Employment

 

Updates to Department of Labor Exempt Salary Status Threshold under the Fair Labor Standards Act

Pursuant to a final rule issued by the United States Department of Labor (“DOL”) on April 26, 2024, specific changes regarding minimum wage and overtime exemptions under the Fair Labor Standards Act (“FLSA”) will be going into effect on January 1, 2024.

Currently, certain executive, administrative, and professional workers are exempt from minimum wage and overtime pay requirements under the FLSA if they (1) are paid on a salary basis at a rate of not less than $884 per week and (2) perform specific duties that are exempt under the FLSA and corresponding regulations. Employees of companies who are subject to the FLSA and are not exempt under this test are required to be paid time-and-a-half for any hours worked more than forty hours in a week unless they are exempt under other regulations under the FLSA.

The weekly salary rate of $844 equates to an annual salary of $43,888. This threshold has been in effect since July 1, 2024. However, effective January 1, 2025, the threshold will increase to $1,128 per week (equivalent to a $58,656 annual salary).

The rule also increases the salary threshold for the highly compensated employees exemption from $132,964 per year (including at least $844 per week paid on a salary or fee basis) to $151,164 per year (including at least $1,128 per week paid on a salary or fee basis), effective January 1, 2025.

These thresholds will then be updated every three years, with the next update set for July 1, 2027, barring any changes to the rule in the interim.

It is important to note that these salary thresholds do not apply to all employees, including doctors, lawyers, teachers, and outside sales employees.

In preparation for setting 2025 employee compensation, employers should begin developing a plan to address these changes if they have employees who will be impacted by these threshold adjustments and perform specific duties that are exempt under the FLSA. The attorneys at Erickson Sederstrom can assist in determining how these changes will impact your business and how to address these changes when they go into effect. Employers can also stay up to date by visiting the Department of Labor website’s Wage and Hour Division Section for articles regarding rule changes, explanations, and other guidance to help employers remain compliant with the ever-changing landscape of federal regulations.

Understanding Workplace Harassment and Discrimination

Harassment and discrimination of any kind have no place in the workplace. However, workplace harassment and discrimination are significant concerns that have been present in many industries and organizations. Despite recent increases in attention to these issues, they continue to persist. As an employer, you are legally obligated to provide a work environment free from intimidation, insult, or ridicule based on race, color, religion, gender, or national origin.

What is Workplace Harassment?

Harassment is defined as verbal or physical conduct that denigrates or shows hostility or aversion toward an individual because of that person’s race, skin, color, religion, gender, national origin, age, or disability. It further serves the purpose or effect of unreasonably interfering with the individual’s work performance.

Conduct itself can take many forms, such as epithets, slurs, stereotyping, jokes, and pranks that are hostile or demeaning or written or graphic material that denigrates or shows hostility towards a particular individual or group.

What if it was just a joke?

Employees who engage in harassing conduct often will use the defense that “it was just a joke.” In situations where you are trying to determine if some conduct that has taken place is harassing conduct, the way to decide it is to use the “reasonable person” standard. In layperson’s terms, it refers to a hypothetically reasonable person with a reasonable way of interpreting and reacting to a situation of harassment. The reasonable person standard aims to avoid the potential for parties to claim they suffered harassment when most people would not find such instances offensive if they themselves were the subject of such acts. This standard includes considerations of the perspective of persons of the same race, color, religion, gender, national origin, age, or disability as the harassment victim.

Prevention and Risk Mitigation

If your company has not taken the steps to mitigate the potential for workplace harassment, this becomes an immediate priority. From a legal standpoint, the best way to reduce your liability should harassment ever occur is to have policies and procedures in place that show that you did everything you could to prevent harassment from occurring. Here are some steps that your team can use for preventing and dealing with harassment:

1. Establish a zero-tolerance, anti-harassment policy

Have a written policy stating that harassment will not be tolerated. This policy should include a clear-cut, easy-to-understand definition of harassment, a harassment prohibition statement, a

description of your complaint procedure, a description of disciplinary measures, and a statement of protection against retaliation.

2. Take immediate action

Should an incident happen, make sure that leadership immediately takes corrective action. This will help build trust and let potential harassers know that that behavior will not be tolerated.

3. Make it easy to bring harassment and discrimination to light

Set up a complaint process that is both easy to use and doesn’t embarrass or burden the victim. Often, employees will remain silent for fear of retaliation or further harassment. By establishing an easy, anonymous process, employees are more likely to come forward and seek help from their employer.

Take every complaint seriously and investigate every complaint.

4. Institute training and awareness programs for your employees

Establish a training program in which all employees must participate and schedule it regularly. This training should include what constitutes acceptable and unacceptable behavior, how to recognize when harassing conduct is taking place, and steps to take to report inappropriate behavior. This also includes management. Management must be skilled in recognizing when harassment occurs and making clear such behavior cannot be tolerated under any circumstance.

FTC Issues Rule Banning Non-Competes Nationwide – Now Subject to Pending Challenge in Lawsuit

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule prohibiting specific non-competition clauses (the “Rule”), which is located here. The Rule goes into effect September 4, 2024, but enforcement could be delayed pending legal challenges to the Rule.

Who does the Rule apply to?

The Rule applies to “workers,” which is defined broadly to include an “employee, independent contractor, extern, intern, volunteer, apprentice, or a sole proprietor.” “Worker” also consists of a person who works for a franchisee or franchisor but expressly excludes a franchisee in its relationship with a franchisor.

However, there is a crucial difference between “workers” and “senior executives.” “Senior executives” are defined as a worker who:

1. Was in a policy-making position; and

2. Received from a person for employment:

a. Total annual compensation of at least $151,164 in the preceding year; or

b. Total compensation of at least $151,164 when annualized in the preceding year before the worker’s departure if the worker left their employment before the preceding year and is subject to a non-competition clause.

The Rule defines “policy-making position” to specifically include a president, chief executive officer or equivalent, or anyone with policy-making authority.

What does the Rule prohibit?

The Rule prohibits employers from entering into, attempting to enter into, enforcing or attempting to enforce a non-compete clause, or representing that a worker is subject to a non-compete clause.

A “non-compete clause” is broadly defined to include a term that “prohibits a worker from, penalizes a worker for, or functions to prevent a worker from” working in the United States with a different employer post termination of prior employment or operating a business in the United States post termination of previous employment.

For “senior executives” enforceable non-compete clauses that were entered into before the Rule’s effective date (which is currently set for September 4, 2024), will remain in effect and the Rule will apply only to new non-compete clauses entered into after the effective date.

What if you have existing clauses that will violate the Rule upon the effective date?

Suppose you currently have workers who are subject to non-compete clauses that will not be enforceable upon the Rule’s effective date. In that case, you will be required to provide notice to such workers. Such notice must be clear, conspicuous, and delivered to the worker by the effective date, stating that the non-compete clause will not and cannot be enforced. The FTC has provided model notices in various languages, which can be located here.

Are there exceptions to the Rule?

The Rule is not a blanket ban on non-competes. The Rule does not apply in the context of a bona fide sale of a business, existing causes of action, or if there is a good faith basis to believe the Rule is inapplicable.

What about non-solicitation clauses?

Commentary on the Rule indicates that non-solicitation clauses generally are not considered non-compete clauses since they do not prevent workers from seeking or accepting other employment or starting a business following termination of their prior employment. However, if a non-solicitation clause is so broad that it “functions to prevent a worker from” seeking or accepting work or operating a business, it would satisfy the definition of a “non-compete clause” under, and thus be subject to, the Rule.

What should employers do?

Employers should monitor the status of pending legal challenges to the Rule to determine whether such challenges will succeed in reversing it. In the meantime, Employers should review their current restrictive covenants and prepare policies and procedures in case the Rule does go into effect while continuing to comply with state law. Existing restrictive covenants that are enforceable under the laws of a particular state may already be compliant with the Rule, especially if state law is more restrictive than the Rule.

Where can you get more information? For more information regarding the Rule, businesses can review the Fact Sheet and Compliance Guide for Businesses and Small Entities provided by the FTC. These helpful resources provided information regarding the Rule and ways employers can comply.

Navigating Diversity, Equity, and Inclusion Initiatives

Strategies for fostering an inclusive workplace culture while ensuring compliance with relevant laws and regulations.

The benefits of fostering a diverse work environment are undeniable: it can lead to higher productivity, greater financial success, and a better culture for employees overall. More companies are pushing policies and procedures that would increase the diversity of their workforce. However, the policies and procedures must be tailored to ensure compliance with non-discrimination laws. Below are a few strategies an employer can use to achieve the balance of fostering an inclusive environment while also adhering to legal requirements.

Understand the Legal Requirements

In order to effectively balance diversity, equity, and inclusion (“DEI”) policies that are compliant with relevant laws, it’s crucial to understand what exactly the laws require of employers. Laws impacting DEI include Equal Employment Opportunity (“EEO”) laws, anti-discrimination laws, and accessibility laws. While coming at them from different points of view, these laws each prevent various types of discrimination in the workplace, including the application/hiring process, actual employment, and termination of employees. More and more relevant statutes are being passed, so it’s empowering to stay up to date on legislation and have a clear understanding of what compliance looks like under the relevant authority.

Training and Education

Once the employer understands the legal requirements, it’s important that this knowledge is distributed throughout the organization. Providing regular training to employees and managers on not only the laws but also DEI principles will ensure compliance at each level. This step is vital for any employee at any level who participates in the hiring, promotion, or termination process. There are countless resources available to companies that provide instruction surrounding DEI compliance, including training developed by the Equal Employment Opportunity Commission (“EEOC”) with the goal of understanding, preventing, and correcting discrimination in the workplace.1

Developing Diverse Hiring Practices

One of the biggest arguments against DEI initiatives is that they promote hiring individuals based solely on their status of being in a protected class under the laws above.2 There are tangible ways to have diverse hiring practices that do not include hiring individuals solely based on their protected status. For instance, pay attention to the wording of the job posting and ensure it doesn’t use words that attract a specific type of applicant while excluding others, or take steps to ensure the job listing is put in places where diverse applicants will see it.3 There are numerous online forums dedicated to aiming jobs specifically at underrepresented groups.4 Another easy way is to celebrate the diversity that your company already has. If a potential applicant researches a company but finds the workplace lacks diversity, they are less likely to apply; studies have shown that 67% of people say that diversity in a workplace is an essential factor to them when considering a job opportunity, and failing to show that your work environment also values diversity may result in losing out on potential applicants.5

Continuing Growth

Once an employer has a policy in place, it’s important to understand that policy cannot be stagnant. Continuous growth is crucial to ensuring the ongoing fostering of a diverse environment while maintaining compliance. Employers/Companies should collect data on their workforce demographics, hiring practices, promotions, and other metrics to determine what’s working and what isn’t.4 Again, the laws surrounding this topic are constantly changing and various case laws are shaping its interpretation, so it’s important to work closely with legal experts, human resource professionals, and DEI specialists to ensure a continuing understanding of what’s required under the laws while still working towards a companies DEI goals. This collaborative approach allows for diverse perspectives and will help mitigate noncompliance or complacency risks.

Navigating DEI initiatives and relevant laws and regulations is no easy task, but by integrating DEI efforts with compliance with employment laws, organizations can mitigate legal risks and reap the benefits of a diverse and inclusive workforce, including enhanced innovation, creativity, and employee engagement. Ultimately, fostering an inclusive workplace requires a proactive and holistic approach that prioritizes both DEI goals and legal compliance.

Employer Liability in the Age of Social Media

As of April 2023, there are an estimated 4.8 billion social media users worldwide, representing 59.9% of the global population and 92.7% of all internet users.1 Social media has become a daily staple in most Americans' lives. Users post daily routines, provide hourly updates on their activities, and detail countless other thoughts, updates, blogs, etc. This also includes references and information regarding their employment and activities related to their job. The average time spent on social media daily is 2 hours and 24 minutes, and the world collectively spends about 11.5 billion hours on social media daily.2 In addition to employee engagement on social media, employers have also become widely involved. According to Forbes, the social media app market in 2022 was valued at $49.09 billion.3 Most major brands and companies today maintain multiple social media accounts and advertise consistently on social media platforms. In fact, the total ad spending on social media platforms is projected to reach $219.8 billion in 2024.4 These staggering numbers show that social media usage is continuing to grow despite the already massive engagement. As such, employee and employer actions on social media will continue to impact the workforce moving forward significantly. This article will discuss some critical considerations for employers and employees to keep in mind while using and interacting on the numerous social media platforms now available to the public.

Legal Impacts: Liability from Corporate Speech on Social Media

As referenced above, most major brands and companies have a social media presence today, advertising and attempting to personify their brand. These posts, however, now provide a unique situation for companies involved in legal disputes. Posts from corporate or brand social media accounts can now be considered a form of corporate

speech and have most if not the same, liability risks as other forms of corporate speech (i.e., press releases, articles, memos, etc.). As such, any post made by an official company or brand's social media account can be used against a company to support claims of libel, defamation, false advertising, etc. For example, if a social media account makes a post that makes specific negative, false, or misleading claims regarding other businesses or individuals, the company could be held liable for defamation of character or libel. Likewise, an employee could potentially be held liable for making false or misleading posts on social media platforms disparaging their employer's name.

There are many real-world examples of employers and employees being sued for libel, defamation, false advertising, etc., for posts made on social media platforms. A very famous example of a lawsuit stemming from a social media post is the current lawsuit between Jimmy "MrBeast" Donaldson and Virtual Dining Concepts (from now on, "VDC"). According to Forbes, Donaldson (known online as "MrBeast) has 174 million YouTube subscribers and 86 million followers on TikTok as of August of 2023. The Donaldson entered into a contract with VDC to create his own "virtual restaurant" called "MrBeast Burgers." MrBeast Burgers only has a limited number of physical locations; primarily, the store is available for order and delivery from many popular delivery apps (e.g., DoorDash, UberEats, GrubHub, etc.). Instead, the food is made and prepared in previous existing restaurants and then picked up and delivered via the delivery apps. In June of 2023, Donaldson deleted his announcement video from the social media platform X, wherein he announced he was partnering with VDC to create MrBeast Burger. In a series of tweets on X, Donaldson explained that he believed he had signed a bad deal with VDC, as he alleged VDC was not concerned with providing high-quality products as he had planned. He further claimed VDC wouldn't let him stop his association with MrBeast Burger, although he alleged it was terrible for his brand. Due to his frustration, Donaldson filed suit against VDC, claiming, amongst other things, that VDC had breached its contract with Donaldson. In response to Donaldson's suit, VDC filed its own counterclaims against Donaldson, requesting damages for the disparaging comments made by Donaldson and seeking an injunction to preclude Donaldson from making further disparaging remarks. The case is currently being litigated in New York federal court.6 This case serves as an example of how both employer and employee can be affected by social media posts, despite the size or relative goodwill of the brand.

Privacy Concerns

In addition to the legal consequences social media posts by employees and employers may create, there are also several practical concerns. As with most online platforms, the number one concern is privacy. Social media platforms inherently require the input of personal information to create and maintain an account. Further, these companies routinely collect, track, and store personal data on user behaviors. Social media platforms use this to better target advertising to their users. They may even share this information with third-party entities. As such, it is essential to remember that when a company or brand, either employee or employer, logs onto a social media platform, it leaves behind data that the platform or third-party entities may collect.

In addition to the platform's data collection, social media also presents potential issues with hackers gaining access to the account. This can present numerous problems, such as posts made by individuals unassociated with the company, data or information leaks, potential access to company hardware and/or software, etc. Specifically, hackers gaining access to hardware containing company-sensitive data, client information, employee information, etc., is a real threat if certain precautions are not maintained. There are several examples wherein social media accounts were hacked, and negative or disparaging posts were made from the official brand's social media account. One example is Burger King's official Twitter account in February of 2013 when an individual hacked the official Twitter account of Burger King and made several disparaging posts, and changed the main page to claim a major competitor, McDonald's, was superior quality. The account was suspended and returned to Burger King the same day, but only after the brand suffered national embarrassment.7 In light of what could have happened, this was a minor impact, as no data or other information was leaked. Again, the potential danger or impact of hackers stealing information from social media is significant.

What Can You Do?

Clearly, brand and company engagement on social media platforms creates many risks for employees and employers. How, then, do employers address these risks? While avoiding the risk by avoiding social media platforms may be a simple answer, there is potential to reach unprecedented numbers of unrealized clients. Avoiding this hugely popular aspect of communication leaves money on the table. As such, all employers should have explicit social media policies regarding the type of content, engagement, advertising, etc., that can be posted on social media platforms, as well as clearly indicating which users are authorized to log on, access, and post from the employer's official account.

Further, specifying which devices can be used and working with an IT representative to ensure proper safeguards are in place regarding information and data on the authorized devices may help prevent some of the potential issues and negative impacts social media can have on employers. Furthermore, regular phishing and internet safeguard training for all employees will help prevent unintended consequences. A thorough social media policy and extensive training regimen are key for employers and employees in navigating this ever-changing online world.

Are Employers Required to Accommodate Religious Practices of Employees?

Are Employers Required to Accommodate Religious Practices of Employees?

In a pivotal moment for religious liberty, the Supreme Court of the United States ruled unanimously on June 29, 2023 that the U.S. Postal Service violated the Constitutional rights of an evangelical Christian mail carrier by refusing to accommodate his wish not to work on Sundays. This landmark ruling of Groff v. DeJoy clarifies the standard for religious accommodations employers must make to their employees under Title VII of the Civil Rights Act of 1964.