texas District Court Prohibits the FTC from Enforcing Its Non-Compete Ban Nationwide
Nationwide Injunction
On August 20, 2024, Judge Ada Brown of the United States District Court for the Northern District of Texas granted summary judgment for the plaintiffs in Ryan LLC v. FTC, preventing the FTC from enforcing its proposed rule banning almost all non-compete clauses in employer agreements. (Click here for the opinion.) The rationale for Judge Brown’s decision was consistent with her prior ruling on plaintiffs’ motion for a preliminary injunction (described here): the FTC does not have substantive competition-related rulemaking authority and the proposed non-compete rule was arbitrary and capricious. However, unlike Judge Brown’s preliminary injunction order, which was limited to the named plaintiffs, her summary judgment order states that the proposed rule “shall not be enforced or otherwise take effect on September 4, 2024, or thereafter.” Applying the plain text of § 706(2) of the APA, Judge Brown held that the proper remedy after concluding that the non-compete rule was in excess of the FTC’s statutory authority and arbitrary and capricious was to “set aside” the rule. According to the opinion, “setting aside agency action under § 706 has ‘nationwide effect,’ is ‘not party-restricted,’ and ‘affects persons in all judicial districts equally.” As a result, the order prohibits the FTC from enforcing the proposed non-compete rule on a nationwide basis.Continue Reading Texas District Court Prohibits the FTC from Enforcing Its Non-Compete Ban Nationwide
DOL Issues Final Rule Expanding Overtime Eligibility
On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule that increases the salary thresholds required to classify certain employees as exempt from overtime pay requirements under the Fair Labor Standards Act (FLSA). The final rule, applicable to employees who otherwise satisfy the “white-collar” (bona fide executive, administrative, and professional) and “highly compensated” exemptions, is similar to the proposed rule DOL issued last August, although the salary thresholds in the final rule have been increased to align with the latest Census salary data.
The final rule represents a sharp increase—approximately 65%—from the current salary thresholds implemented in 2019 under the Trump Administration. The rule is scheduled to take effect in two phases, with the first phase effective July 1, 2024 and the second on January 1, 2025. Thus, employers have only a small window to determine how the rule will impact their operations and make any necessary adjustments.Continue Reading DOL Issues Final Rule Expanding Overtime Eligibility
Changes to WA’s Non-Compete Law Require Employers to Take Action
Since 2020, with the adoption of Washington state’s non-compete statute (Chapter 49.62 of the Revised Code of Washington (“RCW 49.62”)), Washington has imposed significant restrictions on employer use of non-compete agreements with employees and independent contractors, permitting such agreements only subject to certain statutory and common-law requirements, including without limitation, a minimum annual earnings threshold (the 2024 limits are $120,559.99 for employees and $301,399.98 for independent contractors), and a Washington forum for any disputes.
Now, Senate Bill 5935 (“SB 5935”) – which takes effect on June 6, 2024 – amends the non-compete statute to further restrict the use of non-compete provisions and expand the types of agreements that may be considered non-competes. As a result, employers will need to take quick action to review their employment agreements and hiring processes to ensure compliance with the new law.
However, as discussed in our Covington Alert, on April 23, 2024 the Federal Trade Commission issued a final rule purporting to ban the use of non-competes with most U.S. workers. The FTC Rule – should it become effective – would supersede inconsistent state laws. The earliest the FTC Rule would take effect is late August 2024, and pending legal challenges may result in court orders that could delay or stay enforcement of the FTC Rule. Accordingly, employers with workers in Washington State should take steps to comply with SB 5935 before it takes effect on June 6, 2024. Employers should also consider consulting with employment and executive compensation counsel for assistance with navigating the evolving non-compete landscape.
Here is an overview of the key changes under SB 5935:Continue Reading Changes to WA’s Non-Compete Law Require Employers to Take Action
The Supreme Court Keeps Status Quo for SOX Whistleblower Retaliation Claims
In a unanimous decision, the U.S. Supreme Court rejected an argument that would have made it harder for whistleblowers to prevail on retaliation claims under the Sarbanes-Oxley Act (“SOX”). The decision, Murray v. UBS Securities, LLC, No. 22-660, may be welcome news to whistleblowers, but as a practical matter, employers will likely not see a significant change in SOX whistleblower retaliation claims or awards.Continue Reading The Supreme Court Keeps Status Quo for SOX Whistleblower Retaliation Claims