Equal Employment Opportunity Commission’s (“EEOC”) Enforcement Guidance on Harassment in the Workplace

The EEOC’s Enforcement Guidance guidelines on harassment in the Workplace were issued on April 29, 2024. In the guidance, the EEOC presents a legal analysis of standards for harassment and employer liability applicable to claims of harassment under the EEO statutes enforced by the Commission. The guidance sets forth the EEOC’s position on its definition of “protected characteristics” and identifies workplace behaviors that rise to the level of harassment. These include prohibitions on work-related harassment based on race, color, religion, sex (including pregnancy, childbirth, or related medical conditions; sexual orientation; and gender identity), national origin, disability, genetic information, and age (40 or over).

Most of the guidance addresses and delves into topics that are most relevant to the modern workforce. The guidelines provide 77 specific fact patterns as examples of what constitutes unlawful harassment in the workplace. The examples range from common scenarios involving coworker sexual advances at holiday parties to comments regarding an employee’s natural hair.

While these guidelines are not binding, and the EEOC could expand or revise its guidance, employers should review and use the guidelines as a tool on how to address and prevent unlawful harassment claims in the workplace.

For a further summary of the EEOC’s Enforcement Guidance on Harassment in the Workplace please see the Dykema blog post summarizing the issue here.

Final Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act

The Final Rule on Employee or Independent Contractor classification under the Fair Labor Standards Act (“FLSA”) has been in effect since March 11, 2024. The 2024 Department of Labor (“DOL”) rule rescinds the Independent Contractor Status under the FLSA Rule that was published January 7, 2021, and replaces it with a six-factor “economic realities” test that considers: (1) opportunity for profit or loss depending on managerial skill; (2) investments by the worker and the potential employer; (3) degree of permanence of the work relationship; (4) nature and degree of control; (5) extent to which the work performed is an integral part of the potential employer’s business; and (6) skill and initiative.

Workers who do not meet the new criteria under the rule must be classified as employees and subject to the Fair Labor Standards Act (“FLSA”) protections and requirements. If misclassified, these workers must be treated as employees. They will be eligible for overtime pay unless they otherwise satisfy the requirements to be considered exempt and be subject to the minimum wage requirements under the FLSA. Employers would also need to comply with the recordkeeping requirements and maintain daily and weekly time records for the worker.

Given President-Elect Trump will be retaking office in January 2025, it is anticipated that the DOL will return to the 2021 independent contractor regulations (issued by the first Trump DOL), which focused on two “core” factors regarding the worker’s control of their work and the worker’s profit and loss in performing the work. If those two “core” factors were met, the worker was an independent contractor; however, if one of the two “core” factors were not met, then three additional “non-core” factors would be analyzed. The Trump DOL’s independent contractor test was more business-friendly and provided a more streamlined approach, which could lead to further individuals being classified as independent contractors.

For a further summary of the Final Rule on Employee or Independent Contractor Classification under the FLSA, please see the Dykema blog post summarizing the issue here.

Federal Court Strikes Down Federal Minimum Salary Requirement for the White Collar Exemptions Under the FLSA

On April 23, 2024, the Department of Labor issued its Final Rule to increase the minimum salary requirements for “white collar” exemptions (executive, administrative, and professional) (“EAP exemptions”) from minimum wage and overtime pay requirements under the FLSA. The increase was set to take effect in two stages: first, on July 1, 2024, the standard salary level was set to increase from $684 per week ($35,568 annually) to $844 per week ($45,888 annually). Then, on January 1, 2025, the salary was set to increase to $1,128 per week ($58,656 annually). The Rule also increased the highly compensation exemption (HCE) total annual compensation level from $107,432 per year to $132,964 per year on July 1, 2024, and $151,164 per year on January 1, 2025.

However, the Rule was recently vacated nationwide by the Eastern District of Texas in State of Texas, et al., v. U.S. Dept. of Lab., et al., No. 4:24-CV-00468-SDJ (E.D. Tex. 2024) wherein the court granted summary judgment in favor of the state of Texas and a coalition of business organizations, striking down the Department of Labor’s regulations mandating significant increases to the salary basis for white-collar employees. As a result, the increases in salary implemented last July, as well as the increase that was to go into effect on January 1, have been nullified, meaning the salary level in effect prior to July 1 ($684 per week, $35,568 per year) was restored and the salary level for the highly compensated employee exemption, $107,432 per year, was reinstated.

For a further summary and update on White-Collar Exemptions under the FLSA, please see the Dykema blog post summarizing the issue here.

Federal Court Blocks the Federal Trade Commission (“FTC”) From Implementing Rule Banning Employee Non-Competes Minimum Salary Requirement for the White-Collar Exemptions Under the FLSA

On August 20, 2024, a federal court in Texas issued a nationwide injunction preventing the Federal Trade Commission’s rule banning nearly all employee non-compete agreements from taking effect on September 4, 2024. The case, Ryan LLC et al. v. Federal Trade Commission, Case No. 3:24-cv-00986 (N.D. Tex.), was brought by a Texas tax preparation company and the U.S. Chamber of Commerce. This ruling was widely expected because the court issued an order in July 2024 that blocked the FTC from applying the rule to the plaintiff but signaled that it would decide whether to issue a broader injunction before the FTC rule took effect.

The court’s decision means that there is no nationwide ban of non-competes. However, the ultimate fate of the FTC rule remains uncertain, as the decision may be appealed, leading to a potential ruling and decision from the U.S. Supreme Court. This is even more likely given the fact that the rule was previously upheld by a Pennsylvania federal court.

Employers that have, or are considering, non-competes should be aware that they are still subject to existing state laws regulating, and in the case of a few states banning, many types of non-competes. Furthermore, the FTC may still pursue enforcement actions against employers on a case-by-case basis; the FTC’s enforcement (as opposed to rulemaking) authority was not impacted by the recent ruling.

As such, employers should consider cataloging and reviewing their existing portfolio of non-competes (including agreements, such as confidentiality agreements, which could, in effect, function as a non-compete) and be prepared if an appeals court further rules on the FTC rule.

For a further summary and update on the blocking of the FTC Rule, please see the Dykema blog post summarizing the issue here.

Minimum Wage for Federal Contract Workers Covered by Executive Order 14026

Effective January 1, 2025, the hourly minimum wage for federal contract workers performing work on or in connection with covered contracts will increase from $17.20 to $17.75/per hour.

To learn more about any of the Federal legal topics above and how it impacts your business or any other general questions, please contact the authors of this article or your Dykema relationship attorney.