Compliance Alert: FTC and DOL ❗️

FTC Shake-Up Ahead📣

The US Federal Trade Commission (FTC) has approved a new rule banning most non-compete clauses in employment contracts, affecting millions of workers. Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. 

This ban is an effort in protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation. The Commission also found that noncompetes tend to negatively affect competitive conditions in labor markets by inhibiting efficient matching between workers and employers.

Existing noncompetes for senior executives (who represent less than 0.75% of workers) can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives.

What does this mean for employers?

Employers will be required to provide notice to current and former employees other than senior executives who are bound by an existing noncompete that they will not be enforcing any noncompetes against them. This also includes revisiting restrictive covenants and consider tailored non-solicitation or confidentiality clauses.

Enforcement begins 120 days after publication in the Federal Register, pending legal challenges.

Here are Four Steps You Can Do Right Now to Prepare for What’s Next

1. 1. Take inventory of and review existing non-compete clauses, non-disclosure agreements and policies. 
2. 2. Take advance steps to protect trade secrets and confidential information. 
3. 3. Update and refine your customer and employee non-solicitation provisions, or even consider alternative agreements.
4. 4. Prepare required notices for current and former employees, and keep on hand until it is time to distribute. Model notices can be found here: https://www.ftc.gov/legal-library/browse/rules/noncompete-rule

DOL Raises Salary Threshold📣

Effective July 1st, 2024, the US Department Of Labor (DOL)  approved a significant increase to the salary-level threshold under the Fair Labor Standards Act, from $35,568 to $58,646. This salary level helps define and delimit which salaried workers are entitled to overtime pay protections under the Fair Labor Standards Act (FLSA). 

Starting July 1, most salaried workers who earn less than $844 per week will become eligible for overtime pay under the final rule. And on Jan. 1, 2025, most salaried workers who make less than $1,128 per week will become eligible for overtime pay. As these changes occur, job duties will continue to determine overtime exemption status for most salaried employees.

The rule will also increase the total annual compensation requirement for highly compensated employees (who are not entitled to overtime pay under the FLSA if certain requirements are met) from $107,432 per year to $132,964 per year on July 1, 2024, and then set it equal to $151,164 per year on Jan. 1, 2025.

Starting July 1, 2027, these earnings thresholds will be updated every three years so they keep pace with changes in worker salaries, ensuring that employers can adapt more easily because they’ll know when salary updates will happen and how they’ll be calculated.

The final rule will restore and extend the right to overtime pay to many salaried workers, including workers who historically were entitled to overtime pay under the FLSA because of their lower pay or the type of work they performed.

Need assistance or have questions? Reach out to our team at Atomus Partners. We're here to help!💼🤝🏼