In a much-anticipated move, President Donald Trump has fired Jennifer Abruzzo, the general counsel of the National Labor Relations Board (“NLRB”). Trump’s action follows a precedent set by former President Joe Biden. On his first day in office four years ago, Biden ousted Peter Robb, the NLRB’s general counsel during the first Trump administration. During her tenure, Abruzzo aggressively sought to expand workers’ rights under the National Labor Relations Act, empower unions, and protect those seeking to organize workers.
The removal of Abruzzo opens the door for President Trump to appoint a new general counsel for the Board. The White House has yet to announce Abruzzo’s replacement, but the president’s transition team for the NLRB was led by Robb and his former deputy, Alice Stock. The new U.S. Labor Board’s prosecutor is expected to adopt a more pro-business stance. It remains to be seen, however, if that agenda will be influenced by Trump’s campaign rhetoric and promises in support of workers and union members. Many have noted that Trump’s choice to lead the Department of Labor, Representative Lori Chavez-DeRemer, is an unusually pro-union Republican whose candidacy was backed by the International Brotherhood of Teamsters in part because she had backed the Protecting the Right to Organize Act as a Congresswoman.
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.
On January 21, 2025, President Donald Trump issued an Executive Order (“EO”) titled “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” explicitly revoking Executive Order 11246, which mandated federal contractors comply with certain diversity, equity, and inclusion (“DEI”) related requirements, including the dissemination and enforcement of nondiscriminatory policies, establishing a written affirmative action plan and placement goals for women and minorities, and implementing action-oriented programs for accomplishing these goals.
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?
With a new administration looming, the National Labor Relations Board (“Board”) recently issued two decisions that radically depart from established law about what an employer can say and how an employer can lawfully meet with its employees during a union organizing campaign.
Employers have always been able to tell employees that one of the disadvantages of unions is that they impede direct dealing between the company and its employees. This is because employees give up their individual rights in favor of exclusive collective representation by the union, and it puts a third party in the middle of the employment relationship. Despite this being an obvious truism, depending on what is said by the company, this may now be illegal under the Board’s decision in Siren Retail Corp. dba Starbucks and Workers United affiliated with Service Employees International Union (“Starbucks”).
Employers have always been able to have a mandatory meeting—the so-called “captive audience meeting”—of all employees in the bargaining unit at least 24 hours before a union representation election to make its case for why it believes that a union is unnecessary for the employees. These meetings have been among the top tools employers use to fend off union organizing campaigns. This type of mandatory meeting is now illegal under the Board’s decision in Amazon.com Services LLC and Amazon Labor Union (“Amazon”).
Time will tell if these decisions hold up under the new administration; but, for now, they are the law.
Massachusetts now joins a growing list of states and other localities with pay transparency laws.
On July 31, 2024, Massachusetts Governor Maura Healey signed into law Bill H.4890. The Bill contains new pay transparency and wage reporting requirements applicable to certain employers with employees in Massachusetts. The law requires employers with 25 or more employees in the Commonwealth to disclose salary range information on job postings, and to provide pay range information to current employees in certain circumstances.
The effective date of California’s Senate Bill 553 is fast approaching, and the law covers nearly every employer and every employment facility in California with the exception of healthcare facilities and other facilities governed by different legal standards, most remote workers, and businesses with fewer than 10 employees.
Whether you are based in California or operate a worksite in the state with more than 10 employees, compliance is mandatory. The requirements, set forth in SB 553, are detailed and complex, establishing rules for planning, logging, and record-keeping, as well as worker training, which will all be overseen and enforced by the California Occupational Safety and Health Act (“Cal/OSHA”).
Specifically, California employers must meet four broad categories of obligations that go into effect July 1, 2024, including:
The creation of a workplace violence prevention plan.
The creation of a workplace violence incident log.
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!
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.
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.
