On May 27, 2025, Mayor Cherelle Parker signed the Protect Our Workers, Enforce Rights (“POWER”) Act into law, which expands the Philadelphia Department of Labor’s enforcement options for violations of the City’s expanding roster of worker protection laws. Under this new ordinance, which is now in effect, workers in Philadelphia have expanded protection against labor infractions; and employers face a host of new and enhanced compliance requirements.
On February 21, 2025, a federal judge in the District Court of Maryland granted a temporary injunction blocking portions of President Trump’s Executive Orders “Ending Illegal Discrimination and Restoring Merit Based Opportunity” (“14173”) and “Ending Radical and Wasteful Government DEI Programs” (“14151”) (collectively the “EOs”). To learn more about each EO’s directives read Blank Rome’s previous coverage on 14173 here and 14151 here. This is a temporary nationwide ban on certain portions of the EOs.
After pointing out that the Trump Administration has declared “DEI to be henceforth illegal”, the Court found the EOs do not “define any of the operative terms” such as “illegal DEI”, “equity-related”, “promoting DEI”, or “illegal discrimination or preferences”. This vagueness fails to provide companies and organizations with proper notice as to what types of programs are prohibited. Further, the Court found that the EOs likely violate the First Amendment by expressly threatening “the expression of views supportive of equity, diversity and inclusion.” This is a nationwide ban.
It is nearly impossible to think about the Federal Trade Commission (“FTC”) without thinking about the chaos caused by the non-compete ban it approved last year over vociferous dissent only to have the ban vacated and set aside nationwide by the Northern District of Texas. Curiosity remains about what the impact of the change in administration will have on the FTC’s approach to this issue of paramount importance to employers. But with President Trump’s appointment of Andrew Ferguson to lead the FTC, what follows is some insight on the current state of play and the FTC’s probable mindset.
Where We Were Last Year
As a recap, the FTC’s “Final Rule” announced on April 23, 2024, would have banned nearly all non-compete provisions and provisions functioning as non-competes (in the FTC’s view). That Final Rule, which was set to go into effect on September 4, 2024 (the “Effective Date”), would have impacted not only traditional restrictive covenant agreements with employees and contractors but likely also agreements with employee equity holders as well as claw-back and repayment agreements with employees presented with signing bonuses or training and education opportunities.
As expected, businesses and trade organizations swiftly challenged the Final Rule, with lawsuits filed against the FTC in Pennsylvania, Florida, and Texas seeking to set aside the Final Rule: a lawsuit brought by a tree-service company, ATS Tree Services, LLC in the Eastern District of Pennsylvania; a lawsuit brought by the Properties of Villages Inc.in the Middle District of Florida, and lawsuits brought by tax-advisory firm Ryan, LLC and the U.S. Chamber of Commerce in the Northern and Eastern Districts of Texas, respectively. The lawsuits yielded distinct outcomes. The Texas court preliminarily enjoined enforcement of the Final Rule as to the plaintiff only, pending a final ruling on the merits. The Pennsylvania court upheld the Final Rule. The Florida court preliminarily enjoined the Final Rule as to the plaintiff only, on similar but not identical grounds to the Texas court, even while accepting some of the Pennsylvania court’s analysis.
The limited holdings and contradictory outcomes made the chaos sewn by the FTC even worse in the weeks leading up to the Effective Date. Ultimately, the Texas court provided clarity, issuing its final ruling on the merits and vacating and setting aside the Final Rule nationwide holding that its issuance was outside FTC’s authority granted by Congress and that the Final Rule was otherwise arbitrary and capricious under the Administrative Procedure Act. The FTC has appealed both the Florida and Texas rulings, and the plaintiff in the Pennsylvania ruling voluntarily dismissed its lawsuit after the Texas court ruling.
Salary threshold. . .$35,568.00. . .the Eastern District of Texas. . .not the classic answers you expect to hear from your loved ones around the Thanksgiving table when you ask, “Hey guys, what are you most thankful for?” While family, friends, food, and a roof over your head are all great, the fact that the United States District Court for the Eastern District of Texas shot down the Department of Labor’s (“DOL”) attempt at increasing the overtime salary threshold to $58,656.00 is right up there for employers.
The DOL’s Not-So-Final “Final Rule”
Back on April 23, 2024, the DOL announced their “final rule,” which entailed a multi-phase increase of the “white-collar exemption” (the executive, administrative, and professional employees (“EAP”)) salary threshold from $35,568.00 to $43,888.00, starting on July 1, 2024, and then up to $58,656.00, starting on January 1, 2025 (with increases automatically occurring every three years thereafter). Notably absent were any changes to the DOL’s “duties” test, which must be analyzed in conjunction with a salary when determining whether an EAP employee is exempt from overtime. At the time of its announcement, the DOL projected their final rule would make four million workers newly eligible for overtime payments and cost employers nationwide roughly $1.4 billion in the first year alone. Being thankful for a $35,568.00 threshold is looking more and more understandable now, isn’t it?
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:
DATE
STANDARD SALARY LEVEL
HCE 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 region
TBD 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!
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.
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.
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.
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):
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
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 daythat 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:
The total number of adverse judgments or administrative rulings during the preceding year;
Whether equitable relief was ordered; and
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.
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.
