The Federal Trade Commission (FTC) has finalized a ban on noncompete agreements in most circumstances. The ban takes effect in August but has already been challenged in court, and implementation may be delayed.
Once the rule takes effect, noncompete agreements—including preexisting ones—cannot be enforced. There is a limited exception for existing noncompetes with senior executives, defined as workers earning more than $151,164 annually and who are in policymaking positions. In addition, there is an exemption for noncompetes in connection with the sale of a business that applies to owners of the business being acquired.
In its comment letter, ACEC asked the FTC to make the ban prospective, allow noncompetes with any business owner, and provide clarity on alternatives to noncompete agreements. Although the FTC confirmed that alternatives to noncompete agreements, such as nondisclosure agreements, are allowable as long as they are not functionally equivalent to a noncompete, the agency did not provide clear guidelines.
ACEC will be providing educational programming to help firms navigate the new rule.
The Department of Labor (DOL) has finalized a rule that raises the Fair Labor Standards Act (FLSA) overtime pay salary threshold, which requires that employees must be paid time and a half for hours over 40 worked in a week.
On July 1, the salary threshold increased from $35,568 to $43,888. This is an inflationary update using the methodology of the FLSA final rule from 2019. On January 1, 2025, the salary threshold will increase to $58,656, based on the new methodology proposed by the DOL last year. Starting July 1, 2027, the salary threshold will be automatically updated every three years.
It is possible that some industries will bring legal action against the rule due to the automatic updates, which are not authorized by the law and were the basis of the 2016 FLSA rule being successfully challenged in court.
For legislative news, visit ACEC’s Last Word blog online at acec.org/news/last-word-blog.