Compliance Stuff

 The Federal Trade Commission’s (FTC) ban on noncompetition covenants (“noncompetes”) could significantly impact the design and administration of employee benefits and executive compensation arrangements. Quick Hits The FTC’s ban on noncompetition covenants has potential implications for several aspects of employee benefits and executive compensation plans and arrangements, such as Code Section 457(f) plans, restricted stock, severance arrangements, golden parachute payments, and garden leave. The rule takes effect on September 4, 2024 , but a federal district court in Texas recently granted a preliminary injunction staying the enforcement of the final rule as to the parties in the case. The court’s decision, pending a final ruling on the merits by August 30, 2024, has signaled that the FTC’s noncompete rule will not survive judicial scrutiny. Although the U.S. District Court for the Northern District of Texas recently granted a preliminary injunction staying enforcement of the ru...

As we reach the midyear point, we’re rounding up the new workplace laws that will take effect on July 1. With so many laws about to kick in, it can be hard to keep track of it all. Here’s a guide to some of the federal, state, and local laws you’ll need to comply with starting in July. Federal Department of Labor The first phase of the new federal overtime rule will make millions of workers newly eligible for overtime pay. Starting July 1, the DOL’s salary threshold for the so-called “white-collar” exemptions from federal OT requirements will rise to $43,888 (and will jump to nearly $59k at the start of 2025). Read these Insights to catch up on: 10 steps employers can take now to prepare; how the new rule impacts highly compensated employees; and business groups suing to block the new overtime rule. Office of Federal Contract Compliance Programs Federal contractors and subcontractors have until July 1 to certify that their affirmative action plans are compliant with federal requiremen...

The proper classification of employees as exempt or non-exempt is often at the root of wage and hour litigation, and there are many common misunderstandings about the subject. Below are some of the questions SLG attorneys most frequently receive about employee classification: Q: Are all salaried employees exempt? A: No! Although many use the word “salaried” as synonymous to “exempt,” the analysis is significantly more complicated. Most California exemptions require employees to be paid at least double minimum wage on a salary basis and to be primarily engaged in exempt duties, which are specifically defined for each exemption. Some exemptions have a higher salary threshold, such as certain physicians and computer professionals, and there are different rules for some commissioned salespeople. Q: Do California employers need to worry about the U.S. Department of Labor’s recently released Overtime Rule? A: Mostly likely no. Under the new Overtime Rule, effective July 1, 2024, the minimum ...

While a traditional non-compete clause falls squarely in the “prohibits” category, the FTC also expressed concern regarding other agreements that may “function to prevent workers from seeking or accepting other work or starting a business after their employment ends.” As a result, employers should consider reviewing other employee agreements and prepare for the possibility that the FTC may attempt to bar those “functional non-compete” agreements in the future. For example, many employers reimburse employees’ tuition fees or training costs to encourage employees to seek further work-related education or training. In such cases, the employees are often required to remain employed for a certain period of time after they receive reimbursement. If they leave before that time period ends, employers reserve the right to deduct the cost or a percentage of the cost from the employee’s final paycheck.  In its commentary on the non-compete rule, the FTC found that some “training repayment agr...

 A new legal challenge by more than a dozen business groups seeks to overturn the enforcement of the Department of Labor's new rule raising the earning thresholds for the FLSA's white-collar overtime exemptions---same as 2016. The new lawsuit alleges that the DOL acted arbitrarily and capriciously (meaning, it was made on unreasonable grounds or without any proper consideration of circumstances) in setting the new thresholds, ignoring concerns from the business community. This lawsuit intends to stop the first threshold increase, which is set to take effect on July 1, 2024. Source: Ogletree Deakins , received on May 28, 2024

Under the new rule, total annual compensation requirement for HCEs will increase from $107,432 per year to $132,964 per year on July 1, 2024 and will rise to $151,164 per year on January 1, 2025.  Earning thresholds will be updated every three years starting on July 1, 2027. This increase is expected to affect nearly 300,000 currently highly compensated dependent on the relaxed job duties test.   Criteria for Classification as an HCE An employee must meet several criteria before being classified as an HCE. First, the employee must be paid a total annual compensation of at least $132,964 as of July 1, which includes at least $844 per week on a salary basis. Effective Jan. 1, 2025, the total compensation threshold will increase to $151,164, which includes at least $1,128 per week paid on a salary basis. The weekly salary amount of $844, or $1,128 as of Jan. 1, 2025, must be paid in its entirety. Employers may not use nondiscretionary bonuses and incentive payments— incl...

 The US Department of Labor (DOL) released a document that outlines several principles with regards to Artificial Intelligence (AI) to provide employers that create and deploy AI with guidance for designing and implementing these emerging technologies in ways that enhance the job quality and protect workers' rights.   The AI Principles apply during the entire lifecycle of AI: from development to testing to deployment of AI in the workplace to oversight, use and auditing.  The AI Principles (thought not an exhaustive list, but should be used as a guiding framework) can be applied to all sectors and are intended to be mutually reinforcing, thought not all principles will apply to the same extent in every industry or workplace. The Department's AI Principles for Developers and Employers include: [North Star] Centering Worker Empowerment: Workers and their representatives, especially those from underserved communities, should be informed of and have genuine input in th...

 GovDocs published a piece on May 17, 2024 with regards to Election Season and Politics in the Workplace.  The Compliance Department felt it worthwhile to share the perspective: The Challenges of Election Season for Employers Election season is upon us, and so are the many political minefields that employers are expected to navigate during the months leading up to voting day. Polarizing opinions (expressed loudly and often), heated arguments between employees, and complicated voting leave requirements are just a few areas that could dampen employee morale and challenge your company’s compliance.  Multi-State Policies for Politics: Untangling the Web To further complicate matters, companies with locations in multiple states must track and manage a complex web of election-related legislation to inform their policies and procedures related to voting rights and workplace politics.  This all might seem a bit overwhelming – and for good reason. This is complicated stuff. R...

 On May 10, 2024, CISA, along with the FBI, HHS, and MS-ISAC, issued a joint  Cybersecurity Advisory relating to Black Basta ransomware affiliates "that have targeted over 500 private industry and critical infrastructure entities, including healthcare organizations, in North America, Europe, and Australia. Black Basta is a ransomware-as-a-service (RaaS) variant, first identified in April 2022. Black Basta uses double extortion tactics, encrypts data and threatens to leak it and has links to Conti and FIN7 threat actors. The  Black Basta Advisory  provides information on how the threat actors gain initial access to victim's systems, which primarily use spear phishing tactics. The Advisory lists indicators of compromise, file indicators, and suspected domains used by Black Basta.  This can be helpful for IT professionals to compare against company systems.  Mitigations listed by the Advisory include current patching, MFA, training, securing remote access sof...

 On May 20, 2024, the Department of Labor announced a final rule from its Occupational Safety and Health Administration that will update the current Hazard Communication Standard to protect workers by improving the amount and quality of information on labels and safety data sheets.  This will allow first responders and workers to react quickly in the event of an emergency.  The updates will take effect on July 19, 2024, Aligned primarily with the  seventh revision  of the UN's Globally Harmonized System of Classification and Labelling of Chemicals the  updated standard will require labels on small packaging to be more comprehensive and readable and makes changes to ensure trade secrets no longer prevent workers and first responders from receiving critical hazard information on safety data sheets. Workers will also receive a clearer hazard classification process to provide more complete and accurate hazard information on labels and safety data sheets; there...

Field Assistance Bulletins (FAB) are utilized to provide guidance to filed staff on enforcing the federal statutes administered by the Department of Labor's Wage and Hour Division (WHD). On May 20, 2024, JacksonLewis reported that the WHD has published a FAB on the application of federal labor standards to employers' use of artificial intelligence (AI) and other automated systems in the workplace. FAB No. 2024-1 emphasizes that statutory protections apply as usual, disregarding the new tools and systems employers are using.  However, the use of Artificial Intelligence (AI) may provide challenges in compliance. "Regardless of the exact AI or other technologies used, the principles described here provide guidance for evaluating how to comply with the law," the FAB states. The bulletin also addresses the potential impact of AI on compliance with the protections FLSA provides for nursing employees.    The FAB also provides guidance on the challenges that may arise with t...

 The US Department of Labor (DOL) filed an  amicus brief (friend-of-the-court) brief  urging the Seventh Circuit to affirm the district court's ruling that employers must pay for such travel time and to extend the district court's ruling to include travel time outside of regular work hours.  If the court adopts this position, it will significantly expand the scope of compensable travel time for non-exempt employees in the Seventh Circuit who travel to remote jobsites. Source(s): Olgetree Deakins, received on May 10, 2024; YouTube , accessed on May 21, 2024.

 Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), final privacy rules set basic limitations on the use or disclosure by covered entities (such as employer health benefit plans) and their business associates of reproductive health care information.  The final rules state that reproductive care is presumed to be legal unless the employer health benefit plan or its business associate has "actual knowledge" that the care was not lawful under the circumstances. The final rules generally require compliance on December 23, 2024.  Effective February 16, 2026, covered entities (such as employer health benefit plans) will be required to update their notices of privacy practices.  Additionally, the 2024 rules modify the HIPAA rules on disclosure of PHI to report abuse or neglect and for public health purposes to limit access to reproductive care information. For example, under current rules, a health benefit plan can refuse to treat an individual a...

 The Department of Justice (DOJ) launched a new pilot program on April 15, 2024.  This program will allow individuals who report certain criminal conduct (such as money laundering, fraud, or fraudulent noncompliance) to federal authorities to avoid prosecution under certain circumstances. The program incentivizes individual actors to disclose to federal authorities "actionable, original information about criminal conduct that might otherwise go undetected or be impossible to prove."  Those that do report must  provide full cooperation, including payment of applicable victim compensation, restitution, forfeiture, or disgorgement (legal requirement to return gains from illegal or unethical activities). The pilot program has certain criteria for a "whistleblower" to be considered: Original Information —The reporting individual’s disclosure must pertain to new, nonpublic information not already known by the DOJ or federal law enforcement. Voluntary —The disclosure must ...

Two cases show that courts consider alleged harassment or discrimination based on transgender or cisgender status to be true and valid under Title VII of the Civil Rights Act. Vacating summary judgment for the employer, a federal appeals court has ruled that while an occasional mistake using the incorrect name or pronouns will not create liability, misgendering an employee can be “severe and pervasive” enough to support a claim of hostile work environment under Title VII.  Copeland v. Ga. Dep’t of Corr. ,  97 F.4th 766 (11th Cir. 2024). Misgendering is using pronouns and gendered terms, such as man, woman, guy, and girl, other than the pronouns and the gender identity the employee has specified for them. In a “reverse” gender identity case, a federal district court has ruled that a cisgender man’s complaint that his transgender coworkers were treated more favorably than he has stated a legal claim sufficient to survive a motion to dismiss.   McCreary v. Adult World, Inc. ...

  The annual limit on health savings account (HSA) contributions for self-only coverage in 2025 will be $4,300, a 3.6 percent increase from the $4,150 limit in 2024, the IRS announced today. For family coverage, the HSA contribution limit will jump to $8,550, up 3 percent from $8,300 in 2024. The jump in the contribution limits is significantly less than the roughly 7 percent increase seen from 2023 to 2024. SHRM’s 2023 Employee Benefits Survey found that 64 percent of employer respondents offer a high-deductible health plan that is linked with a savings or spending account, like an HSA, and 63 percent of those employers offer contributions to their employees’ accounts. The average individual-only annual contribution is $1,012, according to SHRM, while the average family annual contribution is $1,585. Source(s): SHRM , received May 9, 2024. IRS , accessed on May 16, 2024.

 For decades, employers have applied the usual FMLA rules for an employee who cannot work because of limitations due to pregnancy. When these limitations render a pregnant employee unable to work, the employer has always had the right to obtain medical certification to confirm the limitation and the employee’s need for leave from work. When the FMLA became law in 1993, there was no such thing as the Pregnant Workers Fairness Act (PWFA), which as of last year requires employers to provide accommodations to individuals limited by pregnancy-related conditions (unless undue hardship exists). In its final rules implementing the PWFA, the EEOC went to unusual lengths to rein in an employer’s ability to obtain medical documentation when an employee requests a pregnancy accommodation. The agency rejected the ADA’s more expansive approach to supporting documentation, instead allowing medical documentation only if it is reasonable under the circumstances to determine if the employee has a qu...

  There are a number of mistakes—some simple and some not-so-simple—that employers should avoid to prevent receiving a panic-inducing assessment letter from the IRS. Mistake #1: Failure to Indicate that Minimum Essential Coverage Was Offered to Full-Time Employees One of the most common issues that I see is failure to indicate to the IRS that an offer of MEC was actually made to at least 95% of the employer’s full-time employees and their dependents. This will lead to an assessment of financial penalties under Internal Revenue Code (“Code)” Section 4980H. On Form  1094-C , Part III, Column (a) should be completed to indicate whether such an offer of coverage was made for all 12 months or for certain months during the year. Frequently, I have found that payroll companies will automatically default to checking the “no” box on the 1094-C, or leaving this box blank when preparing the 1094-C for their clients. Many organizations submit this Form 1094-C without carefully reviewing i...

 To find out if your organization is a covered entity under the Cybersecurity and Infrastructure Security Agency, I found a Fact Sheet  that may help with that decision. On April 4, the Cybersecurity and Infrastructure Security Agency published a notice of proposed rulemaking setting out mandatory reporting requirements for covered entities that experience cybersecurity incidents or make ransom payments in relation to a cybersecurity incident.  While the rule will inevitably change following the notice and comment period, the proposed rule represents the overall approach that CISA will take when it promulgates a final rule. JD Supra includes the original full publication that was published by Law360 on May 8, 2024. Source(s): JD Supra , received on May 14, 2024; CISA Covered Entity Fact Shee t, accessed on May 14, 2024.

With the April 23, 2024 FTC approval and issuance of the final rule banning employers' use of non-compete agreements (with very few exceptions), despite the unfavorable reception from some employers, it may be important to understand that all is not lost.  The FTC's new rule will force US employers to adopt practices that California companies have used for generations (remember the Gold Rush?  California became the 5th largest economy in the world. Employers need to lean into confidentiality, intellectual property, and trade secret provisions in employment agreements.  This is one of the best ways to safeguard their businesses. The focus of this article is to provide practical guidance that can help employers make the necessary pivot toward protecting their trade secrets. In this article, JD Supra provides this guidance:   Draft separate, stand-alone agreements to address confidentiality, intellectual property, and trade secret provisions.  Provisions addressing...