The Federal DOL Publishes Overtime Final Rule
On April 23, 2024, the U.S. Department of Labor (DOL) announced the highly anticipated final rule that expands overtime protections and will increase exempt employees’ minimum salaries for bona fide executive, administrative, or professional (EAP) employees from federal overtime pay requirements. The new final rule will also implement automatic updates to the EAP salary levels.
Effective July 1, 2024, the U.S. Department of Labor has increased the annual minimum salary threshold from $35,568 ($684/week) to $43,888 ($844/week). As of January 1, 2025, the annual threshold will increase to $58,656 ($1,128/week). Beginning July 1, 2027, the department will also automatically increase the overtime threshold every three years.
The Fair Labor Standards Act (FLSA) provides an exemption from both minimum wage and overtime pay for employees employed as bona fide EAP employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than the salary minimum threshold.
In preparation for the upcoming change, employers will need to determine how they will move forward. Will they raise employees’ salaries to meet or exceed the new salary threshold to remain exempt? Or will they need to reclassify employees as nonexempt, which may bring about financial or administrative burdens such as budgeting for overtime if these employees are regularly working more than 40 hours per week and training these employees in the ways of nonexempt such as the need to log their time, take lunches and breaks, and observe overtime policies?
Resourcing Edge will continue to monitor the situation and share developments as they occur.
FTC Adopts Final Rule Banning Employers From Entering Non-Competes
On April 23, 2024, the Federal Trade Commission (FTC) issued its final rule, enacted pursuant to President Biden’s 2021 “Executive Order on Promoting Competition in the American Economy,” effectively prohibits the use of almost all non-compete clauses except for existing agreements for senior executives. The rule, referred to as the Non-Compete Clause Rule, is set to go into effect 120 days after its publication in the Federal Register.
Employers will be required to provide notice to current and former employees, rescinding existing agreements of this nature.
The FTC defines a “noncompete clause” as a contractual term that blocks a worker from working for a competing employer or starting a competing business within a certain geographic area and time period after the worker’s employment ends. The FTC defines the term “senior executive” to refer to employees earning more than $151,164 annually who are in a “policy-making position.”
The rule is set to take effect 120 days after publication, but it is likely to face legal challenges that could delay its effective date.
Resourcing Edge will continue to share new information as it becomes available.
Pregnant Workers Fairness Act – Final Regulations Published
The final rule for the Pregnant Workers Fairness Act (PWFA), which applies to employers with 15 or more employees, has been published and takes effect June 18, 2024.
With over 100 pages of preamble, regulations, and interpretive guidance, there’s obviously a lot to take in. Thankfully, you don’t need to spend a whole afternoon reading unless or until you’re considering denying an accommodation—that’s when you should take a close look at what the Equal Employment Opportunity Commission (EEOC) has to say to ensure you’re compliant.
Here are some key takeaways to be aware of even if you expect to accommodate most requests.
Some Accommodations Are Presumptively Reasonable
The following accommodations for pregnant employees are presumed to be reasonable, meaning an employer will need an exceptionally good rationale for denying them based on undue hardship:
- Allowing an employee to carry or keep water near and drink, as needed
- Allowing an employee to take additional restroom breaks, as needed
- Allowing an employee whose work requires standing to sit and whose work requires sitting to stand, as needed
- Allowing an employee to take breaks to eat and drink, as needed
So for instance, if a pregnant employee tells you they need more bathroom breaks or to sit on occasion, you should allow it. You’ll want to document the conversation so you have a record of saying yes, but there shouldn’t be a protracted back and forth with the employee about whether their request can be granted. If you believe any of these accommodations do create an undue hardship, we recommend speaking with an attorney before denying them.
Requests for Documentation Are Limited
Employers can only ask for documentation to support a request for accommodation when it’s reasonable under the circumstances. Blanket policies that automatically require documentation aren’t permitted.
In the following situations, seeking supporting documentation is considered unreasonable and isn’t allowed:
- When the limitation and accommodation needed are obvious
- When the employer already has sufficient information to determine that the employee has a limitation and needs an accommodation because of it
- When a pregnant employee requests one of the presumptively reasonable accommodations listed in the section above
- When the employee requests an accommodation related to pumping at work (or nursing, if feasible)
- When the requested accommodation is available to employees with a non-PWFA limitation without providing documentation
When collecting documentation is permitted, employers can only request the minimum amount that confirms the employee’s condition, verifies that it’s related to pregnancy, childbirth, or a related condition, and describes the adjustment that the employee needs.
The Definitions Are Broad (and Might Surprise You)
Known limitations that must be accommodated can be modest, minor, or episodic and don’t need to rise to the level of a disability—they also include medical care, meaning you need to allow time off for appointments. Pregnancy and childbirth include (among other things) infertility, fertility treatment, and the use of contraception. And related medical conditions (among many other things) include termination of pregnancy, including by miscarriage, stillbirth, or abortion.
Employers Can’t Require “Magic Words” or Special Forms
An employee’s request for accommodation can be made orally, in writing, or by any other effective means. Employers can’t require that it be in a specific format or use specific language for them to acknowledge the request. Employers also can’t require that supporting documentation be on a specific form.
Accommodations Should Be Provided Without Delay
Once an employee makes a request for accommodation, the employer should do their best to provide it (or an interim accommodation) as soon as possible, even if supporting documentation will ultimately be required. The EEOC made it clear that they will frown upon delays, particularly with respect to simple or presumptively reasonable accommodations.
If You Thirst for More Knowledge
You can read and word-search the final rule here. The first 87 pages are the EEOC’s background and explanation of why and how they responded to public comments. The regulations start on page 88 of the PDF, and the Interpretive Guidance, which includes 78 very helpful examples of how the law would be applied in real life, starts on page 94.
Action Items
- Make sure your policy addressing the PWFA accurately reflects the regulations.
- You should also educate your managers (and anyone else likely to receive a request) on the presumptively reasonable accommodations, the limitations on asking for supporting documentation, and the importance of prompt accommodation.
- If you are unsure of your managers’ abilities to respond appropriately, you may want to require that anyone who receives a request immediately communicate it to Human Resources.
New Rule for Fixed-Indemnity and Specific-Disease or Illness Policies
The IRS, the Department of the Treasury, the Employee Benefits Security Administration, the Department of Labor, the Centers for Medicare & Medicaid Services, and the Department of Health and Human Services (collectively the federal departments) published a proposed rule on July 12, 2023, addressing short-term limited-duration insurance, independent noncoordinated excepted benefits coverage, level-funded plan arrangements, and the tax treatment of certain accident and health insurance.
The final rule, published on April 3, 2024, addressed only short-term limited-duration insurance (not discussed here as they are typically not in the group market) and the independent noncoordinated excepted benefits, specifically fixed-indemnity and specific-disease or illness policies. Level-funded plan arrangements and tax treatment were not addressed but may be in future rules.
The final rule includes a new notification requirement on the first page of any marketing materials and enrollment (or re-enrollment) applications for fixed-indemnity and specific-disease or illness policies issued (or renewed) on or after January 1, 2025. The new notice is intended to inform individuals that the policy does not provide comprehensive benefits. A sample model notice is included in the rule. However, the federal departments plan to create a notice that will not require modification or customization.
Employers must ensure the notice requirement is met when reviewing marketing and enrollment materials from the issuing insurer.
Supreme Court Rules on Title VII Discrimination
On April 17, 2024, the United States Supreme Court issued a decision in Muldrow v. City of St. Louis Missouri. In this case, a female police officer was involuntarily transferred and replaced with a male police officer. Her rank and pay stayed the same, but her job responsibilities, certain job perks, and schedule did not. She brought a lawsuit claiming discrimination based on sex under Title VII of the Civil Rights Act.
Title VII applies to employers with 15 or more employees and prohibits covered employers from discriminating against employees in the terms and conditions of their employment based on their race, color, religion, national origin, or sex.
The question that the Supreme Court answered in this case is whether a job transfer needs to have “significantly” harmed an employee in order for the employer to have violated Title VII. The Court found that it does not. The law prevents employers from treating employees worse because of a protected characteristic—it does not matter how badly the employee is harmed if a disadvantage occurs due to an involuntary job transfer.
Muldrow v. City of St. Louis, Missouri
2023 EEO-1 Component 1 Data Collection Opening in April
On February 26, 2024, the Equal Employment Opportunity Commission (EEOC) announced that the 2023 EEO-1 Component 1 data collection will open on April 30, 2024, and the deadline to file is June 4, 2024. The EEOC’s EEO-1 Component 1 online Filer Support Message Center will also be available on April 30, 2024.
All updates about the 2023 data collection, including the instruction booklet and file upload specifications, will be posted on the EEO-1 website when they’re available. The EEOC anticipates they’ll be posted by March 19, 2024.
