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Yes, that was an Olympics pun.
Holy schnikes how is it August already?!? I guess time flies when you’re monitoring an ever-changing landscape of employment law updates (and I suppose the non-stop news cycle isn’t helping – anyone else longing for just precedented times?). In any event, it’s still summer dammit, and we’ve got updates to fill you in on. So, sit back and enjoy. This edition revisits two major developments we previously covered on non-competes and overtime changes. But first, a word on the Administrative Procedure Act and deference to administrative agencies’ statutory interpretation (…Brian that’s way too boring don’t write that) let’s hear from the Supreme Court!
What was this Chevron stuff y’all were talking about?
About a month ago, there was a much-anticipated decision from the U.S. Supreme Court (or as we in the biz call them, SCOTUS) and you probably heard and saw the word “Chevron” all over the place. “Why is everyone talking about gas stations?” you may have asked. In a 6-3 decision, SCOTUS ruled in the case of Loper Bright Enterprises v. Raimondo and Relentless, Inc v. Department of Commerce that the so-called “Chevron deference doctrine” was overruled, abolished, finito, done.
In as simple terms as legally possible, the Chevron doctrine required courts to defer to a federal agency’s reasonable interpretation of an ambiguity in any law administered by that agency (and yes, dear cynical reader, most laws have ambiguities – the Loper case was literally a fight over whether the National Marine Fisheries Service could create a rule that required commercial fishers to pay a per diem fee because the Magnuson-Stevens Act was ambiguous on this fact … I LOVE THE LAW).
“Chevron deference” had been a thing for a very long time and was absolutely enmeshed in legal culture. If an agency created a rule related to a law it administered, it was incredibly difficult to push-back. But following Loper, SCOTUS held that courts must “exercise independent judgment in determining the meaning of statutory provisions,” even ambiguous ones. Said differently, you can now use the My Cousin Vinny defense. That’s right, the next time you want to challenge a federal agency’s interpretation of an ambiguity in a law administered by that agency, feel free to tell the judge that “everything that [agency] said is bull$%@!” (this recommendation is being provided for humor purposes only and for the love of god should not be construed as legal advice and this blog condones nothing less than full professionalism before the tribunal).
And wouldn’t you know it, we’re about to talk about some more federal agencies making rules regarding statutes they administer …
Let’s check in on the FTC
As we previously wrote:
“You likely know by now that on April 23, 2023, the Federal Trade Commission (FTC) announced a rule effectively banning most non-competes between employers and employees, with the rule set to go into effect on September 4, 2024 (for more details, check out our prior alert here and our latest webinar where we discussed this topic). You likely also know that since the FTC released this news, all hell has broken loose. Employers are freaking out and questioning their life’s journey, and employees are wondering if they can finally tell their bosses what they really think of them. What’s also been happening since April 23? LAWSUITS!!!”.
And lawsuits there were – four, to be exact, filed in the federal courts of Texas, Pennsylvania, and Florida. The first decision received was from the Texas judge which ruled against the FTC and preliminarily enjoined the FTC from enforcing the non-compete rule . . . but only with respect to the plaintiffs in the case, and not (at least, not yet) a nationwide ban. Making things interesting, we recently heard from the judge in the Pennsylvania case who held in favor of the FTC and denied the plaintiff’s request for a block. As of this post, there have been no decisions in the Florida action.
While it is widely understood that when the Texas judge issues his final decision and order that it will be a nationwide block . . . this has definitely become more of a nailbiter than we anticipated. In the meantime, our advice to employers remains the same as previously mentioned in that you essentially have three options:
- Do Nothing: The sharp money is still on a nationwide block before September 4th. If you’re in a jurisdiction that still allows non-competes (we still know, California, you’re an exception), doing nothing might not be the worst strategy.
- Embrace the Future: The trend against non-competes isn’t going anywhere. Agencies like the NLRB have arguably been even more aggressive in going after non-compete clauses, and new state laws continue to pop up. Indeed, last week Governor Shapiro of Pennsylvania signed the “Fair Contracting for Health Care Practitioners Act”, essentially banning non-compete agreements for healthcare practitioners.
- A little bit of this and a little bit of that: Compromise! Perhaps eliminate non-competes for lower-level employees and keep them for higher-level staff.
And don’t forget about Loper’s implications here – the FTC’s rule is a classic example of a scenario that could be challenged under the new framework created by SCOTUS. Whatever you choose to do, rest easy that we’ll be monitoring this situation and providing updates as they come in. Enjoy the rest of your summer. You’re welcome.
A reminder about overtime
While it was probably overshadowed due to the fact that it was released on the same day as the FTC’s non-compete rule, a reminder that the U.S. Department of Labor’s rule revising the overtime rules under the Fair Labor Standards Act (FLSA) went into effect on July 1st. And while this rule was also challenged, unless you’re the state of Texas as an employer (and yes, I mean the state and not in the state), the rule survived the initial challenge and is currently in effect. As a reminder, the final rule updates the FLSA and its regulations in three significant ways:
- Increased Salary Thresholds: Effective July 1, 2024, the minimum salary threshold for exempt employees will increase to $844 per week (annual $43,888). This will rise again on January 1, 2025, to $1,128 per week (annual $58,656).
- Highly Compensated Employee Threshold: Starting July 1, 2024, the total annual compensation for highly compensated employees will be $132,964 (it’s currently $107,432), and will then increase to $151,164 on January 1, 2025.
- Automatic Updates: These thresholds will now automatically update every three years based on wage data.
Remember, the salary threshold is itself a rule promulgated by the DOL interpreting the FLSA, and so Loper looms large here, too. Add in the fact that we expect to see copycat cases like the successful challenge in Texas, and you have a decent chance the January 1, 2025 increase might not happen. But for now, the rule stands, so if you have “exempt” employees earning below the threshold … we should talk.
Thank you as always for reading. If you enjoy this newsletter, be sure to also check out our newest addition – the Business Blog! Check it out for helpful tips and updates (and less fearmongering) on all things business law related.
And as always, if you’ve got questions, you know we’ve got answers.
~ The W + K Team
ABOUT WEINSTEIN + KLEIN P.C.
Established in 2019, Weinstein + Klein is a boutique law firm focused on labor and employment law, business matters, and litigation. W + K works with businesses, individuals, and entrepreneurs to protect their legal interests. In addition to advising clients on employment matters and working with businesses to minimize their risk of litigation, we advise small businesses and start-ups on various business law matters.