Working in 2025? Three Tips for Employee Planning
Year-end can be a stressful time. The holidays can bring joy; however, from a workplace perspective, they truncate the available time to get work done. This can result in employees and employers being in “survival mode” until December 31. As part of my Employment Law practice, I recommend that employers and employees take time to plan for 2025, using awareness of recent updates and simple steps for successful compliance.
1. Review your team’s overtime and independent contractor classifications.
On November 15, 2024, the United States District Court for the Eastern District of Texas vacated the Department of Labor’s increase of the salary threshold for the white collar exemption under the Fair Labor Standards Act (FLSA) – the primary law governing the payment of overtime. The FLSA increase was pending for several years and was set to take effect as of January 1, 2025, changing the salary threshold from $43,888 annually to $58,656 annually. The federal court’s decision means that the increase will not take effect on January 1, 2025—meaning that the existing salary basis of $43,888 will remain in effect.
I recommend that employers review the current classification of their team members to ensure that they are properly classified as a W-2 or 1099. In addition, I recommend that employers review whether they are properly classifying certain employees as exempt (versus non-exempt) for overtime. The federal court’s November 2024 decision only addresses one prong of a white-collar exemption for overtime. The law still leans very favorably towards employees receiving overtime (and away from employer exemptions). Classification law state-wide and federally similarly leans towards status as a W-2. Reviewing your classification now can cut down significantly penalties moving forward – including a judgment that affects your personal assets (permissive under the FLSA).
2. Recruit team members using salary transparency requirements.
Salary transparency and pay equity rights are expanding nationally. As of late 2024, Maryland and the District of Columbia (among other jurisdictions – including New York and California) must have realistic salary ranges for every job opportunity – including internal postings/promotional opportunities. These requirements also prohibit inquiries on past salaries as part of the interview/recruitment process – as well as workplace postings on employee rights surrounding pay transparency. I recommend that employers review and revise their recruitment processes to ensure compliance, keeping in mind the law’s application to remote workers.
3. Reexamine your non-compete and other restrictive covenant agreements.
In 2024, employees and employers were on a metaphorical rollercoaster with reference to non-compete agreements. In April 2024, the Federal Trade Commission released its final rule on non-compete agreements, banning the agreements nationally for most all employees—to take effect in September 2024. Enforcement of the rule was ultimately prohibited in August 2024 when a Texas court overturned the provisions.
I recommend that employers review any restrictive covenant agreements (including non-compete, nondisclosure, and non-solicitation provisions) to ensure that they are tightly and narrowly tailored in 2025. While a federal ban does not currently exist, appeals of the August 2024 Texas decision are pending (making a federal ban still possible). Further, several state legislatures (including Virginia, Maryland, and the District of Columbia) have banned non-competes for lower-wage employees (up to $73,320 in salary annually in Virginia). State precedent also reflects the courts’ preference for limited restrictions on employees. Clear and narrowly tailored agreements in 2025 should allow for enforceability and significant penalties by state governments for violating existing laws.
Feel free to reach out to me at tringham@kramerelias.com or (703) 202-7633 to discuss your 2025 planning or any workplace concerns that you might have.
Theodora Stringham focuses her practice on bringing solutions-oriented representation and zealous advocacy to complex issues impacting individuals, organizations, and businesses. Ms. Stringham’s approach focuses on understanding clients’ concerns and providing them with thorough and detail-oriented approaches/options to advance their goals. She has been recognized for her advocacy in the Real Estate and Labor and Employment fields, providing counseling for a wide variety of Real Estate and Labor and Employment concerns.