Compliance Update: NonCompetes & FLSA Minimums

Over the last few weeks, we've seen two big changes to employment in the US: the ban of non-competes and the increase of the min salary threshold for exempt workers!

It's a lot to unpack, so here's the tl;dr and what it means for employers:

Non-Competes (pulled from FTC.gov website):
👉 The FTC ruled last week that non-compete clauses are an unfair method of competition.
👉 Non-compete clauses prevent employees from working for anyone the company deems a "competitor" for a certain period of time (and sometimes within a geographical area) after leaving their employer.
⏲ This ruling will take effect 120 days after being published in the Federal Register (so, fairly soon!)

Impact after effective date:
👶 New contracts: noncompete clauses are not allowable or enforceable for any employees
👵 Existing Contracts: noncompete clauses will be unenforceable for all employees except senior executives (defined as workers earning > $151,164/year and in policy making positions)*

FLSA Exemptions (From Sidley's DOL debrief):
1️⃣ Beginning July 1, 2024 - those exempted from overtime by bona fide executive, administrative or professional exemptions will see the minimum salary threshold federally raised from $35,568/year to $43,888/year*
2️⃣ Beginning January 1, 2025: the above threshold will raise again to $58,656/year
3️⃣ Beginning July 1, 2027 and every 3 years: salary thresholds will automatically update to ensure min thresholds remain at the 35th percentile of weekly earnings of full-time salaried workers in the lowest wage Census Region.

What do you need to do as an employer?
💡 Audit your contracts to identify who will be impacted by the change in non-compete enforcement. Communicate the change + update contract templates for new hires.
💡 Identify employees impacted by the updated salary minimum. Either raise the salary of the exempt employee to meet minimum thresholds or reclassify their positions as non-exempt and overtime eligible.

🌟 *Keep in mind state or local differences to non-competes and FLSA exemption minimums, as some states may have higher minimums or more aggressive anti non-compete requirements.