Federal Law Updates
As we move through 2024, there have been several updates in employment law at the federal level. Here are the changes that have gone into effect:
Federal Pregnant Worker Fairness Act (PWFA)
While the PWFA went into effect on June 27, 2023, the EEOC issued its final regulation to carry out the law on April 15, 2024. The final regulation went into effect on June 18, 2024.
The PWFA requires employers with 15 or more employees to provide reasonable accommodations to an employee’s known limitations related to pregnancy, childbirth, or related medical conditions unless the accommodation will cause the employer an undue hardship.
Department of Labor’s New Independent Contractor Rule
At the federal level, the Department of Labor’s (DOL) prior rule used in determining whether or not a person could be classified as an independent contractor rather than a direct employee of a company has been expanded as of March 11, 2024.
Previously the DOL only looked at two factors for assessing the classification of an independent contractor. Those factors included (1) control the individual held over the work and (2) the opportunity of profit or loss for the business. Now, the rule uses a six-factor test focused on the economic realities of the business and the individual.
The new test looks at:
- The business opportunity for profit or loss.
- Investments by the worker and the potential employer.
- The degree of permanence of the work relationship.
- The nature and degree of control the worker has over the work.
- The extent to which the work is performed is an integral part of the business initiative.
- The skill and imitative required of the worker.
It is important to note that many states enforce their own independent contractor rules and that more comprehensive rules should be followed.
Increase in the FLSA Salary Exemption Threshold
On April 23, 2024, the US Department of Labor (DOL) published its final rule which raises the salary threshold under which employees are exempt from overtime requirements within the Fair Labor Standards Act (FLSA). Currently, if an employee earns less than $35,568 ($684 per week) they are eligible for overtime payments (the “salary basis” under the FLSA).
Effective July 1, 2024, any employee who is classified as “exempt” will now be eligible for overtime payments (equal to 1.5x their normal hourly pay rate) if they earn less than $43,888 annually ($844 per week), which then increases to $58,656 annually ($1,128 per week) after January 1, 2025. This increase to the salary basis for the exemption threshold could have financial impacts on employers throughout the country.
At this time, the rule has not been overturned and the first raise to the threshold took effect on July 1, 2024. With the continued legal challenges to this rule, there is the potential that the next increase will not go into effect on January 1, 2025. If the rule is upheld, employers will need to review each salaried employee to ensure they meet the threshold, and for those that do not, determine the strategy that works for them moving forward, including reclassification.
Next steps
Employers should undertake a comprehensive review of existing policies and procedures to ensure alignment with the new legal requirements. It is essential to update company policies accordingly to comply with the latest regulations.
ARI is monitoring the status of this rule and the legal challenges. As this change takes effect, the ARI Human Resources Team is here to help you interpret guidelines and regulations, to review your current polices, revise polices as necessary, and to any questions you may have. If you would like to learn more about how we can help support your business, contact us.
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