Finally!? DOL Cranks Up Exempt Salary Threshold Near $60,000

Jason E. Reisman ●

We’ve all known this day was coming—it was just a matter of time. From the moment the Biden Department of Labor (“DOL”) announced that the Trump DOL’s 2020 increase to the Fair Labor Standards Act salary threshold for the so-called “white collar” exemptions (primarily the executive, administrative, and professional exemptions (“EAP”)) was not good enough, it became crystal clear that a new rule was in the works.

Although it took the DOL some time to put its thoughts together, it issued the proposed new rule in September 2023, and awaited public comments—33,000 of those followed. After reviewing each of the comments, the DOL announced its final rule yesterday. Here are the basics:

  • It will be effective as of July 1, 2024.
  • There are no changes to the duties tests (perhaps the only positive news).
  • The new salary thresholds for the EAP exemptions and the highly compensated employee (“HCE”) exemption essentially will be phased in beginning on July 1, 2024, and then fully implemented on January 1, 2025.
    • Note: On July 1, 2024, the DOL is implementing an interim increase to the thresholds (as noted below) that is based on current earnings data using the methodology established in the Trump DOL’s final rule.
    • Then, on January 1, 2025, the DOL will use the new methodology to establish the full salary thresholds.
  • Beginning on July 1, 2027, and every three years thereafter, the DOL will update the salary thresholds to align with the then-current earnings data.
  • Here’s a chart based on the DOL’s FAQ that provides the relevant data points:
DATESTANDARD SALARY LEVELHCE ANNUAL COMPENSATION THRESHOLD
Before 7/1/2024$684/wk ($35,568/yr)$107,432
7/1/2024$844/wk ($43,888/yr)$132,964
1/1/2025$1,128/wk ($58,656/yr)$151,164
1/1/2027 (and every three years thereafter)TBD based on 35th percentile of full-time salaried earnings in lowest Census regionTBD based on 85th percentile of full-time salaried employees nationally

Where’s the good news for employers, you ask? Uh, there really isn’t any … except maybe that the new salary threshold is not immediately rising to $60,000 and the expectation that any one of a number of business organizations is likely to challenge the new rule, perhaps using a number of the theories raised in the fighting that ultimately resulted in the rule being blocked by Judge Mazzant in the federal court in the Eastern District of Texas.

If the above did not wake you up, please keep in mind that the DOL has projected that costs for employers in the first year of this new rule will be about $1.4 billion and the rule will make four million workers newly eligible for overtime pay (unless their employer intervenes in some fashion).

So, what do you do? Grab your popcorn and watch the challenges to the new rule roll in? Maybe—but you should start considering those currently exempt employees who fall in the “danger zone” between $35,568 annually and $43,888 annually and evaluate whether you can consider a raise to the new threshold or instead need to potentially reclassify them to non-exempt status. Fortunately, that danger zone (leading up to July 1, 2024) is somewhat narrow when compared to what will come on January 1, 2025. At least the phased implementation provides a longer window to watch the anticipated legal challenges unfold. As an added note of caution, you should remember that current state law minimum salary thresholds like those that exist in New York and California, which are significantly higher than those in the DOL rule, continue to apply. Don’t touch that dial!

Keeping Up: Guidance on California’s New Pay Data Reporting for Employers

Natalie Alameddine ●

As most employers with employees working in California or assigned to a California location know, and as we reported in “Big Brother Just Got Bigger: Expanded Pay Data Reporting Expected to Hit the Golden State,” 2022 legislation obligated employers with 100 or more workers to report pay data via separate pay data reports to the agency now known as the California Civil Rights Department (“CRD”). Continuing that trend, in 2023 California statutes enhanced the existing pay equity rules by requiring employers to post salary ranges in job postings, and to provide the same information to their employees upon request.

With the May 8, 2024, deadline for employers to submit their 2023 pay reports quickly approaching, it is important to be aware of the recent changes to the reporting requirements implemented by the CRD. Employers should begin to collect data now and keep these key changes in mind:

  • Employers must now submit information about the number of employees per each employee group who worked remotely. The CRD FAQs define a “remote worker” as “a payroll or labor contractor employee who is entirely remote, teleworking, or home-based, and has no expectation to regularly report in person to a physical establishment to perform work duties.” Hybrid workers who appear in person for any portion of time would not be considered remote workers for pay data reporting purposes.
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2024 Brings Change for New York Employers

Mara B. Levin and Anthony A. Mingione


LEGISLATION

This year brings significant legislative updates recently passed in New York that may impact your business operations. Three of these laws, and a recent Court of Appeals decision, introduce important changes that require attention and potential adjustment of your employment practices.

Worker’s Bill of Rights

Effective July 1, 2024, New York City employers must post and distribute a “Worker’s Bill of Rights” notice, informing employees of their rights under federal, state, and local workplace laws—regardless of immigration status. Some of these rights include: Paid Safe and Sick Leave, Minimum Wage, Temporary Schedule Changes, Fast Food Worker Rights, and right to organize.

Employers must provide this notice in English and any other language that is spoken as a primary language by at least five percent of their employees. Failing to meet notice and posting requirements could subject employers to a civil penalty of up to $500.

Read the full client alert on our website.

Employers Get a 2-Year Breather on Complying with the Secure 2.0 Change to Catch-Up Contributions

Daniel L. Morgan ●

Professional photo of Daniel L. Morgan

The Internal Revenue Service (“IRS”) issued Notice 2023-62 last week, which addresses a change made by the SECURE 2.0 Act of 2022 (“Secure 2.0”) to the 401(k) plan rules applicable to so-called “catch-up contributions” that may be made by older plan participants.

Background—Catch-Up Contributions and Roth Contributions

Employers are permitted to write their 401(k) plans to allow employees who are age 50 or older to make catch-up contributions in excess of the annual limit on elective contributions. Therefore, for example, someone who is at least 50 years old in 2023 can elect this year to contribute an additional $7,500 on top of the normal limit of $22,500 that a person who is younger than 50 can elect to contribute.

Employers are also permitted to allow 401(k) plan participants to make their elective contributions as Roth contributions, which go into the plan on an after-tax basis. If these Roth contributions satisfy requirements on how long they must be held in the plan, they ultimately can be distributed, along with earnings on the contributions, tax free.

Continue reading “Employers Get a 2-Year Breather on Complying with the Secure 2.0 Change to Catch-Up Contributions”

Oops, the NLRB Does It Again—The Handbook Police Are Back!

Jason E. Reisman ●

Just yesterday, the National Labor Relations Board (“NLRB”) issued a decision (Stericycle Inc.), which overrules its own 2017 Boeing Co. decision and establishes a new standard for evaluating employer handbook policies and rules under the National Labor Relations Act (“NLRA”). Welcome (back) to what is the revolving door decision-making process that is the political machine of the NLRB.

Effectively, the current Biden NLRB has reversed one of the hallmark decisions of the Trump NLRB. When the Trump NLRB decided Boeing Co., it seemed to strike a balance in evaluating workplace rules, weighing the rule’s impact on workers’ NLRA rights against the employer’s legitimate business justification for the rule.

Although the concept of balancing those two potentially competing interests seems rational, the current NLRB Chair, Lauren McFerran, said that “Boeing gave too little consideration to the chilling effect that work rules can have on workers’ Section 7 rights.” NLRB Press Release 8/2/23. Taking that view to the extreme, the NLRB has shifted the bulk of the burden to employers to establish the legitimacy of the work rule. Under Stericycle, the most important consideration in evaluating a workplace rule is how an employee would understand it—not how the employer or a neutral third party might. The NLRB’s new approach is evident in this passage from the decision:

We clarify that the Board will interpret the rule from the perspective of an employee who is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity. Consistent with this perspective, the employer’s intent in maintaining a rule is immaterial. Rather, if an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden, even if a contrary, noncoercive interpretation of the rule is also reasonable.

372 NLRB No. 113, p.2 (emphasis added). Incredibly, if an employee could interpret the rule to chill the exercise of NLRA rights, the rule is presumed unlawful. The only way for an employer to rebut that presumption is “by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.” Id. If the employer can prove both of those, the work rule will be found lawful. Good luck.

The deck is now stacked against employer work rules that have any potential ambiguity in the mind of an employee. Given the energy and zeal demonstrated by the NLRB General Counsel in seeking to hold employers accountable, it is reasonable to presume that the NLRB “handbook police” will return, leaving almost no handbook completely safe from attack. Employers should expect to see more scrutiny given to work rules and policies, especially those particularly sensitive ones such as anti-harassment and workplace conduct policies.

SCOTUS Increases Burden on Employers to Deny Religious Accommodations


Garrett P. Buttrey ●

On June 29, 2023, the United States Supreme Court (“Court”) issued a unanimous opinion in Groff v. DeJoy, finding that the employer-friendly de minimis standard for determining whether an employer would suffer an undue hardship by granting a religious accommodation to an employee is incompatible with the text of Title VII, and that federal law requires employers to instead show that such an accommodation would impose “substantial additional costs” on the employer.

After the United States Postal Service (“USPS”) began delivering packages for Amazon on Sundays in 2013, Gerald Groff, a former mail carrier with the USPS, requested a religious accommodation, claiming that according to his Evangelical Christian faith, Sundays were to be devoted to worship and rest, and that delivering packages on Sundays would violate his religious convictions. The USPS, however, continued to schedule him for Sunday shifts and, when he continued to refuse to work on Sundays, the USPS redistributed those shifts to other USPS staff and issued Groff progressive discipline for his refusals to work. Eventually, Groff resigned his position and sued the USPS, claiming that it could have accommodated his religious practice without an undue hardship on the conduct of its business.

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New York State Legislature Sends Broad Noncompete Ban to Governor’s Desk

Kevin M. Passerini and Anthony A. Mingione ●

On June 20, 2023, the New York Assembly passed a bill already passed by the Senate banning all post-employment noncompete agreements with workers. The bill is headed to Governor Kathy Hochul’s office for her approval. Governor Hochul has voiced her support for a much narrower, income-targeted ban on noncompetes, but she has not previously voiced support for this broad a measure. While it is possible she may decline to sign the ban and insist upon amendments, many expect her to sign it, particularly given the overwhelming vote it received in both legislative houses.

More specific details of the noncompete agreement ban include:

      • The ban has no compensation threshold or exception for executives.
      • The ban covers all employees and independent contractors (and, through the vague definition of “covered individual,” may include other service providers/consultants and even workers who are partners, members, or other equityholders).
      • The ban appears focused on only traditional noncompetition agreements, despite the odd prefatory language stating, “Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” The sentence that follows that pronouncement focuses on “non-compete agreement” (the defined term in the act); and the act expressly indicates that it is not intended to apply to certain non-solicitation provisions, confidentiality agreements, and agreements providing for a “fixed term of service,” provided that those agreements “do not otherwise restrict competition in violation of” the act.
      • The ban appears not to be retroactive since the bill it is amending states, “This act shall take effect on the thirtieth day after it shall have become a law and shall be applicable to contracts entered into or modified on or after such effective date,” and comments on the floor of the Assembly during last week’s debate and vote confirm that.
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Deadlines Are Fast Approaching for Chicago and Illinois Employers

Krista P. McDonald ●

Several deadlines are on the horizon for Chicago and Illinois employers. Businesses should be aware of what they need to do to comply, or they may face significant daily penalties.

Employers Must Conduct Required New Sexual Harassment and Bystander Intervention Trainings for All Employees by June 30, 2023. The City of Chicago amended its Human Rights Ordinance last year to require all employers with employees in Chicago to provide the following annual training by June 30, 2023 (and annually thereafter):

      1. One hour of sexual harassment prevention training to all employees (with an additional hour of sexual harassment prevention training for all supervisors and managers, for a total of two hours); and
      2. One hour of bystander intervention training to all employees.

Template sexual harassment and bystander intervention trainings and other materials are available on the City of Chicago website. Employers must keep written records of the trainings for the longer of five years or the duration of any claim, action, or pending investigation. Employers that do not comply with the training and record-keeping requirements may be fined significant penalties for each day that the employer is not in compliance.

Illinois Adverse Judgments or Rulings Reports Are Due by July 1, 2023. By each July 1, every employer that had an adverse judgment or administrative ruling against it in the preceding year must disclose to the Illinois Department of Human Rights the following:

      1. The total number of adverse judgments or administrative rulings during the preceding year;
      2. Whether equitable relief was ordered; and
      3. The number of adverse judgments or administrative rulings entered against the employer within specific categories outlined in Section 2-108(B) of the Illinois Human Rights Act.

An “adverse judgment or administrative ruling” means any final and non-appealable judgment that finds sexual harassment or unlawful discrimination with the ruling in the employee’s favor and against the employer. This includes reporting adverse rulings outside of Illinois jurisdiction. The disclosure report form may be found here: Form IDHR 2-108.

For more information, contact any member of Blank Rome’s Labor & Employment practice group.

A Tall Order: NYC Prohibits Height and Weight Discrimination in Employment

Anthony A. Mingione  ●

On May 26, 2023, New York City Mayor Eric Adams signed a bill that will prohibit discrimination based on an applicant or employee’s actual or perceived height or weight. This bill amends the New York City Human Rights Law by specifically adding “height” and “weight” to its list of protected classes. These additions will become effective on November 22, 2023.

There are several exemptions, including where height or weight restrictions are:

      • Required by a federal, state, or local law or regulation;
      • Permitted by any regulation adopted by the City Commission on Human Rights that identifies certain jobs or job categories for which height or weight could prevent the person from performing the essential requirements of the job, and for which the Commission finds that no other reasonable alternative is available that would allow the person to perform the essential requirements of the job; or
      • Permitted by any regulation adopted by the Commission that identifies particular categories of jobs for which the use of height or weight as a criteria is reasonably necessary for the normal operations of the business.
Continue reading “A Tall Order: NYC Prohibits Height and Weight Discrimination in Employment”

U.S. Supreme Court Grants Companies the Right to Sue Unions for Intentional Property Damage Resulting from Labor Strikes

Garrett P. Buttrey, Andrew I. Herman, and Anthony B. Haller  ●


On June 1, 2023, the Supreme Court of the United States issued an 8-1 opinion in Glacier Northwest, Inc. v. Teamsters, finding that conduct intentionally undertaken to cause damage to the employer’s property, or the failure to reasonably protect against such foreseeable damage, is not activity that is “arguably protected” under the National Labor Relations Act (“NLRA”) and that a union can be held liable for the damage caused.

The International Brotherhood of Teamsters, Local 174, represented drivers for Glacier Northwest in its concrete mixing and delivery business. After the collective bargaining agreement expired without a reaching a new agreement, the union called a strike, but waited to commence the strike until after the company filled its trucks with wet concrete. The union then instructed the truck drivers to ignore the company’s orders to deliver the wet concrete, putting the trucks and the concrete in imminent, foreseeable danger of being damaged and lost if the concrete hardened. Several of the union drivers abandoned their trucks without giving Glacier any notice, causing the company to deploy emergency measures to salvage the trucks by dumping—and wasting—the large batches of concrete the company mixed.

Continue reading “U.S. Supreme Court Grants Companies the Right to Sue Unions for Intentional Property Damage Resulting from Labor Strikes”