Multistate Monday, Election Edition: Legislative Action in the Works as the Ballot Boxes Open

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Dee Anna Hays: Hello everyone, and welcome to another installment of our Multistate Monday podcast series, which focuses on topics that we hope are of interest to clients and friends that operate in multiple jurisdictions across the country. I am Dee Anna Hays, a co-chair of Ogletree Deakins Multistate Advice and Counseling practice group, and a shareholder in the firm’s Tampa office. I’m excited to be joined today by my co-chair of the Practice Group, Lucas Asper from our Greenville office, and our esteemed colleague Jim Plunkett in the Washington, D.C. office. Lucas and Jim, thanks for joining. Would you like to say hello?

Jim Plunkett: Thanks for having me, guys. I know this is your thing that you do regularly, so I’m really pleased to be invited, and I’m looking forward to talking with y’all.

Dee Anna Hays: Thank you for joining. And as election day is drawing near, we thought it might be helpful to focus this podcast on some election foreshadowing and a recap of some of the key federal and multistate legal updates that we’ve seen. And we also had a webinar on this topic recently. If this is interesting to you, and you want to get a little more detail, you can get that information either from pinging us or going to Ogletree’s webinar page on the website. Of course, this podcast is intended to provide helpful information, but of course shouldn’t be considered legal advice. And with that introduction, let’s dive in. Lucas, I heard that the FTC just filed an appeal. Can you give us an update on the latest with the FTC’s non-compete ban and where that stands?

Lucas Asper: Sure, Dee Anna. We are in this funny phase of wait and see how it all plays out in the courts. The FTC has held true to its word, and when they said they were going to keep exploring ways to enforce and chase after enforcement of the non-compete rule that they issued, they did, in fact, file their appeal by the deadline. October 18th, we saw the appeal filed, which I guess puts us at expecting a result if I had to guess from all of the prognosticators that I’ve tried to follow on this. We probably won’t see a decision from the Fifth Circuit as far as how it ultimately plays out until mid-spring of next year, if I had to guess, probably around six months. Maybe sooner, but I don’t expect the Fifth Circuit is going to fast track this one just because of the gravity of it and everything else. It’ll be interesting to see, but it’ll be another hurry up and wait moment I believe.

Dee Anna Hays: And in the meantime, how are states getting involved with non-compete restrictions?

Lucas Asper: Yeah. I mean this has really been, obviously the FTC rule was big deal and had sweeping impact, but as far as volume of activity, we’ve definitely seen a lot more of it at the state level, unsurprisingly, because non-competes, restricted covenants have always been a state issue. And so, over the past handful of years and including even in the current year and with proposals that are slated to take effect moving forward, we’re seeing states do things like impose compensation-related requirements if you’re going to have an enforceable non-compete or even a customer non-solicitation in a couple of jurisdictions. Outright prohibitions on non-competes in a handful of states. I won’t go into details on all of those right now, just touch a couple to give you an example, but the compensation-related requirements, it could be anything from a minimum salary threshold. For example, Colorado, you have to make about $124,000 a year.
District of Columbia, about 150,000. In Massachusetts, you have to be an exempt employee. In Maine, there’s a requirement that you be at 400% of the federal poverty level, which sounds huge, but it’s actually only about $58,000 shockingly. And then another one that is just staggering to really show you how far states have gone with some of these, the state of Washington for employees entering into non-competes, they have to earn a salary of about $120,000 a year. But if a Washington business wants to enter into a non-compete with an independent contractor, they have to have an annual compensation deal with that contractor above $300,000 a year before that’s even potentially unenforceable, placing aside all the other issues that come with non-competes in the contractor space. And so that’s just a handful of examples. The outright prohibitions, California still hates non-competes, we know that. Minnesota has passed a law prohibiting non-competes. Nebraska disfavors true non-competes in a significant way. North Dakota prohibited and Oklahoma prohibited, and so expect to see continued development on the state level, especially if the FTC rule does not come back to life depending on what happens in the courts.

Dee Anna Hays: That’s helpful. And if employers that are listening do operate in multiple states and they’re using some type of restrictive covenant agreement, particularly one that has a non-compete clause within it, is it possible to have one agreement that works in many different states? What do you think?

Lucas Asper: I mean, it’s okay to have a template, a starting point, the skeleton of the agreement and that’s going to work in a lot of jurisdictions. But to really have something that we feel good about enforceability, I mean we need to make it as individualized as possible to the actual employee duties that we’re talking about. And, more importantly, we need to have a lot of state-specific carve-outs, addenda, things like that to make sure we’re not asking employees to sign something that is outright prohibited in their state because placing aside the enforceability issues in that scenario, employers can actually get sued in a handful of jurisdictions for asking employees to enter into unenforceable agreements.

Dee Anna Hays: Mm-hmm. Good to know, absolutely. And Jim, I was hoping you could give us a little bit of an update on the National Labor Relations Board and some of the key enforcement areas we’ve seen them focus on. And I understand one of these can be non-compete agreements, as well. Is that correct?

Jim Plunkett: Absolutely, Dee Anna. The board obviously operates on a federal level, but there are elements that are within its jurisdiction that touch on this discussion that we’re having about non-competes and multistates. And those are issues that really haven’t been teed up yet or are teed up by the board or have been teed up by the board’s general counsel, Jennifer Abruzzo. But we don’t really have any decisions yet. The board has really taken its instruction from President Biden with his statements that he’s the most pro-union president in history, and they’ve run with it, right? They’ve reissued their ambush election regulations. They issued a joint employment standard that’s gotten struck down. They’re going after employer handbook rules. They’re expanding their remedy and expanding the scope of protected and concerted activity. But two areas that Abruzzo, the general counsel would like to see the board rule on are non-compete agreements.
She thinks that they chill employees’ section seven activity, and she has a broad reading of non-compete agreements, and they would include other types of agreements like training, recoupment provisions, and those things. Look for the board to address that issue in the near future. And then the other issue is employer speech, right? Abruzzo and the labor unions don’t like the fact that employers have a constitutional and statutory right to speak to employees about the pros and cons of unionization with certain parameters there. But we’ve seen states, I think there’s 10 states in all, who have enacted laws that would limit employers’ abilities to have these discussions with employees. And Abruzzo would like the board to rule on that, too. Those are two big areas for employers to keep on the lookout for are the board addressing non-competes and employer speech.

Dee Anna Hays: Interesting. And even if an employer does not have a unionized workforce, could this still impact them?

Jim Plunkett: Absolutely. And that’s one of the goals of the board here is that they’re trying to not necessarily expand their jurisdiction, but they want employers to know that they’re not just about overseeing unionized workplaces and collective bargaining sessions and that thing. They want employers to know that the National Labor Relations Act applies to them regardless of whether they’re unionized or not. And you can see how the employer speech issue, in particular, impacts non-unionized employers because maybe there’s a campaign going or maybe employees are asking questions about unionization, and employers want to speak with them about the facts about that or their opinions about unions or their experience with unions, which they’re all able to discuss those situations. Absolutely, the board would apply the NLRA to employers in non-unionized settings.

Dee Anna Hays: Mm-hmm. Thanks for going over that. I think it’s important because in some areas where there’s not a lot of union activity like here in the Southeast, I think sometimes employers just tune out, when it comes to the board, but it really is important to keep watching because we’re really seeing a lot of aggressive activity. And I understand that the board, in particular, is political in nature. Who is on the board, and how does that impact some of these initiatives?

Jim Plunkett: Sure. The board is one of these five-member commissions that are peppered throughout the federal government, and it’s usually three members of the majority party of whoever’s in the White House and then two minority members. In this case, we’ve got three Democrats on the board, and we only have, there’s a vacancy. We only have one Republican. But the key fight now for the business community and for Democrats is this renomination of Lauren McFerrin to the board. And the reason that this is so important is because of the staggered terms, the staggered five-year terms that each board member enjoys, if Lauren McFerrin is confirmed before the end of the year, Democrats would control the board through at least August of 2026 regardless of who wins the White House or who wins the Senate, right? This tilting of the labor management policy landscape in favor of organized labor would continue through 2026 regardless of the election. This has become a big political fight and Congress is out right now, but they will return after the elections for a brief period before Thanksgiving and then they’ll come back for a couple of weeks in December. And keeping McFerrin off the board and giving a potential President Trump an opportunity to flip the board to a Republican majority is going to be a priority in these remaining weeks of 2024 for the business community, Dee Anna.

Dee Anna Hays: Very interesting is definitely something that, as you said, the business community might want to watch closely as we near the end of the year here.

Jim Plunkett: Mm-hmm.

Dee Anna Hays: And Lucas, another thing I know a lot of employers are continuing to watch is the DOL overtime rule and what’s the latest with the January 1st increase to the minimum salary thresholds? Do we think that that’s going to stand? Do we have an idea of when we might have a decision on some of the lawsuits that are pending?

Lucas Asper: I hate to use the phrase, but it’s the million-dollar question, and it’s a question that clients are asking repeatedly right now because no one really knows what’s going to happen with that January rollout date. As we sit here today, everything is on track for that rule to take effect and for the minimum salary to go up to about $1,125 a week as of January one. Now there are lawsuits pending in multiple jurisdictions challenging that rule and taking issue with it ever taking effect, but we’re waiting to see what happens with that. Just gut feeling, this is not based on any inside information or anything else, but gut feeling is that it does stand an uphill battle chance to succeed. I think that there is a good chance it could get struck down just because it changes the way that we calculate the minimum salary compared to how we’ve done it in the 2019 regs or even in the piece of these new regs that took effect in July. And so by changing the mechanism of calculating and just moving the target a little bit, I think the DOL has made the rule more prone to challenge that piece of it, but we’ll see. We’re all keeping a finger on the pulse on this one and anxiously waiting to see what the courts do.

Dee Anna Hays: And this is another area where we’ve seen states get involved and not continue to wait on the federal government. What are some wage and hour law trends that we’re seeing at the state and local level?

Lucas Asper: Yeah. This is one where we are absolutely, in one area more than any other, seeing an explosion of state regulation. And that’s the one place we’re really seeing it as it relates to minimum wage. As we all know, the feds have been passive and inactive really on the minimum wage, any changes to it for quite a while as we sit here right now. I mean it’s been about 15 years since we’ve seen it go up to seven and a quarter where it continues to sit today. Because of that, there are 31 states and jurisdictions, including the District of Columbia that currently have minimum wages that are higher than federal law. And so that’s a trend we need to keep an eye on because those states that already have those laws, they’re continuing to increase them. The ones that don’t have those laws are exploring them, even states in very conservative parts of the country that we would never historically think of as activist type states when we talk about laws regulating the workplace.
We’re even seeing minimum wage increases in those jurisdictions. Florida is an easy example. I mean even in Florida with the way the law is currently in place, by September 30th, 2026, the minimum wage will be up to 15 bucks an hour or that is a trend that we have to keep an eye on. In that same vein as it relates to exempt salary levels, we just talked about what the DOL has done at the federal level. Well, there are currently five states that have higher minimum salaries for exempt employees than the current federal law. That’s Alaska, California, Colorado, New York, and Washington. Of those we have California, New York and Washington, regardless of whether that change takes effect in January will still be higher than federal law. And so we should expect to continue seeing states explore those types of changes to their state wage and hour laws to fill the gaps of what the Feds have just not really been doing on these issues or have been unsuccessful doing.

Dee Anna Hays: Mm-hmm. Absolutely. And when it comes to pay, and not just wage and hour, but we certainly see states and localities getting involved when it comes to job applicants and candidates with pay transparency requirements where many states now require salary ranges or pay rates within job postings and/or salary history bans where employers are prohibited from asking candidates about prior salaries and using that to evaluate compensation.

Lucas Asper: Yeah. I mean, Dee Anna, you hit the nail on the head. States are doing everything they can, especially in those the more historically blue states, we’re absolutely seeing that action, but it is fascinating to see it spread to the red states as well as we’re not seeing these types of laws pass at the national level.

Dee Anna Hays: And Jim, with the election nearing, I’m sure many of our audience would be curious, can you give us some background regarding our presidential candidates and how things might change with some of these issues depending upon the outcome of the election?

Jim Plunkett: Sure, Dee Anna. Obviously, this is a topic that could fill an entire podcast, but I’ll just tick off a few things. First, I think in a Harris administration, she’s likely to continue the Biden policy agenda of expanding rights and protections for employees. I think she might try to distinguish herself a little bit by advocating for paid leave, some federal paid leave program. She’d obviously need Congress’s help on that, but I think that’s where she might want to leave her legacy. Trump, on the other hand, would try to roll back some of the regulations passed by the Biden administration, but there could be some areas that are a little bit tricky, like the overtime regulation, which we just talked about. That’s perceived as giving employees a raise even though we know it’s not. It just makes them eligible for overtime, but because of the politics of that, that could be a little bit tricky for him to unwind if it does survive the legal challenge.
Two other things for employers to watch in 2025. The first is a debate about taxes, right? Congress is going to spend much of 2025 talking about taxes because many provisions of the 2017 Tax Cuts and Jobs Act expire at the end of the year, so they’re going to want a new tax package. That means not a lot of time for labor and employment legislative action. And then finally, employers should watch for EEOC wage and hour reporting, right? The EEOC has said they want to pass a regulation that would require employers to hand over to them what they’re paying their employees and how long their employees are working. We saw a little bit of this at the beginning of the Trump administration when they tried to rescind a previous Biden administration effort to do this. A court said, no, you can’t do this. Employers had to report for about a two-year period, but the EEOC is going to try to make this a durable and lasting wage reporting regulation. Employers should watch out for that.

Dee Anna Hays: Absolutely. Very interesting. And what are some things at the congressional level that we might want to look out for??

Jim Plunkett: Sure. For the remainder of the year, Congress is out a lot, right? And then when they come back, I mentioned that McFerrin is up for a nomination. There’s going to be other personnel, judges that Democrats are going to want to see confirmed. They also have to do things like fund the federal government and fund the military. Not a lot of time for labor and employment legislation. And I don’t think unlike like the previous Congress where we saw the Pregnant Workers Fairness Act and the Pump Act get passed towards the very end of that Congress, I don’t expect anything like that in the current Congress to pass.

Dee Anna Hays: Okay. Good to know. At least there’s a little bit of a reprieve maybe knocking on my desk here next year.

Jim Plunkett: Yes, yes.

Dee Anna Hays: Well, thank you Jim and Lucas both for the overview of those areas. I know there are so many multistate trends that we’re watching, and we tried to pick out some of the highlights of what we had covered in our webinar. And what we will do is make sure we have another installment of this podcast coming up where we can hit on some of the topics that we didn’t discuss, and then hopefully Jim will join us again to talk about the results of the election and what we might expect once we know what we’re dealing with there. But we wanted to talk about a few other areas that we’ve been watching, and one of them is workplace safety and health. This is another area where we’ve seen states get into the game, so to speak. At the federal level, we have OSHA’s new proposed rule on heat illness prevention.
It is in the notice-and-comment stage. If you are an employer and you have thoughts about that that you want to share, the deadline is December 30th to get the comments in there. This is a huge rule that has a heat index trigger of 80 degrees Fahrenheit, and it applies to any worker that’s going to be working at that temperature for 15 minutes in a one-hour period. It’s pretty wide sweeping. I mean a heat index of 80 degrees here in Florida is winter. I think we just hit that and it’s the end of October. Certainly a lot of employers could be impacted. And there are some states that have similar requirements to that OSHA proposed rule that are already in place. To name them, California, Colorado, Minnesota, Oregon, and Washington. And newly to this stage is Maryland. Maryland’s Occupational Safety and Health Division of Labor just published on September 20th a heat illness prevention standard that became effective on September 30th.
Employers only had 10 days to get into compliance there. And it also has a heat trigger of 80 degrees Fahrenheit and requires some things that a lot of employers probably don’t already have in place, such as a written heat illness prevention plan, mandated breaks, mandated periods for climatization, which means a time period to gradually get exposed to the hot environment for new employees or maybe employees who have been out on a leave of absence. Of course, requirements to provide water and shade and all of those things. Certainly make sure you’re aware if you’re in some of those areas what the requirements are because they’re new and they’re changing. Similarly, workplace violence is another area where federal OSHA does not yet have a specific standard, and some states have gone ahead and implemented requirements such as California and New York and Texas has a notice posting requirement but isn’t as onerous as California and New York.
And there are many other states that have provisions specific to healthcare. That’s something else to be on the lookout for. And of course, marijuana and drug testing. Another area that’s very state-specific changing all the time. I mean certainly the trend with marijuana is legalization and more and more employees are using marijuana. One thing to consider is if you haven’t trained your first level supervisors on reasonable suspicion in a while, that might be something that could be on your to-do list before the end of the year, early in 2025. Paid sick leave and family medical leave is another area that continues to change. There are many states now that have paid sick leave requirements. Some of the things that we are seeing to changing would be increases in the amount of hours that are required in states like California and also localities like New York and Chicago. Expanded reasons to take leave and new posters or notice requirements, sometimes expanding scope and coverage.
If you’re in those paid sick leave jurisdictions, just make sure that you’re aware of what the current requirements are. Same thing with family and medical leave. We’ve seen contribution rates increase, maximum weekly benefits increase. These things are changing all the time. And I know it’s one of the areas that we frequently have clients have questions about because it’s really difficult to keep up with the patchwork of requirements there. Child labor, interestingly enough, we’ve seen a split where some states are restricting child labor more and more, and we have other states like Florida that are relaxing restrictions. In Alabama, Arkansas, Iowa, Indiana, Kentucky, Louisiana and West Virginia, all of those have changed requirements for meal or rest periods or work hours making it easier for employers to employ minors in the workplace. And on the flip side of that, many states like Colorado, Illinois, Utah have stronger protections that are now in place. Something to watch if you do employ minors in any capacity. And the last thing that we wanted just to mention are remote workers, right? And Lucas and I get questions about this all the time, and one of the questions we get is, which law applies. Lucas, I don’t know if you want to just chime in here for a couple of seconds and just give your thoughts about how to think about remote workers and which laws are going to apply to them.

Lucas Asper: Sure. Yeah. I mean, the easiest way, and this is overly simplifying it, but the easiest way to approach this is if you have an employee sitting anywhere, you have to make sure you are at least aware of the law of wherever they’re sitting. Because we think of a remote worker as being assigned to a location, and that’s true. We should make sure we’re compliant with the law of the location to which they’re assigned. But if they are truly a remote worker stationed in another state, jurisdiction, et cetera, then we have to be sure that we are aware of the legal requirements of that jurisdiction because if that would work in the employee’s favor, most likely that jurisdiction would insist on compliance with its laws.

Dee Anna Hays: Mm-hmm. Absolutely. And some of them are triggered fairly easily. I mean, for example, some of the paid sick leave requirements in California apply if you’ve worked 60 days in a 12-month period in California. It’s a really short amount of time. And we know some employers now have very flexible policies and even unlimited PTO where employees might be working in other states while they’re on vacation or they’re just working from another area. They could be triggered even in that type of scenario. And one thing employers might want to consider to combat that if they don’t already have it in place, would be either a remote work agreement or policy that requires employees to tell the employer where they’re going to be working. If they have a designated work from home address, then they need to tell the employer before they change that. And I even heard one client when I was giving a presentation recently say that they monitor the VPN access.
It is important to know where your employees are because if they are working from other areas for a significant amount of time, in addition to these laws getting triggered, you have concerns about do we need to register to do business? Do we have tax requirements or insurance requirements? Just another thing to keep on your radars. With that, thank you very much for joining us today. We know we covered a lot of information, but hopefully it was valuable to you. And just like you, we will be watching all of these things and waiting to see how the elections turn out. Thank you so much for joining us.

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