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This rule, which increases the minimum salary that employers must pay certain white-collar and highly compensated employees to exempt them from federal overtime requirements, has left many employers scrambling to ensure compliance.

How will these changes impact your business, and what steps must you take to navigate this complex regulatory environment effectively?

A Brief History of Overtime Rule Changes

The recent rule change marks the third modification attempt by the DOL in the past eight years, following a twelve-year period of stagnation between 2004 and 2016. The primary focus of these modifications has been on adjusting the salary threshold required for exemption under the federal Fair Labor Standards Act (FLSA), leaving the duties test unchanged.

It’s key to remember that an employee’s exemption status hinges not only on their salary but also on their job duties fitting specific exemption categories.

Employers often mistakenly equate salaried positions with exempt status, which can lead to non-compliance.

Key Changes Under the New Rule

Effective July 1, 2024, the annual salary requirement for executive, administrative, and professional white-collar exemptions increased to $43,888, with a further increase to $58,656 set for January 1, 2025. Similarly, the threshold for the highly compensated exemption has risen to $132,964, with an increase to $151,164 also slated for January 1, 2025. Additionally, the new rule mandates automatic adjustments to these salary requirements every three years, starting July 1, 2025, based on federal labor data.

Strategic Considerations for Employers

1. Dual Criteria for Exemption: Employers must evaluate both the duties and salary of employees to determine exemption eligibility. Simply meeting the new salary threshold does not guarantee exemption status.
2. State and Local Laws: The federal FLSA sets a minimum standard, but state and local laws may impose higher requirements. Ensure your compliance strategy encompasses all relevant jurisdictions to avoid discrepancies between federal and state regulations.

The recent changes to the overtime rule underscore the importance of staying informed and proactive in managing compliance risks. Employers must carefully review their payroll practices and exemption classifications to align with the new requirements. By doing so, businesses can mitigate potential legal exposure and ensure fair compensation practices.

Are your current payroll practices compliant with the new DOL rule? How will you adapt to the forthcoming changes in 2025? Taking action now can safeguard your organization against future regulatory challenges and reinforce your commitment to lawful and ethical employment practices.

For further guidance on navigating these complex changes, contact Dawda. Our team of experienced attorneys is here to provide expert legal counsel and support tailored to your business needs.

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Submitted by Randal Cole & Alexander Masson, Dawda

The Federal Trade Commission (“FTC”) recently proposed a new rule which would ban non-compete agreements between employers and workers. The rule would impact employees, contractors, and other workers.

“As of January 13, 2023, the rule is still being considered, and before adoption, the rule is subject to a 60-day comment period,” said Alexander Masson, Associate, Dawda, Mann, Mulcahy & Sadler, PLC.

This proposed rule is based on the FTC’s preliminary finding that non-compete agreements constitute an unfair method of competition. The FTC defines non-compete clauses as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment.”

Further, the rule prohibits broad non-disclosure agreements, stating the agreements “effectively preclude a worker from working in the same field” after separation.

Notably, the FTC’s proposed rule does not prohibit agreements that restrict outside work by employees during their term of work for their employer. However, the rule provides one exception for enforcement of non-compete agreements related to the sale of a business (or sale of a person’s ownership interest in a business) when the person restricted by the agreement is a “substantial owner [owning at least 25 percent of]…the business entity measured at the time the person enters into the non-compete clause.”

The rule does not currently provide exclusions for management, executives, or other workers who are privileged to trade secret or highly confidential information.

Although the FTC’s rule is not final, employers should review their current policies, procedures, hiring processes, and other agreements containing non-compete, non-solicitation, and/or confidentiality provisions. In addition, employers may have an affirmative duty to rescind and inform workers that such agreements are unenforceable.

“We recommended that employers take a careful look at any intellectual property or trade secret provisions,” said Randal Cole, Member, Dawda, Mann, Mulcahy & Sadler, PLC. “If the rule is implemented, these provisions become one of the most useful tools available to employers.”

Reach out to the attorneys at Dawda to discuss impacts on your businesses.

The post How New Rule Banning Non-Compete Agreements Could Impact Employers and Contract Workers appeared first on Dawda PLC.

According to this newly enacted law, one instance of cyberbullying subjects a bully to misdemeanor charges, punishable by imprisonment for up to 93 days and/or a fine of no more than $500.00. Having more than one violation will subject the bully to imprisonment for up to 1 year or $1,000, or both.

Additionally, a person who continuously bullies an individual, creating a pattern of harassing or intimidating behavior, and that behavior is the cause of serious injury to the victim, is subject to felony charges punishable by imprisonment of 5 years and/or a fine of up to $5,000.

However, if a bully violates the statute in a continued pattern or harassment or intimidating behavior that leads to the death of the victim, the bully is guilty of a felony punishable by imprisonment for up to 10 years and/or a fine up to $10,000.

These patterns of offenses require a showing of two or more instances of noncontinuous acts which amount to harassing or intimidating behavior. According to the law, a “cyberbully” is a person who posts a message or statement in a public media forum about any other person if both the following apply:

• It was posted with the intent to place a person in fear of bodily harm or death and it expresses an intent to commit violence against them,
• The message or statement is posted with intent to communicate a threat and it is known that the message will be viewed as a threat.

For any questions, please contact:
Randal R. Cole, Labor and Employment Defense Attorney
(248) 642-3025 | Rcole@dmms.com

A special thank you to law clerk, Kathryn Kaleth for contributing to this article.

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On January 15, 2019, the Supreme Court ruled unanimously in the case of New Prime Inc. v. Oliveira that independent contractors working in interstate commerce (e.g., the transportation industry) may not be forced into mandatory arbitration. They stated, “a court’s authority to compel arbitration … does not extend to all private contracts, no matter how emphatically they may express a preference for arbitration.”

The New Prime case involved a dispute between a trucking company and one of its drivers, Dominic Oliveira, who was classified as an independent contractor under an operating agreement that contained a mandatory arbitration provision. The agreement instructed that even disputes over the scope of the arbitrator’s authority must be resolved by an arbitrator. When Oliveira filed a class action against New Prime, alleging that the company misclassifies its drivers as independent contractors to deny them lawful wages, New Prime asked the court to compel arbitration under the Federal Arbitration Act (the “Act”).

The Act creates an exception to the enforcement of contractual arbitration provisions, and does not authorize court-ordered arbitration for disputes involving “contracts of employment of … workers engaged in foreign or interstate commerce.” The question presented in the New Prime case was whether this exception extended to truckers hired as independent contractors rather than as direct employees.  The Court determined that independent contractors working as truckers, in addition to seamen and railroad employees, were deemed to qualify under this exception of the Act, and therefore could not be compelled into arbitration.​

Much of the Court’s analysis rested on the Act’s use of the term “contract of employment.” Today, a “contract of employment” is widely viewed solely as a contract between an employer and an employee, one of which is easily distinguishable from an agreement a company may have with an independent contractor. However, the Court concluded that, when the Act was adopted in 1925, such distinctions were not as formalized as they are today. The drafters of the Act intended that “employment” refer to all “work” in general, including the work of independent contractors.

Proponents of the Court’s decision see it as a victory for workers in the transportation industry, who are likely to see an increase in wages, whereas those more skeptical of the holding believe it will result in increased costs for companies to transport goods and thus an increase in the cost of goods for consumers and retailers.

The case comes as the first in a trio of arbitration suits set for argument this term. Keep an eye out for the Court’s decisions in Lamps Plus, Inc. v. Varela, in which the Court will determine whether state courts can order class arbitration even when there is no contractual basis to do so, and Henry Schein v. Archer & White Sales, Inc., concerning whether a court or an arbitrator should be charged with making threshold determinations about the arbitrability of claims.

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Given the length, formality, and cost of litigation, employers are turning to arbitration to resolve disputes. Arbitration is a private process with a neutral third party as the decision maker. Employees also find the process advantageous, as it provides a more accessible way to address issues with an employer.

In order to resolve a dispute through arbitration, the parties must be subject to an arbitration agreement. Below is a general overview of Michigan employment arbitration agreements, should you or your business require resolution of a dispute through arbitration:

Scope of Arbitration Agreements

When interpreting an arbitration agreement, the same legal principles that govern contract interpretation apply. Therefore, it is important that the language of the agreement represents intent of the parties.

Determining the Applicable Law

Arbitration agreements are enforceable under Federal Arbitration Act or the Michigan Uniform Arbitration Act.

Arbitrations are administered through organizations such as the American Arbitration Association (“AAA”) or JAMS, which also have its own rules and procedures.

Who Enforces Employment Arbitration Agreements?

The subject of the dispute determines who will decide the issue. Substantive issues–such as whether an agreement exists, and issues that go to the drafting of the contract–are generally questions for the court. Procedural issues, on the other hand, are generally questions for the arbitrator.

Keep in mind that if arbitrating according to the AAA Commercial Arbitration Rules, the arbitrator may make the initial determination of substantive issues.

When Dealing with Enforcement Issues, Who Carries the Burden?

According to Michigan law, the burden is on the party seeking to avoid the arbitration agreement, not the party seeking to enforce the agreement.

Who Can Be Required to Arbitrate?

As a general rule, a party cannot be required to arbitrate an issue which he/she has not agreed to submit to arbitration. Additionally, a party cannot be required to arbitrate when not legally or factually a party to the agreement.

However, since arbitration is a matter of contract, Michigan Courts recognize five contract principles that bind a nonparty to an arbitration agreement:

• Incorporation by reference
• Assumption
• Agency
• Veil-piercing/alter-ego
• Estoppel

Continued Employment as Acceptance of Arbitration Agreement

If an employer changes an arbitration provision in the employee’s employment contract or incorporates new dispute resolution process, it is no longer enough to rely on the employee’s continued employment as acceptance of the changes. The employee must know that their continued employment manifests acceptance.

If you would like help navigating Michigan employment arbitration agreements, our team is happy to assist. Send us a message now.

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The specific situation and location matters, but the general rule can be described as “RUN, HIDE, FIGHT.” First, if there is an accessible escape path your primary goal should be to take it. Make sure to help others if possible, leave your belongings behind, and keep your hands up in the air with your fingers spread wide. Remember too, that the best escape path might not be the one that you initially see or be the most obvious, similar to being on an airplane.

Second, if you cannot run, then hide. Choose a spot where an active shooter is less likely to find you, out of the shooter’s view, that provides protection if shots are being fired and does not restrict your options to move again, if possible. Lock or barricade a door if you can, silence your cellular telephone and do not make any noise.

Third, and only as a last resort, fight back! You should only fight back when your life is in imminent danger. You can attempt to disrupt or incapacitate an active shooter by acting aggressively towards the shooter, throwing items, improvise with weapons nearby (like a fire extinguisher), or yelling loudly to distract the shooter.

With the above in mind, it is important for employers to take steps to prepare for and manage an active shooter situation. This could include conducting effective employee screenings, including background checks; offer counseling services to employees; institute access controls; train managers to respond effectively; assemble crisis kits; and have an emergency notification or alarm system in place.

In reacting to active shooter situations, managers should be sure to take immediate action, as most situations do not last more than 10-15 minutes. Managers should remain calm, lock and barricade doors if possible, and evacuate staff and customers to preplanned meeting points.

In the event that you have any questions or that Dawda can be of assistance in working with your Human Resources Department, please feel free to contact Randal R. Cole at rcole@dmms.com or (248) 642-3025 or Nina M. Abboud at nabboud@dmms.com or (248) 642-8591.

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Even in the most synergistic of workplaces, sexual harassment looms large as a difficult issue for both employees and employers. This is especially true in this era of the “Silence Breakers” and “Me Too” movements. It has never been more incumbent on an employer to make sure they have proper policies and protocols in place in order to protect both itself and its employees from a hostile work environment.

Initially, an employer needs to have a comprehensive, written sexual harassment policy. The policy must be prominently placed in the employee handbook and circulated to the employees. The policy should communicate the law to employees, include specific reporting details and clearly outline the roles and responsibilities of all parties involved. A well-drafted policy should offer clear guidance, timelines and details on how to access and file claims. Finally, the policy should include a promise of confidentiality to the highest degree possible, in order to foster an environment where employees are not fearful of reporting potential violations.

Because many employees may fear retaliation or loss of their jobs, it can be difficult for an employee to come forward and accurately report an incident. Once the policy is established and the employees are made aware of it, employees should feel comfortable that if and when they report an incident, it will be handled professionally by management.  Technology can be helpful as there are even new websites and smart phone applications that can assist employers in making reporting easier and more convenient for employees.

Once a policy and protocols are established, if an incident is reported, employers should take immediate action to investigate the claim. The investigative process needs to be carried out swiftly, objectively, and documented thoroughly. If an employee’s claim is deemed valid after investigation, disciplinary action should ensue. Depending on the violation, discipline could entail a range of options, from additional training for employees to the termination of an offender. However, once a claim is concluded, an employer should provide clear guidance on how all parties should treat one another and be prepared to follow-up in order to make sure that compliance with policies continues.

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The TSCA was enacted in 1976. It was a major piece of legislation at the time of its passage, enabling the Environmental Protection Agency to regulate a whole host of chemicals.

The new bill is entitled the Frank R. Lautenberg Chemical Safety for the 21st Century Act, named after the long-serving Senator.

Why the new bill?

The TCSA, although it was comprehensive for its time, has been showing its age, as new toxic substances were not under the aegis of the legislation. As new research regarding the toxicity of substances has emerged, the EPA has been limited in adding these substances to the regulatory ouevre.

Under the Lautenberg bill, the EPA has increased power to review and regulate chemicals that previously had not been under its purview. During this review process, the EPA will be able to prioritize chemicals. Those chemicals deemed high priority will be subject to more timely research and further EPA action.

Environmentalists had been pushing changes to the TCSA, complaining that the EPA, unable to meet the previously high burden of proof of toxicity, was also restricted in publicizing toxicity information as well as legislating use and disposal.

How did the Senate manage to come together on an environmental bill?

Partly by engendering support of the Lautenberg bill from industry leaders as well as environmentalists. These industry leaders were able to support the bill, which also includes protections for the industries, particularly by limiting state regulation of newly classified toxic substances. As a result, the bill has the imprimatur of both the American Chemical Council and the National Association of Chemical Distributors, both trade organizations that represent chemical manufacturers.

Not all environmentalists are fully supportive of all aspects of the bill, claiming that it does not go far enough. They also are worried about the low priority status, as they are concerned that research can be delayed or even blocked if substances don’t pass the high priority bar. But even with these objections, the environmentalists are satisfied with the greater funding for the EPA that is a component of this bill.

The House of Representatives passed a similar, less sweeping bill. The next step is reconciling the House and Senate versions. Once that step has completed, the bill can go to President Obama, who is expected to sign it into legislation.

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