Regulation Updates: NCAs Ruled Illegal; Potential OT Rule Change
24 April 2024
Two timely updates from the H.R. Guy on ever-changing government regulations
1. FTC declares Non-Compete Agreements illegal as an inherently unfair competition tactic.
I ran through the 570 page rule last night, and most of it appears to be a pre-emptive legal defense of both the agency’s authority to do this, and analysis of the comments and challenges that were submitted during the rule-making process.
By the end of August, if this rule survives legal challenges, companies in the US will not be allowed to present or enforce any non-compete agreement or any other type of policy or agreement that limits post-employment ability to work. This includes NDAs and Training agreements attempting to prohibit “use of skills or knowledge associated with X work or industry.”
There are two exceptions relevant to my friends in the trades:
- Sale of a business if you owned more than 25% of the company
- EXISTING agreements on Sr Executives making more than $151k a year
I posted a little while ago
on my professional thoughts on these agreements. Now all we can do is see what the big corporation legal teams come up with to try and get this killed in court. 🤷♂️
2. Pending Overtime Rule Change Update.
The Department of Labor formally announced they are increasing the minimum salary threshold for Administrative/Executive/Professional exempt status employees from $684/wk to:
- $844/wk starting July 1, 2024 (less than was proposed just in Dec)
- $1,128/wk starting Jan 1, 2025 (more than was proposed in Dec 🤬)
- Plus automatic updates every 3 years going forward.
The "Duties Tests" involved with justifying exempt status are not being changed at this time.
I fully expect legal challenges... Last time this significant of a jump was attempted ($455/wk up to $969/wk) was in 2015, and it was killed literally the day before it was supposed to go into effect... AFTER most people had already jumped through the hoops to stay compliant! Trump's DOL did increase it from $455/wk to the current $684/wk in 2019.
Fighting employee misclassification is a major initiative within the Dept of Labor right now. Their easiest targets in the Trades are employees misclassified as subcontractors (updated rules last month) and misclassified OT exempt.
Three points to help evaluate YOUR vulnerability on Overtime:
- Techs, Installers, CSRs, and Dispatchers are all nearly universally ineligible for OT exemption.
- If you are paying Spiffs, Commissions, or Task Pay in addition to (hourly+) or in replacement of hourly wages, you need to ensure clock time is being tracked and Overtime is being properly calculated and paid.
- Special treat for CA businesses... You also need to be paying additional Rest Break premiums if you are paying anything other than straight hourly.
Any questions on where your business stands with the new and pending regulation changes? Reach out to us
and we can help talk through your specific situation.
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