Federal changes in overtime rules, non-compete agreements and joint employer classifications

By Bev Carroll and Melissa Cassell
Attorneys at Law

Spring seems to be marching on with additional showers of federal updates for employers.

For overtime

As anticipated, the Department of Labor (DOL) issued a new overtime rule, which raises the salary requirement for “exempt” employees higher than predicted last month. The new rule increases the salary-threshold level in two steps: (1) Workers who earn less than $43,888 annually ($844 weekly) as of July 1, 2024, have to be paid any earned overtime, even if they are a manager or professional, and (2) as of Jan. 1, 2025, workers who earn less than $58,656 annually ($1,128 weekly), have to be paid any earned overtime. The rule includes automatic increases to the salary threshold every three years after implementation.

The new rule may also modify previous exemptions to the overtime rule, by placing a greater focus on the dollar amount paid to each employee, in lieu of previous emphasis on duties performed by the employee, which has many employers concerned.

For non-compete agreements

At the end of April, the Federal Trade Commission (FTC) announced its Final Non-Compete Clause Rule (“Final Rule”), which comprehensively bans post-employment non-compete clauses between employers and their workers. The Final Rule becomes effective 120 days after being published in the Federal Register (expected effective date of September 4, 2024).

The Final Rule prohibits employers from entering into, attempting to enter into, enforcing, attempting to enforce, and representing to a worker that they are subject to, a non-compete clause. The prohibition includes employees and independent contractors.

A very narrow exception was carved out of the ban, allowing employers to maintain existing non-competes with “senior executives,” defined as workers earning more than $151,164 annually and holding a policy-making position for the business, but bars employers from entering into, or attempting to enter into, a non-compete clause with such senior executives after the effective date for the Final Rule.

The Final Rule carves out a second exception, allowing non-competes entered into by a person pursuant to a bona fide sale of a business entity.

The Final Rule also provides for additional notice requirements for employers.

The Final Rule does not on its face prohibit certain other restrictive covenants often relied upon by employers, but commentary cautions against creating a non-compete effect.

For joint employer classifications

A federal court in Texas struck down the National Labor Relations Board’s (NLRB) joint employer rule issued in 2023, causing brief relief for employers. For now, the standard is back to “immediate and direct control” of employees. Being deemed a joint employer often means unintended consequences for an employer, such as shared liability for labor law violations committed by other employers and joint collective bargaining obligations with unions that may not even involved direct employees.

Beverly A. Carroll is an attorney with Morton & Gettys in Rock Hill, SC. She is a Certified Specialist in Employment and Labor Law and also a business consultant who can help companies with a wide range of employment issues. She can be reached at (803) 366-3388 or

Malissa Cassell is a partner at Morton & Gettys whose practice includes employment law and business law. She can be reached at (803) 366-3388 or

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