Two new laws that affect your business

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Labor law changed this week. If you have employees, then there are two important changes to labor law that you need to be aware of.


Labor law changed this week. If you have employees, then there are two important changes to labor law that you need to be aware of. One defines when an employee is eligible for overtime and sets an on-going schedule of changes. The other comes very close to negating non-compete clauses.


I’ll just go ahead and quote the FTC’s rule summary here. You should however read the total document, including the narrowing of the what the title of “senior” executive should mean. Companies cannot put non-compete on by simply adding “senior” to key staff anymore. The FTC estimates that 30 million workers are under non-compete agreements now.

Rule Summary

  • Under the final Noncompete Rule, the FTC adopts a comprehensive ban on new noncompetes with all workers, including senior executives.
    • The final rule provides that it is an unfair method of competition—and therefore a violation of Section 5—for employers to enter into noncompetes with workers.
    • Note: The regulation’s effective date is 120 days after Federal Register publication – not after the FTC’s public announcement.
  • For existing noncompetes, the final rule adopts a different approach for senior executives than for other workers. For senior executives, existing noncompetes can remain in force. Existing noncompetes with workers other than senior executives are not enforceable after the effective date.
    • Fewer than 1% of workers are estimated to be senior executives under the final rule.
    • Specifically, the final rule defines the term “senior executive” to refer to workers earning more than $151,164 who are in a “policy-making position.”
Noncompete Rule | Federal Trade Commission (

Compliance Guide

The FTC also helpfully outlines the three steps you should take to comply with this rule update. Here I’ll quote the compliance guide. There’s a PDF you can download too.

3 Steps to Complying with the Noncompete Clause Rule
Step 1: Don’t include noncompetes in future employment contracts, paperwork, or websites
This applies to all workers, including senior executives. “Paperwork” includes employee
handbooks and workplace policies.
Step 2: If you have active noncompetes, give notice to those current and former workers
who are not senior executives that their noncompetes are unenforceable
Model language for the notice can be found on the Noncompete Clause Rule page. If you prefer,
you can write your own notice. You can deliver notice by email or text message, or deliver a
paper notice by hand or mail. If you don’t have any contact information for a former worker, you
don’t have to send the notice.
*Notice is not required for senior executives because their existing noncompetes are not affected
by the Rule. As part of this step, consider whether any of your workers with active noncompetes
are senior executives.
Step 3: Don’t enforce existing noncompetes going forward for workers other than senior
For workers other than senior executives, don’t enforce a noncompete in court or threaten
workers or former workers with enforcement. You can still enforce an existing noncompete with
a senior executive. You can also still enforce a claim that a noncompete was breached before the
Rule’s effective date.

Noncompete Clause Rule: A Guide for Businesses and Small Entity Compliance Guide (

Who can you still put under non-compete? Not many people. Essentially only Senior executives that meet the following criteria.

Senior executive means a worker who:

(1) Was in a policy-making position; and

(2) Received from a person for the employment:

(i) Total annual compensation of at least $151,164 in the preceding year; or

(ii) Total compensation of at least $151,164 when annualized if the worker was employed during only part of the preceding year; or

(iii) Total compensation of at least $151,164 when annualized in the preceding year prior to the worker’s departure if the worker departed from employment prior to the preceding year and the worker is subject to a non-compete clause.  

Noncompete Rule | Federal Trade Commission (

Overtime rules

The thresholds for who is eligible for overtime had not been raised since 2020, which was increasing the number of people that were not eligible for overtime. This rule has two phases with the first being a two-year catch-up period. Then it sets into place a regular schedule for on-going wage adjustments in the rule from that point forward so that this doesn’t happen again.

Here’s the numbers:

The salary threshold for the “white-collar” exemptions (executive, administrative, and professional) will be raised in two steps:

  • Effective July 1, 2024, the threshold will increase from $35,568 to $43,888 per year ($844 per week).
  • Effective January 1, 2025, the threshold will further increase to $58,912 per year ($1,128 per week)
  • The new thresholds will be automatically updated every 3 years to keep pace with changes in worker salaries.

Does your business have to comply? Probably. The rules for compliance with the Fair Labor Standards are that you have two or more employees and the business revenue is at least $500,000. That’s not a high bar for the IT industry.

Highly compensated employees have their own rule set too. This part has to do with the job duties where the Department of Labor found that some classes of high wage earners were not exempt from overtime because of the type of work that they perform. Exempt work is only for policy makers fitting the title “senior executive” as defined by the Labor board.

Part 541 final rule 04-22-24 with disclaimer (

There is still a computer employee exemption but it is very narrow and mostly applies to design engineers and programmers. You can read more about that: Fact Sheet #17E:Exemption for Employees in Computer-Related Occupations Under the Fair Labor Standards Act (FLSA) | U.S. Department of Labor ( Most IT service providers will not fall into this category.

Business owners have a decision to make. Do they raise wages and policy decision making to continue to not pay overtime? Or do they start paying overtime? Whichever option you choose, be sure to update your employment policy handbook and go over it with all employees.

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