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‘Twas the week before year-end, when all through the office, not a regulation was stirring – except in California. The handbooks were hung in the office with care, in hopes that updates for 2024 would soon be there. Employees nestled snug in their ergonomic chairs, reminding themselves, “behave at the holiday party, or you’ll end up starring in next year’s HR training video.”
Our final newsletter of 2023 features updates on wage and hour changes to look out for in the new year, some notable changes you likely will need to make to your settlement agreements, and an update on New York’s non-compete clause saga. And thus, with policies polished and compliance in sight, here’s to a New Year’s bash that won’t end in fright. So, raise your cup with some cheer, “To a lawsuit-free, prosperous, and utterly compliant New Year!”
New Year, New Rules: Salary Increases on the Horizon for Exempt Workers
This time of year carries with it many great traditions. Annual rites of passage such as lighting the Christmas tree, creating new year’s resolutions, the Jets being eliminated from the playoffs, and minimum wage increases. And while we’ve grown accustomed to minimum wage increases (we still need a moment for the Jets), it’s a bit rarer to see changes to the salary threshold for exempt workers.
Quick refresher for those of you saying “salary threshold whatnow?” in order to be considered exempt – meaning, not entitled to overtime – an employee must be paid a salary above a certain threshold. The current threshold in New York is $1,125.00 per week for New York, Westchester, Nassau, and Suffolk counties ($1,064.25 for the remainder of the state). But, following proposed regulations by the New York Department of Labor in October of this year, that number is expected to increase to $1,200.00 per week for “downstate” and $1,124.20 per week for “upstate”. These amounts would also increase each year through 2026.
Not a New Yorker? Don’t forget the U.S. Department of Labor’s announcement earlier this year proposing to hike the salary threshold under the Fair Labor Standards Act (“FLSA”), currently at $684.00 per week, to $1,059.00 per week (almost double). While this proposal is still being reviewed and will almost certainly be challenged, there’s a good chance it becomes law as early as mid-2024. Considering several states have their salary thresholds indexed to the FLSA, an increase such as that would create a whole host of newly minted non-exempt employees. Translation: you may have to start paying a lot more in overtime.
If you’re reading this newsletter, then a wage and hour audit should have already been on your resolutions list (if not, replace “go to the gym” with the audit – remember, NYC’s ban on weight discrimination went into effect the day before Thanksgiving so you’re good). And given these changes to the salary rules for exempt employees, an FLSA/exempt review needs to be top of mind.
NDAs: Good for Secret Santa, Not Secret Settlement Agreements
Navigating the intricacies of confidentiality and non-disclosure provisions in settlement agreements, especially concerning harassment or discrimination claims, is crucial. Over a dozen states have introduced restrictions on using NDAs in such agreements, with some imposing limitations and others (yes, California is one of them) enacting complete prohibitions. Even the federal government stepped in with the Speak Out Act in late 2022, targeting specific pre-dispute clauses related to sexual assault and harassment. In our previous newsletter, we discussed the pending New Jersey Supreme Court decision on whether the Garden State’s ban on confidentiality in harassment claims extends to non-disparagement clauses.
New York is an example of a state that limits the use of NDAs but does not completely prohibit them. In 2018, New York passed a law that banned non-disclosure provisions in agreements involving sexual harassment claims, unless confidentiality was the complainant’s preference. Once it was established that confidentiality was the complainant’s preference, the other party to the agreement (typically the employer) was required to provide the complainant-employee with 21 days to consider the confidentiality clause (which needed to be in a separate agreement). Once the 21-day period expired, the employee could sign, wait a 7-day revocation period, and viola you had a valid confidentiality clause. This rule was modified in 2019 to cover agreements involving any claim of discrimination or harassment (not just sexual harassment).
Fast forward to November of this year and we have more changes to this rule:
- Changes To The Waiting Period: The NY rule clearly borrowed from the ADEA’s requirement of giving certain employee’s up to 21 days to consider the agreement, along with a mandatory 7-day revocation period – with one big distinction: the ADEA’s waiting period is waivable and could be shortened if the employee wanted to sign earlier; the NY rule is not waivable … or we should say, was not waivable. One of the big changes to the rule is that the 21-day period for confidentiality in NY settlement agreements is now waivable and the employee may sign within the 21-day period. The 7-day revocation period is still mandatory (and as a technical point, the 21-day period is still unwaivable for settlements following lawsuits as opposed to pre-litigation settlements – ya know what, don’t worry about this specific point, just call us).
- Stricter Rules Regarding Terms: Want to ensure your settlement agreement remains enforceable? Be sure to remove all terms that punish the employee’s violation of a non-disclosure or non-disparagement clause with forfeiture of any part of the settlement payment, as well as terms requiring the employee to make any statements or representations the employee was not subject to unlawful discrimination or retaliation.
So listen, go enjoy your holiday parties (just not too much at any company-sponsored events, please) and relax for the remainder of the year – you’ve earned it. But let’s make a New Year’s resolution to review and update your settlement agreement templates, ensuring they align with these evolving regulations. Your future self will thank you for this much more than that Planet Fitness membership.
New York’s Non-Compete Bill: What’s Next?
And finally, the question we’ve all been waiting for … will New York join states like North Dakota and Oklahoma (and yes, California) in banning non-compete clauses outright?
… No. Well, at least not in the broad-sweeping fashion originally imagined. While New York legislators passed a bill aiming for a comprehensive ban, Governor Hochul announced that she would not sign that bill into law. However, based on the Governor’s comments, it’s still likely we see New York adopt a version of the rule seen in several other states that limits the use of non-competes to certain individuals. For now, the wholesale ban is off the table.
Wishing all those who celebrate a Merry Christmas – be sure to remind your cousin that yes, you can be fired for what you post on social media. To all our friends, and even some adversaries, we wish you a happy and healthy new year!
As always, if you’ve got questions, you know we’ve got answers.
Damien + Brian
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.