Employment Law Updates (in case you’re interested in legal news besides THAT trial)

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It’s good to be back! After a little hiatus, the Labor and Employment Law Blog has returned just in time for the season’s most significant news (because, let’s be honest, nothing notable happened yesterday, right?). Memorial Day is behind us and we’re already staring June in the face. It’s been a wild ride in the world of labor and employment law – and we’re here to keep you in the loop. From the FTC’s non-compete ban to the DOL’s overtime bombshell and a fresh update on New Jersey’s non-disparagement clauses, we’ve got all the legal drama covered. So grab a cup of coffee (or something stronger), and let’s dive into the latest developments.

A word from the FTC on non-competes

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!!!

The ink wasn’t even dry on the FTC’s rule before the legal challenges started. The most relevant of these lawsuits is probably the one filed by the U.S. Chamber of Commerce in the U.S. District Court for the Northern District of Texas, where the Chamber is requesting that the court block the FTC’s rule. Numerous entities have joined the Chamber’s case (the U.S. Chamber of Commerce represents roughly 3 million companies), including the world’s largest HR organization, SHRM, all requesting that (at least this version of) the non-compete ban be rejected or blocked.

The FTC’s response to this challenge is expected in the upcoming weeks, with the court indicating it will decide whether to block the rule before the July 4th holiday (‘Merica).

So, what should employers do now? Here are three options:

  1. Do Nothing: It seems increasingly likely that this version of the rule may never see the light of day. If you’re in a jurisdiction that still allows non-competes (we know, California, you’re an exception), doing nothing might not be the worst strategy.
  2. Embrace the Future: Even if this rule is blocked, the trend against non-competes isn’t going anywhere. New state laws and agency decisions like those from the NLRB suggest that adapting your policies now might save you future headaches.
  3. 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.

Whatever you choose to do, navigating these turbulent waters requires a strategic approach. Stay tuned as we continue to monitor the situation and provide updates, or give us a call – it’s what we do for a living.

Step aside, FTC, the DOL wants some spotlight too

The life of an employment lawyer is pretty wild – dealing with all these HR crises is not for the faint of heart. And yet, in all my years of doing this, I don’t think I’ve ever seen so many fellow nerds nerd-out quite so much as what was witnessed a month ago. You see, on the same day the FTC announced its non-compete ban, the U.S. DOL dropped its own bombshell by revising the federal overtime rules. As the kids say, it was on fleek (Do the kids still say that? Did they ever say that? Moving on . . .)

The final rule updates regulations in three significant ways:

  1. 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).
  2. 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.
  3. Automatic Updates: These thresholds will now automatically update every three years based on wage data.

This rule change is a massive shift for states that hadn’t already increased their local overtime thresholds (yes, California, we know you’re ahead of the curve), leaving employers in a state of panic and existential dread.

What else has happened since April 23?

LAWSUITS!!!

Last week, multiple employer groups and associations filed a federal lawsuit in the U.S. District Court for the Eastern District of Texas, asking the court to block the DOL’s overtime rule. There’s precedent for this: during the Obama administration, a similar rule was blocked by the same court. The rule was shelved during the Trump administration but has now resurfaced.

While history could repeat itself and the rule could be blocked again, this outcome is not guaranteed. Employers should absolutely review their policies, conduct a wage and hour audit, and assess any necessary changes.

Finally, New Jerseyans may be able to do what we do best

And finally, returning to the homeland (swamps) of (New) Jersey, we have an update on a story we’ve been tracking about the Garden State’s rules on non-disparagement clauses in settlement agreements.

As we wrote in a previous post:

“[I]n 2019, New Jersey passed a law that barred non-disclosure agreements ‘in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.’ . . . [T]here was an open question as to whether non-disparagement provisions fell under the law as well. Shortly after the new law went into effect, a police sergeant settled a gender discrimination case [and . . . f]ollowing the execution of a settlement agreement, which contained a non-disparagement clause, the sergeant went on the news and called the department a “good ol’ boy” club, and was promptly accused of violating the terms of her agreement . . . [a]nd the New Jersey Supreme Court agreed to hear the issue of whether the non-disparagement provision was violated.”

And we finally have a decision!

Question: Is it permissible for an employer to enforce a non-disparagement clause in a settlement agreement that bars a plaintiff from discussing their claims under the New Jersey Law Against Discrimination (LAD)?

<drumroll, please>

Answer: No!

The LAD states that any provision in a settlement agreement that conceals details about discrimination, retaliation, or harassment claims is against public policy and unenforceable. This includes non-disparagement clauses that would otherwise hide such details. And if you thought people from Jersey talked a lot before . . .

So, NJ employers, it’s time to rethink those non-disparagement clauses. Either get rid of them entirely or make sure they are tailored to ensure they don’t violate the law.

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.

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