Employment Law Updates August 2024

We have been tracking federal agency rules regarding noncompete agreements and overtime exemption salary thresholds. One such rule has been struck down while the other is currently in effect but is subject to pending legal challenges.

The FTC’s Ban on Noncompete Agreements Has Been Struck Down and Will Not Go Into Effect on September 4, 2024

On August 20, 2024, a federal court in Texas struck down the Federal Trade Commission’s (FTC’s) rule banning most noncompete agreements which was set to take effect nationwide on September 4, 2024. The ban would have prohibited most new noncompete agreements and retroactively invalidated current agreements. The court held that the FTC did not have the authority to issue such a rule and that the rule was arbitrary and capricious because the FTC did not provide adequate justification for its universal reach.

The FTC is considering an appeal of the ruling, but for now the FTC’s rule banning non-compete agreements will not take effect on September 4, and the FTC is without authority to enforce it. However, the FTC in its brief public statement following the ruling noted that this decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.

The First Phase Increase of the DOL’s Overtime Exemption Salary Threshold Final Rule Is In Effect But the Rule Is Still Subject to Pending Legal Challenges

As we reported in April 2024, the Department of Labor’s Final Rule increasing the salary threshold for overtime exemptions for executive, administrative, and professional (“EAP”) employees was set to take effect, in a staged approach, beginning July 1, 2024. Despite legal challenges being filed, no nationwide injunction has been entered, and other than as applied to the State of Texas as an employer, the new salary thresholds are currently in effect.

As a result, as of July 1, 2024, the standard salary threshold level for EAP employees increased from $35,568 per year to $43,888 per year. In other words, unless an EAP employee’s salary met the new threshold as of July 1, they no longer satisfy exempt employee criteria. It is expected that courts with pending litigation over the DOL’s Final Rule will issue rulings prior to the next staged salary threshold increase, which is set for January 1, 2025 and significantly increases the salary threshold to $58,656 per year.

Our firm will continue to monitor these and other employment law developments. Reach out to any of our employment attorneys or your regular attorney contact with questions or for assistance.

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