Discussion:

In State of Texas v. U.S. Dept. of Labor, the Federal District Court for the Eastern District of Texas essentially voided the U.S. Department of Labor’s (DOL) 2024 Final Rule increasing the overtime exempt salary test under the Fair Labor Standards Act (FLSA). The 2024 Final Rule increased the minimum weekly wage for overtime exempt employees to $844 on July 1, 2024. It was set to increase that amount further to $1,128 per week as of January 1, 2025, with automatic increases every three years beginning in 2027.

Previously in this case, the court issued an injunction against enforcement of the 2024 Final Rule for the State of Texas as an employer. Since then, the case was consolidated with other plaintiffs similarly challenging the rule. The court has now granted a summary judgment motion invalidating the 2024 Final Rule for all employers nationwide.

Even though the text of the FLSA’s overtime exemption mentions no minimum salary requirement, based on its statutory authority to interpret the FLSA’s requirements, the DOL has considered salary in some capacity since the law’s inception in 1938. The court understood this to mean that the fundamental aspects of the salary-level test must be applied by the DOL in a manner consistent with “serving only the purpose of separating exempt from nonexempt employees, not improving the status of such employees.” Moreover, the exempt minimum salary requirement must be a “reasonable proxy” for an employee’s exemption status, indicating that there must be a reasonable correlation between the two.

Although the court acknowledged that, in Mayfield v. U.S. Dept. of Labor in September of this year, the Fifth Circuit confirmed that the DOL’s authority to “define and delimit” the overtime exemption “includes the authority, within limits, to impose a salary-level test to qualify for the exemption,” the 2024 Final Rule nonetheless exceeds the DOL’s authority because it increases the minimum salary for the overtime exemption to a level that effectively displaces the duties-based test required by the FLSA with a predominant salary-level test. Additionally, based on the statutory language of the FLSA, the court said that the DOL can only change overtime exempt status requirements by the active rulemaking process for enacting regulations, which prohibits the DOL from implementing automatic increases.

In its ruling, the court looked at each of the three components of the 2024 Final Rule. First, the July 1, 2024 increase from $684 per week to $844 per week was found to be disproportionate to the typical percentage of employees historically impacted by the DOL’s salary test increases. Second, the January 1, 2025 increase was based on a metric different from the DOL’s historical practice. The court said “the 2024 Rule is out-of-step with both the [DOL]’s past practices and the historical screening function of the salary-level test,” as it screens out substantial percentages of employees who meet the duties test. The automatic increase beginning in 2027 is something the DOL has historically asserted was not within its power. More importantly, the language of the FLSA specifically requires the DOL to follow a specific process when implementing regulations, which the automatic increase seems to circumvent.

As a result, the current minimum salary requirement for executive, administrative, and professional exemptions is now $684 per week. Similarly, the highly compensated exemption salary is now $ $107,432 per year. Employers are not subject to the anticipated January 1, 2025 salary increase. For those who already increased workers’ salaries on July 1, 2024, the least disruptive course of action would be to continue to maintain those salaries. Employers wanting to reduce exempt employee salaries to the 2019 Final Rule levels should consult with their legal counsel as there are a number of factors to consider, such as equal pay requirements, nondiscriminatory selections, legitimate business interests, and advance notice and timing requirements. Note that reductions may only be made to employee salaries on a prospective or going-forward basis, not on a retroactive basis for wages already earned. Also keep in mind that some states have higher exempt salary requirements than what is required under the FLSA, such as Alaska, California, Colorado, Maine, New York, and Washington, and may not be impacted by this ruling.

While the DOL may appeal this ruling to the Fifth Circuit, it is not expected to be pursued following the upcoming change of the presidential administration. Employers should continue to look for updates on this topic.

Action Items

1. Review planned 2025 salary increases in connection with this ruling.
2. Review any prospective salary reductions with legal counsel for compliance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase

Discussion:

On October 24, 2024, the Consumer Financial Protection Bureau (CFPB) issued new guidance aimed at protecting workers from the growing use of invasive surveillance tools and “black box” AI algorithms in third-party consumer reports. The guidance emphasizes that employers using these digital tracking systems — including background checks, performance tracking apps, and social media analysis — must comply with the Fair Credit Reporting Act (FCRA). These reports, which increasingly assess worker behavior, performance, and even predict future actions, must adhere to key protections designed to ensure transparency, consent, and accuracy.

Of note, the guidance indicates that such reports must comply with the guideposts of the FCRA. These include:

• Worker Consent. Employers must obtain explicit consent from workers before using third-party consumer reports in employment decisions. Workers should be informed that such data is being collected and how it will be used.
• Employers are required to provide workers with clear and detailed information about any adverse actions that result from third-party reports. This allows workers to understand the data influencing decisions and to challenge inaccurate information.
• Dispute Resolution. If workers dispute the accuracy of information contained in these reports, employers must investigate and correct or remove any inaccurate, incomplete, or unverifiable data.
• Limits on Data Use. The guidance clarifies that employers can only use consumer reports for employment-related purposes and prohibits the sale or misuse of this data for other purposes, such as marketing financial products.
• Implications for Employers. Employers must regularly review their policies and practices for compliance.

Action Items

1. Review how third-party consumer reports are collected, used and shared, to confirm compliance with FCRA requirements.
2. Consult with legal counsel about specific questions regarding the use of certain third-party consumer reports.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase

Discussion:

On October 15, 2024, the U.S. Department of Labor (DOL) released expanded guidance for OSHA inspections targeting employers in the animal slaughtering and processing industry. This new guidance supersedes a 2015 policy focused exclusively on poultry processing, reflecting the DOL’s conclusion that workers in this sector face high occupational risks, with injury rates significantly exceeding those of other industries.

Inspections conducted pursuant to this new guidance are to focus on many of the same hazards identified in the previous guidance while also addressing the hazards that may be the subject of the inspection. These “focus hazards” include sanitation and cleanup operations, ergonomics, personal protective equipment, lockout/tagout, machine guarding, and hazards associated with certain chemicals common to the industry. However, the new guidance adds recordkeeping as an additional area of focus. The new guidance also highlights new inspection procedures for Compliance Safety and Health Officers (CSHOs), including to:

• Conduct inspections during off-shift times to ensure that second and third-shift operations are covered;
• Include contractors and temporary workers who provide on-site sanitation services in the inspection;
• Observe workplace activities that may impact workers who are at most risk; and
• Review training efforts.

Action Items

1. Prepare for inspections by evaluating sanitation processes, safety training programs, and policies for contract and temporary workers for compliance with OSHA standards.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase

Discussion:

Alaska voters approved Ballot Measure No. 1 which also bans captive audience meetings. Effective July 1, 2025, employers cannot take or threaten to take adverse employment action against an employee for their refusal to:

• attend an employer-sponsored meeting, the primary purpose of which is to communicate the employer’s opinion about religious matters or political matters; or
• listen to communications, the primary purpose of which is to communicate the employer’s opinion about religious matters or political matters.

“Political matters” are matters relating to elections for political office, political parties, candidates, proposed legislation or regulations, and the decision whether or not to join or support a political party, or political, civic, communal, fraternal, or labor organization. “Religious matters” are matters relating to religious affiliation and practice and the decision whether or not to join or support a religious organization or association.

The law does not prohibit:

• an employer or its agent or representative from communicating to its employees information required by law to be communicated, necessary for an employee to perform the employee’s job, or directly related to, or relevant to, the workplace;
• an institution of higher education or its agent or representative from communicating to its employees coursework, symposia, or an academic program;
• a requirement that an employer’s executive personnel listen to communications about the employer’s business; or
• a bona fide religious organization from requiring its employees to attend an employer-sponsored meeting or participate in any communication with the employer of the employer’s agent, representative, or designee for the primary purpose of communicating the employer’s religious beliefs, practices, or tenets.

Action Items

1. Have appropriate personnel trained on the requirements.
2. Review adverse employment actions with legal counsel.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase

Discussion:

Nebraska voters approved Initiative 436 which requires employers to provide earned paid sick leave for their employees. Effective October 1, 2025, Nebraska employers must provide their employees with paid sick leave at a rate of one hour for every 30 hours worked.

Covered Employer. The law applies to all Nebraska individuals, partnerships, limited liability companies, associations, corporations, business trusts, legal representatives, or organized groups of persons who employ one or more employees.

Covered Employee. The law applies to all employees that work in the state for more than 80 hours in a calendar year.

Qualifying Reasons. Paid sick leave can be used for:

• An employee’s mental or physical illness, or health conditions; an employee’s need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; or the need for preventative medical care;
• Care of a family member with a mental or physical illness, injury, or health condition; care of a family member who needs medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; care of a family member who needs preventative medical care; or in the case of a child, to attend a meeting necessitated by the child’s mental or physical illness, injury, or health condition, at a school or place where the child is receiving care; or
• Closure of the employee’s place of business by order of a public official due to a public health emergency, or an employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency, or care for oneself or a family member when it has been determined by the health authorities having jurisdiction or by a health care provider that the employee’s or family member’s presence in the community may jeopardize the health of others because of his or her exposure to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease.

Accrual. Employers with 20 or more employees must provide one hour of earned paid sick time for every 30 hours worked, but usage can be capped at 56 hours per year. Employers with fewer than 15 employees must provide one hour of earned paid sick time for every 30 hours worked, but usage can be capped at 40 hours per year.

Frontloading. Employers can frontload paid sick leave.

Carryover. Employers must allow employees to carry over unused paid sick time from year to year. Alternatively, an employer may pay an employee for unused paid sick time at the end of a year and provide the employee with an amount of paid sick time that meets or exceeds the requirements that is available for the employee’s immediate use at the beginning of the subsequent year.

Usage and Notice. Employees can request to take earned paid sick leave at any time. Employees must make a good faith effort to provide notice when the need is foreseeable. When it is not, an employer may require notice as soon as practicable. There must be a written policy with the required procedures for providing notice.

Employers must also provide a written notice to employees about their rights under the law upon the start of employment or by September 15, 2025.

Documentation. Reasonable documentation of a covered purpose may be required for earned paid sick leave of three or more consecutive workdays.

Interaction with Existing PTO Policies. Employers who already provide PTO that meets the minimum requirements of the law do not have to provide additional paid sick leave.

Prohibited Actions. Employers cannot take retaliatory or discriminatory actions against employees for exercising their rights under the law.

Action Items

1. Review and update leave policies to include paid sick leave.
2. Update procedures to track time worked for accrual purposes.
3. Provide required notice when available.
4. Have appropriate personnel trained on the requirements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase