Intro to Federal and Multi-State Labor Laws

On August 23, 2024, a federal appeals court overturned the U.S. Department of Labor's (DOL) so-called "80/20/30 rule," which set strict compliance requirements for employers using tip credits to meet minimum wage obligations. The 5th U.S. Circuit Court of Appeals determined that the DOL's rule did not align with the text of the Fair Labor Standards Act. The decision provides relief to employers from the rule’s compliance requirements, including the need to distinguish between “tip-producing” and “tip-supporting” work. While the federal rule has been overturned, it is important to keep in mind that states and localities may have their own requirements when it comes to tips and minimum wages. Employers with tipped employees should work with legal counsel for guidance in reviewing pay practices in light of the ruling and to ensure compliance with state and local regulations.

On August 20, 2024, the U.S. District Court for the Northern District of Texas ruled to set aside the Federal Trade Commission’s (FTC) Non-Compete Clause Rule. The rule would have banned employers from using non-compete agreements except in very limited situations. This decision means the ban will not be enforced nor will it take effect nationwide on September 4, 2024, as intended.

A federal judge in Texas has put the Federal Trade Commission's (FTC) nationwide ban on non-compete agreements on hold. For the challengers involved in the case, the injunction delays the enforcement of the FTC's rule, set to take effect on September 4, 2024. The judge’s final decision, which is expected on or before August 30, 2024, could have broader implications for all employers, if upheld. The final decision is expected to be subject to further appeals, likely extending into 2025. A similar injunction, currently being considered in a Pennsylvania federal court, will be decided in the coming days (by July 23, 2024), which may have further implications for the challengers and beyond. 

Employers should keep themselves updated on this ongoing legal matter and remain aware of state-level regulations regarding non-competes.

As Election Day nears, employers are encouraged to review voting leave laws to understand employees' rights to take time off to vote or to serve as election officials. A majority of states require employers to provide employees with a few hours off to vote, sometimes with pay. Some states also require employers to notify employees of the availability of time off to vote. Justworks customers can search voting laws by state by logging into their Justworks account and navigating to HR > Resource > Visit Mineral. Employers should consult with legal counsel to review policies and procedures, including handbooks, to ensure compliance with applicable state and local laws.

The Corporate Transparency Act of 2021 created a reporting requirement for beneficial ownership information (BOI) – certain information about individuals who own or control, directly or indirectly, a company. Companies that fall within the reporting requirements and were formed prior to January 1, 2024 must file a BOI report by December 31, 2024 to stay compliant and avoid fines and penalties. Companies that are required to report BOI and formed on or after January 1, 2024 are required to file a BOI report within 90 calendar days after receiving notice that the company’s creation or registration is effective. Businesses may also need to file this report each time there is a change to an owner’s information or a change in ownership.

Justworks has partnered with Wolters Kluwer to help small businesses stay compliant and accurately file BOI reports with the Financial Crimes Enforcement Network (FinCEN), at discounted rates.

The summer will bring changes in many jurisdictions to the minimum wage/minimum salary thresholds for exemptions from minimum wage and overtime requirements, and other minimum pay requirements. Most minimum pay requirements get updated on or around January 1, or on or around July 1. As mentioned in our last edition, the most notable update includes exempt salary pay requirements increasing for exemption types at the Federal level.

Employers should review the pay requirement updates linked here and make adjustments to their employee compensation details and classifications as needed.