Employment Compliance Updates – Vital Info for Employers

At PBO Advisory Group, our Human Resources team is continually reviewing regulatory changes and advising our clients how these changes may impact them. All employers should be aware of the following proposed final rulings, which are anticipated to be challenged in court.

However, employers should expect these changes and establish a plan to pivot, if needed.

If you need assistance in interpreting these rulings and developing a plan, please reach out to our team.

  • Federal Trade Commission (FTC) approved a proposed final rule banning most new noncompete clauses in employment contracts. This ruling also makes all existing noncompete agreements (except those covering senior executives, defined as employees earning more than $151,164 annually who are in a “policy-making position”) unenforceable. Employers must be prepared to provide notice to current and former workers that the noncompete clauses are no longer in effect.
    • IMPACT: If this ruling proceeds as is, employers should anticipate impact to areas such as how they attract/retain talent, protect intellectual property, adjust policy to align compliance, etc.
  • New OT rules raise salary level in two phases. The US Department of Labor has proposed a two-part approach to implementing the new overtime rule. The FLSA (Fair Labor Standards Act, governing FEDERAL law) annual salary-level threshold for exempt positions will increase from $35,568 to $43,888 on July 1, 2024. As of January 1, 2025, it will jump again to $58,656. The total compensation threshold for HCE (highly compensated employees) also moves from $107,432 to $132,964 on July 1, 2024, and to $151,164 on January 1, 2025. In addition, the final rule includes a three-year automatic adjustment mechanism for updating the salary threshold.
    • IMPACT: Employers need to consider areas such as budget impacts for salary/OT/401K match increases, plan for a reclassification evaluation of impacted positions, decide if they will adopt the compliance in two-phases or move directly to comply with the July 2025 requirement, etc.

Our HR team is anticipating some push/pull until final rulings are made. We will keep you posted as these rulings proceed through legislative process. In the meantime, we advise all employers to anticipate these changes and their impact and to plan accordingly.

If you’d like more information or help navigating these changes, please reach out to Nicole Devine.

Nicole Devine
Consulting Chief People Officer
858-622-1681 Ext. 287