Refresh & Refine: A Fresh Look at HR Compliance in 2024

 David Schlottman, Partner - Jackson Walker

We're now a month and a half into 2024, but it's not too late to set compliance goals for the year. Here are a few things to think about:

Update those employee handbooks.  Did you know that Congress enacted major employment legislation that took effect in 2023?  The Pregnant Workers Fairness Act went into effect on June 27, 2023.  Among other things, the PWFA requires covered employers to provide “reasonable accommodations” to a worker’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the accommodation will cause the employer an “undue hardship.”

The PUMP Act also took effect in 2023.  Under that law, employers are required to provide a reasonable amount of break time and a space to express milk as frequently as needed by a nursing employee, for up to one year following the birth of the employee’s child.  The space provided by the employer cannot be a bathroom and it must be shielded from view and free from intrusion by coworkers or the public.

In addition to federal legislation, states across the country have been actively implementing new employment laws and will continue to do so.  Remember that if you have employees in different states, you may very well be subject to employment laws in those states.

Now is a good time to take stock of what new employment laws your organization may be subject to and to update your employee handbook as needed. 

Prepare for a potential federal non-compete ban.  In January 2023, the Federal Trade Commission proposed a new regulation that, with limited exceptions, would ban nearly all non-competition and non-solicitation covenants across the country.  The proposed rule is currently in a comment period, and we anticipate that the FTC will vote on a final rule in April 2024.

Although it remains to be seen what the final rule will actually say, there are steps to take now.  First, employers should review their practices on use of restrictive covenants and determine what might have to change if the proposed rule goes forward.  Second, the proposed rule contains a provision obligating employers to notify employees subject to existing restrictive covenants that those agreements are no longer enforceable.  Employers should consider conducting an inventory of existing restrictive covenant agreements to prepare for this potential notice obligation. 

Be aware of potential increases to the salary thresholds for the white-collar exemptions.  You may soon have to pay your salaried employees more.  On August 23, 2023, the Department of Labor issued a new proposed regulation that would raise the minimum salary required to invoke the commonly used “white-collar” exemptions to overtime from $684 per week (or $35,568 annually) to $1,059 per week (or $55,068 annually).  Additionally, the proposed regulation would raise the minimum annual salary required to claim the highly compensated employee exemption from $107,432 to $143,988. According to DOL estimates, these revisions could impact nearly 3.5 million employees.

The DOL is anticipated to issue a final rule in spring or early summer of 2024.  It is not clear whether the final rule will adopt the thresholds included in the proposed rule or instead use other figures.  However, given that the proposed increases are substantial, employers should begin reviewing which employees may be subject to these increases and the financial viability of raising their salaries to the thresholds specified in the rule.   

Review and audit contractor engagements.  Independent contractors can create significant legal risks.  If an individual is misclassified as an independent contractor, that could lead to penalties and liabilities for unpaid taxes and overtime compensation.  Importantly, a contract designating an individual as an independent contractor is not controlling.

On January 9, 2024, the Department of Labor issued a final rule regarding contractor classification that will become effective on March 11, 2024.  The final rule is widely considered to make it harder to validly classify a worker as an independent contractor.  In light of this revised DOL rule, now is the time to review and audit existing contractor arrangements to determine if any misclassification risks might exist.