While the future of the federal regulatory state is uncertain after the Supreme Court ended Chevron deference in June, retailers ought to give immediate attention to a slew of new regulations affecting their workforce. Chances are, the regulations themselves are not on your summer reading list. Here we provide a top-line summary of four regulatory developments for retailers to keep top of mind as 2024 unfolds.
DOL: Expansion to Overtime Eligibility.
Based on Department of Labor (DOL) regulations issued April 26, 2024, the minimum annual salary level to classify an employee as exempt from federal overtime pay requirements rose to $43,888 on July 1, 2024. In January 2025, the minimum salary threshold will rise again, to $58,656 a year. The spike in salary level is a major issue for retailers who wish to maintain exempt status for positions serving in areas like store management, marketing, merchandising, product design, asset protection, and planning that would no longer satisfy the minimum salary test come January. Retailers affected by the DOL rule need to consider the budget implications, as well as operational and culture considerations, in deciding whether to increase salaries to maintain exempt status or reclassify to non-exempt status with the obligation to pay overtime.
FTC: Nationwide Ban on Most Non-competes.
The Federal Trade Commission (FTC) announced on April 23, 2024 regulations set to take effect on September 4, 2024 that would nullify a tool many retail companies rely upon in protecting valuable business assets: non-compete agreements. If the rule survives legal challenge, retailers no longer will be able to stop former employees from working for competing companies. Even more, retailers will need to notify workers that any prior non-competition agreements are unenforceable. Retailers should take stock now of any non-competition agreements they have in place in order to prepare a strategy for protecting their proprietary information, customer relationships, goodwill and other business assets should the FTC rule takes effect.
EEOC: Job Accommodations for Pregnant Workers.
The Equal Employment Opportunity Commission (EEOC) issued regulations that took effect June 18, 2024 under the 2023 Pregnant Workers Fairness Act (PWFA), a federal statute affecting nearly all retailers. Based on the regulations, retailers should be prepared to grant pregnant employees' requests for additional breaks, having water at their work station, sitting or standing during their shift, and relief from job duties they cannot perform temporarily. In the guidance appended to the regulations, the EEOC gives examples of pregnancy-related accommodations for retail workers, including giving a store employee a cart to use when moving clothing and temporarily reassigning a cashier to a greeter role. Retailers should consider training all front-line supervisors on the practical impact of the regulations so they are prepared to respond to employees' requests for accommodations quickly and in line with the EEOC's expectations.
OSHA: Proposal to Prevent Heat Injuries at Work.
On July 2, 2024, the Occupational Safety and Health Administration (OSHA) announced a proposed rule set to published imminently in the Federal Register that would impose a nationwide standard for preventing heat injury and illness at work. An employee's exposure to 80℉ or higher temperatures for over 15 minutes in any 60-minute period would trigger an employer's need to provide water, break areas, acclimatization protocols and other protections for employees. If temperatures reach 90℉, additional requirements would come into play. The rule would require covered employers to develop a written plan for preventing heat-related injuries and illnesses and train employees accordingly. For many retail workers, heat stroke is an occupational hazard. In light of OSHA's upcoming rulemaking on heat safety, retailers should evaluate how they prevent heat hazards indoors, like in warehouses and distribution centers, as well as outdoors, such as for delivery drivers.
In addition to these federal regulatory developments, retailers should also be mindful that state administrative agencies have been flexing their regulatory muscles in myriad other areas.
Before the holiday shopping season is upon us, now is an opportune time for retailers to take a close look at their workplace operations to ensure that legal compliance does not get in the way of business goals.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.