Federal rule changes will impact businesses – Grand Forks Herald

Employment and labor attorney MacKenzie Hertz says the Federal Trade Commission’s (FTC) recent ruling banning non-compete agreements shouldn’t have a dramatic impact on businesses in North Dakota and Minnesota because both states have previously invalidated non-compete agreements. Hertz, who works at Vogel Law in Fargo, shared with Prairie Business the current changes in laws and regulations that may impact businesses.

An estimated 18% of U.S. workers, or 30 million people, are covered by a non-compete clause or agreement. A non-competition clause is an employment contract in which the employee undertakes not to compete with the employer for a specified time and place in the event of resignation or termination of the contract. These agreements may also prohibit the employee from disclosing trade secrets or internal company information.

“Employers in North Dakota and Minnesota are going to have to think more about the domino effect,” Hertz said. “We will see a shift in the scope of the new federal regulations. This will impact things like non-disclosure agreements. If I have an NDA that says you can’t disclose all of my trade secrets to my competitors, that’s generally an acceptable agreement, but the FTC rule says yes, they are generally valid unless it would mean you’re effectively prohibiting someone from working on it “right field forward.”

It is expected that the ruling will benefit employees, who will now be able to start their own business or work for another employer.

“The FTC thinks this will be a massive stimulus to the economy,” Hertz said. “But for employers, it could have a practical impact when innovation stagnates. It will become increasingly difficult to develop cutting-edge technology in-house and keep proprietary information in-house.”

Importantly, it will not enter into force for some time and will be the subject of legal challenges, she explained.

“Suites have already been filed. I think there’s an opinion in the Texas district court from some chamber of commerce groups that says this is beyond the scope of regulatory authority. Should it come from a federal agency, the rulemaking process, or is it important enough that it should go through federal or state legislation?” she said.

On the same day that the FTC regulations went into effect, the U.S. Department of Labor issued a final regulation regarding overtime regulations. This rule increases the salary threshold for overtime exemptions and minimum wage requirements under the Fair Labor Standards Act (FLSA).

“What this rule does is that in order to be exempt from the OT and minimum wage requirements under the FLSA (Fair Labor Standards Act), you must perform certain job duties to be part of the so-called ‘white collar’ exemption in the FLSA,” Hertz said: “Stuff such as professional, administrative and executive roles. In addition, you must be paid a salary, which must be a certain amount.

Previously, the salary threshold to qualify for overtime pay was $684 per week, or approximately $35,500 per year. The new salary threshold, starting in July, will be raised to $844 a week, or about $43,800 a year. The threshold will increase again in January 2025 to $1,128 a week, or more than $58,000 a year. To be exempt from minimum wage and overtime requirements, an employee will have to earn a higher wage.

Companies will now have to make decisions on items in the middle of these amounts. To comply with the law, some positions may need to be changed from non-exempt to exempt, and in other cases, compensation for certain positions may change.

“I think it will have an impact on the atmosphere in the workplace. “Employees think that being a terminated employee is like a badge of honor, a senior employee, and then they explain to them that it’s not a demotion, it’s a federal law,” Hertz said, “and we can’t afford to take away $35,000 from you to over $58 000 dollars, we have to find something in the middle.”

The rule has not yet been published in the Federal Register but goes into effect based on that time frame, she added. Like the FTC’s final rule, this one is also subject to legal challenges.

Pregnant workers will now enjoy greater protection thanks to a regulation that will enter into force on June 18. The final regulation was issued by the U.S. Equal Employment Opportunity Commission regarding the Pregnant Worker Fairness Act.

“The PWFA requires a covered employer to provide ‘reasonable accommodation’ to a qualified employee’s or applicant’s known limitations related to, relating to, or arising from pregnancy, childbirth, or related conditions, unless the accommodation will cause an ‘undue hardship’ to the employer.” PWFA applies to accommodation only. Other laws enforced by the EEOC make it illegal to fire or otherwise discriminate against employees or applicants based on pregnancy, childbirth, or related medical conditions.

“We have Title 7, which states that you cannot treat employees differently based on their gender, and gender includes pregnancy,” Hertz said. “We also have the Americans with Disabilities Act (ADA) and similar state laws that say the workplace must accommodate people with disabilities. Pregnancy is not a disability, so you have this loophole – just because a woman is pregnant doesn’t mean she has a disability. Do you need to adapt? There is a gap between Title 7 and the ADA. PWFA came to fill this gap and argues that people should be admitted without restrictions related to pregnancy and childbirth.

This final PWFA rule provides guidance for workplaces on how to apply the new regulations to employees.

“They are helpful and provide a lot of useful information. What is most surprising is that the law provides protection not only during pregnancy but also for pregnancy-related and related health conditions. They mean it very broadly to include fertility and infertility, so including people who are undergoing treatment, as well as termination of pregnancy, whether it’s abortion or miscarriage, and taking into account people’s needs at that time. Even menstruation is covered by insurance. So this is a broader than expected range of terms and conditions that must be met in the workplace,” Hertz said.

This is a presidential election year, and often regulatory approaches may change with a change in administration. For example, there are pro-worker policies and guidelines from the National Labor Relations Board, which is the federal agency that oversees union and nonunion workplaces.

“They have been clear that, for example, handbooks need to be really employee-friendly and make it clear that people can talk about workplace concerns in the workplace, and also ask employers to be really sensitive about it to allow people to make complaints – Hertz said. “If we see a change in the president’s administration, we will also see the pendulum swing back towards a friendlier employer, giving them more power to manage their workplace.”

Hertz advises companies to stay up to date with their policies and watch for updates. In the face of potential changes in presidential administrations and state legislative activities, leaders must educate themselves and their managers and high-profile supervisors who interact with employees on a daily basis.