August Updates

Dueling Rulings for FTC Non-Compete Ban

The United States District Court for the Northern District of Texas issued a limited preliminary injunction to stay the implementation of the Federal Trade Commission’s (FTC) ban on non-compete agreements only as to the named plaintiffs in the case and is not nationwide: Ryan, LLC; Chamber of Commerce of the United States of America; Business Roundtable; Texas Association of Business; and Longview Chamber of Commerce. A final order on the case is anticipated by August 30, 2024. Contrasting with this ruling is a decision from the U.S. District Court in Pennsylvania which upheld the FTC’s ban by denying a preliminary injunction against it. This ruling does impact employers nationwide which means employers should immediately review hiring practices in order to comply with the September 4, 2024 effective date of the non-compete ban. Employers should continue to monitor challenges across the country to the proposed ban and consult with legal counsel regarding any current or future non-compete agreements to address compliance with the ban.

 

Third Circuit: NCAA Athletes Can Be Considered Employees

On July 11, 2024, in Johnson v. NCAA, the Third Circuit Court of Appeals issued a long-awaited decision indicating that the economic realities test must be used to determine whether NCAA college athletes are employees under the FLSA. Based on this understanding, the court found that “college athletes may be employees under the FLSA when they (a) perform services for another party, (b) ‘necessarily and primarily for the other party’s benefit,’ (c) under that party’s control or right of control, and (d) in return for ‘express’ or ‘implied’ compensation or ‘in-kind benefits’.” The Third Circuit focused on “the circumstances of the whole activity” and applied a common law agency analysis instead of the district court’s approach of effectively weighing the benefits of the student athletes’ activities to the institution against their benefits to the student athlete. This decision departs from the understanding in other circuits, the Ninth and Seventh, which have found that college athletes are not employees protected by the FLSA. With a distinct circuit split of authority, we may expect this issue to continue on to appeal before the United States Supreme Court.

 

Alabama: Child Labor Laws Amended

Effective June 1, 2024, SB 53 amended Alabama’s child labor law. Under the amendment, 14 and 15-year-olds no longer must obtain the permission of a school official to certify the minor’s satisfactory grades and attendance. Also, the minor’s parents no longer must notify the head administrator, counselor, or instructor of the school the minor attends of the name, address, and phone number of the employer. While these amendments loosen child labor restrictions, employers must still obtain a Child Labor Certificate which limits the hours that minors may work and the occupations in which they work.

 

California: DMV License Suspension Records Remain Accessible

On June 21, 2024, in Doe v. California Dept. of Motor Vehicles, the California court of appeal said that the DMV’s disclosure of the reason for a driver’s alcohol-impaired driving license suspension, when the driver has not been convicted, does not constitute non-conviction arrest information that would otherwise be considered private information. The court said that the DMV’s public driver record does not directly disclose the arrest itself but instead provides the administrative adjudication results from the DMV’s own license suspension process.

 

California: Healthcare Minimum Wage Extended Again

As of June 29, 2024, the California healthcare minimum wage was extended again. AB 159 establishes a new effective date depending on what happens going forward:

• The minimum wage will go into effect on October 15, 2024 IF the state’s income from July 1 to September 30, 2024, is at least 3% higher than originally budgeted for that time period; OR
• 15 days after the California Department of Health Care Services notifies the Joint Legislative Budget Committee that it has initiated the data retrieval necessary for Medi-Cal increases; OR
• As of January 1, 2025, if neither of the other two conditions are met.

 

California: CFRA Support for Small Businesses Bolstered

As of July 18, 2024, AB 2011 makes the Family Leave Mediation Program permanent, since its temporary installment in 2020. The Family Leave Mediation Program assists small employers (5-19 employees) with resolving disputed claims under the California Family Rights Act (CFRA). Also, on June 1, 2024, funding was renewed for the Paid Family Leave Grants Program, which provides financial assistance to small businesses when employees take CFRA leave. The program offers up to $2,000 per employee to businesses with one to 50 employees, and up to $1,000 per employee for those with 51 to 100 employees. Review the FAQ’s for more information.

 

California: Arbitration Agreements Are Not Void Following Three Strikes

On July 15, 2024, in Ramirez v. Charter Communications, Inc., the California Supreme Court said that an arbitration agreement is not automatically void simply because three or more provisions are found to be unconscionable. There is no set rule on the number of invalid components to an arbitration agreement that would render the whole agreement void. Rather, courts must use a three-prong test to determine how to manage the unconscionable terms and whether to enforce the rest of the agreement.

 

California: Updated Workers’ Compensation Poster

As of January 1, 2025, AB 1870 requires workers’ compensation posters to state that the “injured employee may consult a licensed attorney to advise them of their rights under workers’ compensation laws; and in most instances, attorney’s fees will be paid from an injured employee’s recovery.” Although attorneys are not necessary to navigate the workers’ compensation process, the notice is meant to provide clarity on employee rights to legal counsel if they choose.

 

Delaware: Employers Must Register for EARNS Program

By October 15, 2024, Delaware employers with five or more covered employees must register for the Delaware Expanding Access for Retirement and Necessary Savings (EARNS) Program, or otherwise certify their exemption. The EARNS Program officially launched on July 1, 2024. The program is an automatic payroll deduction IRA program that provides retirement savings options for employees who work for employers that do not offer a retirement plan. Employees are eligible for the program if they have wages or other compensation allocable to Delaware and they are at least 18 years of age. Employers are covered if they have at least five covered employees, have been in business in Delaware for at least six months in the immediately preceding calendar year and they do not maintain a specified tax-favored retirement plan.

 

Hawaii: Increased Minimum Salary for Highly Compensated Employees

Effective June 21, 2024, HB 2463 increases the minimum monthly salary for highly compensated employees in Hawaii. Previously, to be exempt from the state’s minimum wage and overtime requirements, a highly compensated employee must have earned a guaranteed compensation totaling $2,000 or more a month, whether paid weekly, biweekly, or monthly. Under the amended law, the threshold is increased to $4,000 or more per month in total guaranteed compensation.

 

Indiana: Updates to State New Hire Reporting Requirements

Indiana employers are required to register with and report newly hired and rehired employees to the Indiana New Hire Reporting Center. Effective July 1, 2024, SB 148 requires that all reports be submitted electronically, twice a month, 12 to 16 days apart, using one of the following methods: 1) online through the Center’s portal; 2) magnetically on diskette, CD-ROM, reel tape or cartridges mailed to the Center; or 3) through file transfer protocol, electronic file transfer or encrypted email files. All reports must include the following information: 1) the employee’s name, address and Social Security number; 2) employee’s hire date (i.e., the date the employee first performed worked for pay); 3) employee’s starting pay; 4) employee’s current primary standard occupational classification code; and 5) the employer’s name, address, payroll processing address, Federal Employer Tax Identification Number, and whether reporting as a multistate employer.

 

Louisiana: Permitless Concealed Carry of Handguns Allowed

Effective July 4, 2024, Louisiana’s SB 152 allows those at least 18 years old who can legally possess a handgun to concealed carry without a permit. There are some limitations to permitless concealed carry in the law: (1) individuals cannot carry and conceal a handgun while under the influence of alcohol or a controlled dangerous substance; and (2) individuals must notify any police officer who approaches them while carrying concealed that they have a weapon on their person, submit to a pat down, and allow the officer to temporarily disarm them. Employers can still implement workplace policies that ban weapons and handguns at their worksites.

 

Louisiana: Child Labor Meal Breaks Limited

Effective August 1, 2024, HB 156 amends its existing meal period law for minors. Under the amendment, only minors under 16-years-old are entitled to a 30-minute meal period for any five-hour period worked. Notably, this amendment excludes 16 and 17-year-olds from the meal period requirement.

 

New Hampshire: Wages for Deceased Employees

Effective September 10, 2024, HB 1201 increases the amount of wages owed to an employee who died, from $300 to $3,000, that can be paid directly to the decedent without triggering the probate process. Amounts up to the increased threshold may be paid to decedents without requiring letters of testamentary or of administration.

 

Pennsylvania: Amendments to Distracted Driving Law

Effective June 5, 2024, SB 37 amends Pennsylvania’s distracted driving law to clarify certain definitions, prohibited activities and exceptions. Of note, the amended law now prohibits the use of “interactive mobile devices” while driving, except in emergency situations. “Interactive mobile device” includes handheld wireless telephones, personal digital assistants, smart phones, portable or mobile computers or similar devices which can be used for voice communication, texting, emailing, browsing the internet, instant messaging, playing games, taking or transmitting images, recording or broadcasting videos, creating or sharing social media, or otherwise sending or receiving electronic data.

 

Pennsylvania: Limits Non-Compete Agreements for Healthcare Providers

As of January 1, 2025, the Fair Contracting for Health Care Practitioners Act will limit noncompete covenants, including patient nonsolicitation provisions, between an employer and health care practitioner to instances where the agreement is no longer than one year and the health care practitioner was “not dismissed by the employer.”  The rule does not apply in the context of a business sale. There are also certain patient notification requirements in the event of a healthcare provider departure.

 

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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