On May 21, 2024, Governor Ned Lamont signed into law new legislation that significantly expands Connecticut’s paid sick leave law to apply to nearly all private employers in the state over the next three years. The law provides for eligible employees to accrue paid sick time beginning upon hire at a rate of one hour for every 30 hours worked, up to a maximum of 40 hours per year, which they can then utilize after their 120th calendar day of employment.

Under the state’s existing paid sick leave law, originally passed in 2012, private-sector employers with 50 or more employees are required to provide paid sick time to all “service workers.” The new legislation, however, applies to all private-sector employees with the exception of seasonal employees and certain unionized construction workers, and will be phased in based on the size of an employer’s workforce as follows: effective January 1, 2025, for employers with 25 or more employees; effective January 1, 2026, for employers with 11 or more employees; and effective January 1, 2027, for employers with one or more employees.

Under the new law, covered workers may use paid sick leave for any of the following qualifying reasons:

  • The employee’s illness, injury or health condition, or that of the employee’s family member, whose definition includes a child (both minor and adult), spouse, parent, grandparent, sibling and anyone related to the employee by blood or close association that makes them akin to family;
  • The medical diagnosis, care or treatment of the employee or the employee’s family member;
  • Preventive medical care for the employee or the employee’s family member;
  • A mental health wellness day for the employee;
  • Certain purposes when an employee or the employee’s family member is a victim of family violence or sexual assault;
  • Closure of the employer’s place of business or a family member’s school or place of care due to a public health emergency; or
  • A determination that the employee or the employee’s family member poses a risk to the health of others due to a communicable disease.

Significantly, however, the law prohibits employers from requiring any documentation that the employee took the paid sick leave for a qualifying reason.

Employers that already offer other paid leave, including vacation, personal days or PTO, under the same or better terms than the legislation will be deemed to be in compliance with the new law. Otherwise, employers that were previously exempt from the law should note the date when they must begin providing paid sick leave and should review their policies to ensure that they comply with all elements of the new law.

The attorneys in Murtha Cullina’s Labor & Employment practice will continue to follow and report on any significant developments regarding this legislation. If you have any questions, please do not hesitate to contact Emily McDonough Souza at esouza@murthalaw.com or at 203.772.7711.

New York has amended its sick leave law (Labor Law § 196-b) to provide paid prenatal personal leave to all employees. Effective January 1, 2025, all employers shall be required to provide their employees with 20 hours of paid prenatal personal leave per 52-week period. Prenatal personal leave is leave taken by an employee “during their pregnancy or related to such pregnancy,” including for physical examinations, medical procedures, monitoring and testing, and discussions related to pregnancy with a health care provider. Prenatal personal leave may be taken in hourly increments.

Unlike overlapping leaves that run concurrently, prenatal personal leave is in addition to the paid or unpaid sick leave already required by New York law. Moreover, unlike sick leave currently required in New York, an employee qualifies for paid prenatal personal leave immediately upon hire.

Similar to current requirements applicable to sick leave, an employer shall be prohibited from requiring an employee to disclose confidential information relating to an absence qualifying for paid prenatal personal leave. Thus, the law precludes an employer from requiring that an employee provide a doctor’s note with substantive detail concerning leave.

The Department of Labor will likely issue guidance prior to the amendment’s effective date. The guidance may also address what constitutes a leave “related to . . . pregnancy,” which will likely be broader than traditional notions of prenatal care. In the meantime, employers should be prepared for this change and revise their handbooks and policies to reflect it.

Murtha Cullina’s Labor and Employment practice will monitor the Department of Labor’s release of guidance interpreting the amendment, as well as issues relating to the amendment’s implementation. If you have any questions, please do not hesitate to contact Sal Gangemi at sgangemi@murthalaw.com or at 203.653.5436.

On April 23, 2024, the U.S. Department of Labor (DOL) issued a final rule substantially raising the salary thresholds for certain employees to qualify for overtime exemptions under the federal Fair Labor Standards Act (FLSA).

The FLSA generally requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours a week, overtime pay of at least 1.5 times an employee’s regular rate. However, the law currently exempts from its overtime requirements those who are employed in “white collar” positions whose duties satisfy the FLSA’s “duties” test applicable to executive, administrative and professional employees, provided that such an individual’s annualized salary is at least $35,568.

Beginning July 1, 2024, the recently released final rule calls for an increase in the compensation threshold for executive, administrative and professional employees to $43,888 per year.  Thereafter, beginning January 1, 2025, the final rule will raise the compensation threshold for such employees to $58,656 per year. Updates to the earnings thresholds shall be calculated every three years based on wage data.

If the rule—which is likely to face legal challenges that could delay implementation—goes into effect, it is expected to result in about four million U.S. employees losing their exempt status. Affected employers should consider either raising the salaries paid to such employees to maintain the exemption or reclassifying their positions as non-exempt and paying them overtime for any hours worked over 40 per week.

The attorneys at Murtha Cullina will continue to monitor the implementation of this rule, including any legal challenges. If you have any questions, please do not hesitate to contact Emily McDonough Souza at esouza@murthalaw.com or at 203.772.7711.

On April 15, 2024, the U.S. Equal Employment Opportunity Commission (EEOC) issued its final rule and interpretive guidance implementing the Pregnant Workers Fairness Act (PWFA). The federal law, which went into effect June 27, 2023, and applies to employers with 15 or more employees, expands protections for qualified employees and applicants with regard to reasonable accommodations for “known limitations” related to pregnancy, childbirth or related medical conditions. It was intended to aid in filling accommodations gaps left in the Americans with Disabilities Act (ADA) and Title VII of the Civil Rights Act of 1964.

Among other things, the final rule—which was published on April 19, 2024, and will take effect 60 days later—provides:

  • That the phrase “pregnancy, childbirth, or related medical conditions” must be read to include current pregnancy, past pregnancy, potential pregnancy, lactation, use of contraception, menstruation, infertility and fertility treatment, miscarriage, stillbirth, or having or choosing not to have an abortion;
  • That the physical or mental condition in question can be modest, minor or episodic, and there is no requirement that conditions rise to a specific severity threshold;
  • That an employer may request to obtain medical documentation for a qualifying condition in only limited circumstances outlined in the guidance, thereby rejecting the ADA’s approach to supporting documentation;
  • That employers are encouraged to respond expeditiously to employees’ requests and to consider granting an accommodation request on an interim basis even if additional information is still needed, given the temporary nature of pregnancy-related conditions;
  • That four specific accommodations (carrying/keeping water in or nearby the employee’s work area; taking additional restroom breaks; sitting instead of standing while working; taking breaks to eat or drink) be deemed de facto reasonable as not imposing an undue hardship in virtually all cases; and
  • That other reasonable accommodations to address known limitations under the law may include telework or remote work; job restructuring; reserved parking; and schedule changes, part-time work, and paid or unpaid leave.

Notably, of the more than 100,000 comments the agency received in response to the proposed rule, approximately 54,000 asked the EEOC to exclude abortion from its definition of related medical conditions.

Employers should familiarize themselves with the final regulations in order to better understand the requirements under the PWFA and ensure compliance in their policies and processes.

If you have any questions about the final regulations, please do not hesitate to contact Emily McDonough Souza at esouza@murthalaw.com or at 203.772.7711.

Two days ago, the Federal Trade Commission (FTC) issued its “Final Rule” banning non-compete clauses in employment. Until now, the FTC never officially declared that such clauses constituted an “unfair method of competition.” The Final Rule seeks to upend centuries of state law governing the use of non-compete clauses in employment, including state laws that already limit or ban their use. The federal government’s encroachment into traditional state law is not necessarily unprecedented, but in this case, will likely fail.

Generally, the laws of most states will allow enforcement of a non-compete clause provided that it both protects a legitimate interest (e.g., confidential information and customer goodwill) and does not impose a greater burden than necessary to protect that interest. Other factors that determine the enforceability of a non-compete clause consider the impact on the employee and the public.

By a strict party line vote of 3-2, the FTC’s unelected commissioners have decided that businesses should not be entitled to the protection of non-compete agreements, regardless of whether they have a legitimate interest worthy of protection.

What is the FTC Anyway?

The FTC was created by the Federal Trade Commission Act (FTCA) , which Congress passed in 1914, in an effort to tighten and enhance the antitrust prohibitions of the Sherman Antitrust Act of 1890. The Sherman Act was intended to preserve “free and unfettered competition as the rule of trade.” Together with the federal Clayton Act, the Sherman Act prohibited unlawful mergers and business practices that harm consumers. The FTCA purported to ban “unfair methods of competition” and “unfair or deceptive acts or practices.” The FTC is a federal executive agency, comprising five commissioners, who each serve seven-year terms. Commissioners are nominated by the President and confirmed by the Senate. Only three FTC members can be of the same political party, and, in fact, the Final Rule was passed by a 3-2 vote, along party lines. The President selects the Chair out of the five-member commission.

The FTC seeks to expand its authority by concluding that unfair methods of competition include non-compete clauses, which it has the power to ban, despite the lack of congressional authority indicating that the FTC can create substantive (as opposed to procedural) rules that are tantamount to laws that a legislature would pass. Of course, legislators are elected to office by the people, while FTC commissioners are appointed by the President.

The Final Rule’s Prohibitions

The Final Rule contains separate provisions defining unfair methods of competition for two categories of workers. For non-senior executive employees (most workers), an unfair method of competition includes requiring the employee (i) to enter into, or attempt to enter into, a non-compete clause; (ii) to enforce a non-compete clause; or (iii) to represent that the employee is subject to a non-compete clause. An unfair method of competition with respect to a senior executive includes requiring the executive (i) to enter into, or attempt to enter into, a non-compete clause; (ii) to enforce, or attempt to enforce, a non-compete clause entered into after the effective date; or (iii) to represent that the senior executive is subject to a non-compete clause, where the non-compete clause was entered into after the effective date. Thus, the Final Rule will not apply retroactively to a “senior executive,” which the Final Rule defines as an employee earning over $151,164 per year, and who has “final authority to make policy decisions that control significant aspects of a business entity and does not include authority limited to advising or exerting influence over such policy decisions.” This definition ensures that only c-suite employees, and not all of them, would be considered senior executives under the Final Rule.

The Final Rule bans all non-compete clauses in employment agreements, and severance agreements. In other words, the Final Rule bans some, but not all, garden leave arrangements, in which an employee is free to enter into a reasonable non-compete agreement in exchange for severance pay covering some portion of the non-compete period. With one fell swoop, the Final Rule eliminates this “employee choice doctrine,” which could result in fewer employers agreeing to pay severance to terminated employees. In addition, the Final Rule will ban any other agreement that would function as a “de facto” non-compete clause, including non-solicitation or non-disclosure agreements.

What is the Effective Date of the Final Rule?

The Final Rule takes effect 120 days after its publication in the Federal Register, which has not yet happened. Once effective, the Final Rule will invalidate all existing non-compete clauses, except for those applying to senior executives, and prohibit new non-compete clauses for all employees, including senior executives.

In addition to invalidating pre-existing non-compete clauses, the Final Rule requires employers to send a notice to each current and former employee (except senior executives) informing them that their non-compete agreements are legally unenforceable.

What Will Happen Next?

As we predicted, lawsuits have already been filed to challenge the FTC’s Final Rule. The U.S. Chamber of Commerce and other business groups have sued the FTC, claiming that the FTC has exceeded its authority in wading into employment-related non-compete clauses. The Chamber’s lawsuit was filed in a Texas federal court and challenges the FTC’s authority to regulate this area of law and to issue substantive rules banning non-compete agreements.

Our prediction is that courts will stay (or strike) the Final Rule prior to its effective date on the grounds that Congress did not clearly authorize the FTC to regulate non-compete clauses between employers and employees. Courts will likely find that the Final Rule violates the “major questions doctrine,” which provides that an executive agency does not have the authority to resolve significant issues and rights unless Congress expressly empowers the agency to do so. For instance, in 2022, the Supreme Court applied the major questions doctrine in ruling that the Occupational Safety and Health Administration (OSHA) exceeded its authority with the issuance of its Emergency Temporary Standard (ETS) that mandated comprehensive vaccine mandates (“vaccine or test”) and stayed the enforcement of the rule. That ETS never went into effect.

What Should Employers Do?

The Final Rule will not take effect for more than four months, assuming it ever does. As a result, the best course of action now is to maintain the status quo. There is no need to eliminate reasonable non-compete clauses or assume that they are not valid simply based on the Final Rule. Employees should not assume that their non-compete obligations are no more. Nevertheless, many states, including New York and Connecticut, are considering bills that would limit the use of non-compete clauses. Regardless of whether the FTC’s Final Rule becomes effective, courts may be less likely to enforce borderline non-compete clauses unless the employer can identify a recognized protectable interest, and the restriction is not broader than necessary to protect that interest. Recognized protectible interests include the protection of trade secrets and truly confidential information, customer relationships and an employer’s investment in an employee’s reputation in the market.

We will continue to monitor the lawsuits challenging the Final Rule, as well as any further developments affecting this proposed ban.

In the meantime, please contact Salvatore Gangemi at sgangemi@murthalaw.com or at 203.653.5436 if you have any questions.

On April 17, 2024, the U.S. Supreme Court resolved a circuit split by holding that while an employee challenging an allegedly discriminatory job transfer under Title VII of the Civil Rights Act of 1964 must show that the transfer caused some identifiable disadvantage, the disadvantage need not be significant.

The allegations underlying the Muldrow v. City of St. Louis, Missouri opinion involved Jatonya Muldrow, a female police sergeant who, after working on high-profile matters in the specialized Intelligence Division of the St. Louis Police Department for several years, was transferred against her wishes to a uniformed job supervising the day-to-day activities of neighborhood patrol officers. Although her rank and pay remained the same in the new position, her duties, perks and work schedule changed. Muldrow filed suit against the City, alleging that she had suffered sex discrimination because of the involuntary transfer due to her supervisor wanting to hire a male for her job.

The district court granted summary judgment in favor of the City, holding that Muldrow could not meet a heightened injury standard of showing that her job transfer resulted in a “significant” change in working conditions producing “material employment disadvantage” in order to establish an adverse employment action under Title VII. The Eighth Circuit affirmed.

The Supreme Court, however, vacated and remanded in a unanimous decision authored by Justice Kagan, holding that “[a]lthough an employee must show some harm from a forced transfer to prevail in a Title VII suit, she need not show that the injury satisfies a significance test.” The Court concluded that the text of Title VII “nowhere establishes that high bar,” and to demand “significance” would be to add words to the statute created by Congress. Justices Alito, Thomas and Kavanaugh authored concurring opinions.

Following this decision, employers should exercise extra caution when transferring employees to different jobs. Moreover, although the Muldrow case concerned a job transfer, there is no indication that the Court’s reasoning is limited to such context; thus, it remains to be seen whether employees will begin challenging other employment actions that do not rise to the level of material adverse changes in employment terms and conditions.

The attorneys at Murtha Cullina will continue to monitor the effects of this decision, and are ready to advise on this and other Title VII issues.

Please feel free to reach out to Murtha Cullina’s Labor and Employment group if you have any questions.

The U.S. Department of Labor (DOL) has issued a Final Rule on the standards for determining independent contractor status for purposes of minimum wage and overtime pay issues under the Fair Labor Standards Act (FLSA). Although the Final Rule is considered “new,” it is based on the standard that was applied prior to the 2021 enactment of the Trump Administration’s rule, which had relaxed the standard for classifying workers as independent contractors, but also provided greater certainty to employers. The Final Rule reinstates the so-called “economic realities” test, which is generally more likely to result in a finding that a worker is an “employee.”

The Final Rule takes effect on March 11, 2024. It is not yet clear how courts will apply its requirements. The various tests for determining independent contractor status are relatively similar, although greater emphasis may be placed on some factors over others.

The Trump-era Rule

Under the 2021 Trump Administration’s rule, independent contractor status turned on two so-called “core factors”: (1) the degree of the putative employer’s “control” over the worker, and (2) the worker’s ability to realize a profit or loss. The rule also added some weight to other factors such as the permanency of the relationship between the putative employer and the worker; the worker’s skill level; and whether the worker’s services were part of an integrated unit of production.

The “New” Final Rule

The Final Rule focuses on the economic realities of the relationship between the putative employer and the worker, or the extent to which the worker is economically dependent on the employer. The standard requires consideration of the following six factors:

  1. The nature and degree of control over the work being performed. This factor considers whether the putative employer exercises substantial control over the worker’s performance of the work (for example, does the employer set the worker’s schedule?). If the putative employer exerts substantial control over the worker, then this factor would weigh in favor of employee status.
  2. The worker’s opportunity for profit or loss. Earning a profit is not the same as earning compensation for a job done. If the worker has the opportunity to earn a profit or incur losses based on the worker’s exercise of managerial skill or business judgment, then this factor would weigh heavily in favor of independent contractor status.
  3. The amount of skill required for the work. To the extent that the work requires specialized training or skill that the potential employer does not provide or facilitate, this factor would weigh in favor of the worker being considered an independent contractor.
  4. Degree of permanence of the working relationship between the worker and putative employer. To the extent that the work relationship is definite in duration (a start and end date, for example), this factor would lean in favor of independent contractor status.
  5. Whether the work is part of an integrated unit of production. This factor asks whether the worker’s work is a “component of the potential employer’s integrated production process for a good or service.” This factor weighs in favor of independent contractor status if the individual’s work is separate from the production process.
  6. Additional factors. The DOL states that additional factors may be considered in making a determination, but only if those factors tend to show that the worker is in business for himself or herself, and not economically dependent on the potential employer.

In practice, it is difficult to tell how differently the Final Rule will function compared to the Trump-era Rule, but the Final Rule’s imposition of mandatory factors beyond the two core factors endorsed under the 2021 rule makes it more likely that a worker will be found to be an employee.

The Final Rule’s Effect on Independent Contractor Tests in Connecticut, New York and Massachusetts

Of course, the Final Rule will apply to worker determinations in New York, Connecticut and Massachusetts with respect to issues arising under the FLSA, but the tests used by each state in other contexts will continue to apply. Application of these tests, however, will require a consideration of the economic realities test to ensure that the classification meets all of the applicable tests. Essentially, employers will have to ensure that their classifications satisfy whatever standard is strictest.

Connecticut

Connecticut applies the “A-B-C Test” for independent contractor determinations under some of its state laws, including its wage and hour and unemployment insurance laws. Connecticut’s version of the A-B-C test considers the following factors:

  1. The worker is free from the control and direction of the potential employer in connection with the performance of the service, both under contract and in fact.
  1. The service is performed either outside the potential employer’s usual course of business or is performed outside of all the potential employer’s places of business.
  1. The individual is customarily engaged in an independently established trade occupation, profession or business of the same nature as that involved in the service being provided.

Factor A is the most important factor and focuses on the potential employer’s right to control both the results and methods of the work. This is similar to the emphasis placed on the 2021 Trump-era DOL rule and is one of the factors considered under the Final Rule.

Under its Workers’ Compensation Act, Connecticut uses a “right to control” test and not the A-B-C test. In any event, the right to control test is similar to Factor A of the A-B-C test.

Additionally, although there is no statutorily required test for independent contractor determinations under employment discrimination law, such determinations are based on a version of the right to control test that considers many more factors than the right to control test that applies under the Workers’ Compensation Act.

New York

New York relies on a hodge-podge of tests depending on the applicable state law or industry. In general, New York uses a right to control test for determinations unless another law requires that a different test be applied. Under the right to control test, which applies to unemployment insurance determinations, the New York Department of Labor scrutinizes the control exercised over the result and the means for achieving the result, with the control over the means being the more important consideration.

Businesses in New York will soon be required to provide written agreements to many “freelancers” under a new law recently signed by Governor Kathy Hochul. The “Freelance Isn’t Free Act,” which will become effective on May 20, 2024, requires businesses in New York State to enter into a written agreement with any freelancer (independent contractor) who provides services with a value of at least $800.

Moreover, New York State’s Construction Industry Fair Play Act applies a presumption that a construction worker is an employee unless the potential employer can satisfy a form of the A-B-C test. Likewise, drivers of commercial vehicles are assessed under the A-B-C test. In addition, the New York State Commercial Goods Transportation Industry Fair Play Act requires the consideration of various factors for determination whether a sole proprietor, partnership, corporation or entity can be considered a separate business entity.

For purposes of the Workers’ Compensation Act, the Workers Compensation Board will consider a hybrid of the right to control and “relative nature of the work” tests. This latter test focuses on the character of the worker’s work; whether the type of work being performed is separate from the putative employer’s occupation; whether the work being performed is continuous or intermitted; the permanency of the relationship; the importance of the work in relation to the employer’s business; and whether the worker is expected to carry his or her own liability insurance coverage.

Massachusetts

Like Connecticut, Massachusetts applies the A-B-C test to determinations under the Minimum Fair Wages Law and under the Unemployment Insurance Law. In Massachusetts, a worker is presumed to be an employee unless the potential employer can satisfy the A-B-C test.

For purposes of the Workers’ Compensation Act, Massachusetts uses a set of factors that are derived from court cases. This test incorporates elements of the right to control test, economic realities test and A-B-C test.

Under Massachusetts’ employment discrimination laws, courts consider a traditional common law test of agency, which entails a multifactor inquiry that seeks to consider the potential employer’s right to control the manner and means by which the end product is accomplished.

Going Forward

Despite the similarities among the different tests governing independent contractor determinations, the A-B-C test and the Final Rule’s economic realities test are more restrictive than the right to control test. While New York employers may need to make significant adjustments to their classification practices, Connecticut and Massachusetts employers will have to contend with less of a learning curve based on their experiences with the strict A-B-C test.

We will continue to report back on further developments, including further guidance from the DOL and court cases implementing the Final Rule’s requirements.

Please feel free to reach out to Murtha Cullina’s Labor and Employment group if you have any questions.

On December 22, 2023, Governor Kathy Hochul vetoed a bill that would have imposed a ban on non-compete clauses throughout the state of New York for all employees, regardless of earnings level. We wrote about the Senate and Assembly bills that were passed in  June, here.

Many business groups and trade associations criticized the bills as overbroad and lacking common sense exceptions, such as permitting non-competes in connection with the sale of a business.

Although we did not think that the bill would be signed into law as it was drafted, we expected that the Governor and lawmakers would arrive at a compromise and include exceptions, such as banning non-competes for employees who earn below a particular threshold. Previously, Governor Hochul had proposed limiting the ban to individuals who earned in excess of $250,000 in total annual compensation. However, this agreement never materialized.

The Governor remains committed to enacting non-compete legislation and State Senator Sean Ryan (D), the bill’s sponsor, vows to reintroduce the bill in the next legislative session. For now, non-compete restrictions are alive and well in New York.

The National Labor Relations Board (NLRB) and Occupational Safety and Health Administration (OSHA) have agreed to team up to investigate and enforce protections for workers who raise safety concerns and suffer retaliation as a result.

Earlier this week (on Halloween no less), the NLRB and OSHA entered into a memorandum of understanding (“MOU”) “to facilitate interagency cooperation and coordination between the [NLRB] and [OSHA]” concerning the National Labor Relations Act (NLRA) and Occupational Safety and Health Act (OSH Act).

Although not the first time the NLRB and OSHA have agreed to work together, the recently signed MOU reflects a more formal process for collaborating and results in potentially greater NLRB involvement in matters of workplace safety traditionally handled by OSHA. There is no doubt that this collaboration is intended to result in an increase of unfair labor practices complaints filed with the NLRB.

According to the MOU, if OSHA comes across “potential victims of unfair labor practices” during one of its investigations or through other sources, it will refer them to the NLRB to file a complaint. In addition, if a worker files a complaint with OSHA that is beyond the 30-day time limit, OSHA will advise the worker to file the complaint with the NLRB, which provides for a six-month limitations period. Likewise, the NLRB will refer to OSHA information relating to workers who have complained about health or safety hazards so that the NLRB and OSHA can pursue the employer on different tracks.

The recent MOU is the latest attempt by the NLRB’s General Counsel to expand the NLRB’s reach in support of its aggressive pro-worker positions. Earlier this year, the NLRB’s General Counsel issued guidance on the illegality of confidentiality and non-disparagement clauses, and separately opined that employee non-compete agreements violate the NLRA. In addition, in August 2023, the NLRB adopted a new standard for assessing whether workplace rules contained in employee handbooks violate section 7 of the NLRA.  

We will continue to monitor developments in this and other areas. Please feel free to reach out to Murtha Cullina’s Labor and Employment group if you have any questions.

Today, the U.S. Department of Labor announced a proposal to increase the Fair Labor Standards Act’s (FLSA) salary-level threshold from $35,568 to $55,068, which would result in many more employees being entitled to overtime pay for hours worked in excess of 40 in a workweek. So, even if an employee is performing otherwise “exempt” duties associated with the Executive, Administrative, Professional, Outside Sales and Computer Employees exemptions, they will still be entitled to overtime for hours worked over 40 unless they are paid at least a salary of $1,059 per week.

The FLSA’s salary-level threshold was last increased in 2019, from $455 to the current $684 per week. This earlier increase reflected the 20th percentile of weekly earnings of full-time salaried employees in the lowest wage Census Region (the South) and in the retail industry nationally.

For New York employers, this increase will have no effect on their New York-based employees, because New York’s salary threshold is already higher than the proposed increase under the FLSA. As of December 21, 2022, New York’s annual salary threshold was $58,500 for New York City, Long Island and Westchester employees, and $55,341 for employees in the rest of the state. (New York’s salary-level threshold will likely increase in 2024 in line with planned minimum wage increases that will take effect on January 1.)

Connecticut and Massachusetts employers, however, would experience a significant increase in the salary-level threshold should the Department of Labor’s increase become final. Currently, the salary-level threshold in Connecticut and Massachusetts is $35,568 (or $684 per week).

The Department of Labor will consider written comments on its proposal over the next 60 days. It seems likely that the salary-level threshold will increase, although it is too soon to say whether it will increase by the proposed amount.

Key Takeaways

  1. Significant Proposed Increase: The U.S. Department of Labor intends to boost the FLSA salary-level threshold from $35,568 to $55,068. This marks a substantial change affecting the weekly salary required for overtime eligibility.
  2. Overtime Implications: With the new proposal, even employees with “exempt” duties would be entitled to overtime if they work over 40 hours and earn less than $1,059 per week.
  3. State-Specific Impact: New York clients are unaffected due to already higher thresholds. However, Connecticut and Massachusetts, currently at the same threshold as the current FLSA rate, would feel a significant impact if the new increase goes into effect.
  4. Timelines and Feedback: The Department of Labor is accepting comments to its proposed rule for the next 60 days. It points towards the potential of an increase in the salary-level threshold, but the exact rise remains uncertain.
  5. The “Duties Test”: The proposed rule does not modify the exempt duties tests for the white-collar exemptions. Remember, in order to be exempt from overtime, an employee must be performing exempt duties under one of the white-collar exemptions, and paid at least a weekly salary that satisfies the salary-level threshold.

Please feel free to reach out to Murtha Cullina LLP’s Labor & Employment group if you have any questions.