NewsBrief – May 2024
In This Issue:
- DOL Publishes Final Rule for Increasing Salary Threshold for Exempt Employees
- Federal Government Bans Non-Compete Clauses
- BOLI Announces New Minimum Wage Rates
- Washington State Expands Paid Sick Leave Law
- Q2 HR Trends Report Available Now!
- Supplemental Executive Retirement Plan for Nonprofit Organizations
- Hot Compliance Question
- Online HR Resources at Your Fingertips
Compliance Corner:
Final Paycheck Guide
Each month, we highlight one of the many resources exclusively available to you as a member of Cascade.
This month, we are featuring our Final Paycheck Guide. Under Oregon law, there are strict requirements for an employee’s final paycheck. This guide dives into the specifics regarding when and how to send out an employee’s final paycheck, including penalties for non-compliance.
DOL Publishes Final Rule for Increasing Salary Threshold for Exempt Employees
Cascade Compliance Team
compliance@cascadeemployers.com
On April 23rd, the Department of Labor (DOL) published its final rule regarding “white-collar” salary exemptions from overtime requirements under the Fair Labor Standards Act (FLSA). Under DOL’s new rule, to be exempt from overtime, an employee will need to make at least $844/week ($43,888/year) beginning on July 1, 2024. This amount will increase to $1,128/week ($58,658/year) beginning on January 1, 2025. Furthermore, DOL states that future updates will occur every three years on July 1st. Employees will still need to meet the existing job duties requirements for the “white-collar” salary exemptions. These requirements did not change.
Additionally, the DOL’s final rule increases the minimum salary for highly compensated employees. On July 1, 2024, the salary threshold for highly compensated employees will increase from $107,432 to $132,964 and on January 1, 2025, it will increase again to $151,164. To note, “highly compensated employees” are exempt from overtime compensation if they perform at least one exempt duty instead of performing all of the specific “white-collar” exemptions. Just to note, this does not apply to all states, including Oregon.
As a reminder, to be exempt from the minimum wage overtime rule under the FLSA's white-collar exemptions, employees generally must be paid on a salary basis, meet a minimum weekly salary, and meet specific exempt job duty requirements. Currently, to be exempt from the minimum wage overtime rule under the FLSA's white-collar exemptions, employees generally must meet a minimum salary threshold of $684/week ($35,568/year).
Given DOL regulations, this overtime rule cannot take effect for 60 days, hence the July 1st effective date. However, it is important to note that during this 60-day waiting period, there could be challenges in court. Specifically, it is likely that this proposed rule will face similar challenges as the 2016 proposed rule. In 2016, it was ruled that DOL did not have the authority to set a salary threshold so high that it effectively eliminates the duties tests and that automatic updates to the overtime threshold were unlawful.
Regardless of the potential challenges, Oregon employers should prepare for the rule to pass. Specifically, employers should complete a budget analysis of non-exempt, overtime positions against the new salary exemptions. Employers should be prepared to either switch positions to hourly or salaried non-exempt or to increase the salaries of exempt employees. Positions that need to be moved to non-exempt to comply with this rule will need training on what it means to be non-exempt, such as how to track hours, and rest and meal periods. Additionally, employers should watch out for pay equity issues under Oregon’s Pay Equity law.
Federal Government Bans Non-Compete Clauses
Cascade Compliance Team
compliance@cascadeemployers.com
In January of 2023, the Federal Trade Commission (FTC) issued a proposed rulemaking that would virtually ban non-compete agreements and supersede all state laws relating to non-compete agreements. On April 23, 2024, the FTC finalized the rule with some modifications from the proposed rule. This rule takes effect 120 days after being published in the Federal Register.
Specifically, the FTC’s non-compete rule mandates the following:
- Employers are prohibited from entering into new non-competes with workers on or after the effective date.
- Employers are prohibited from enforcing existing non-competes with workers other than senior executives.
- The final rule defines the term “senior executive” to refer to workers earning more than $151,164 who are in a policy-making position. Policy-making position means a “business entity’s president, chief executive officer or the equivalent, any other officer of a business entity who has policy-making authority, or any other natural person who has policy-making authority for the business entity.”
- Employers must provide both current and former employees with a clear and conspicuous notice to the worker by the effective date that the worker’s non-compete clause is no longer in effect and will not be, and cannot be, enforced. Employers may provide notice on paper, by mail, email, or text message; and employers are exempt from the notice requirement where the employer has no record of a street address, email address, or mobile telephone number for the worker. The FTC provides safe harbor model language in a document linked here under "Model Notices".
Assuming the final rule is published in the Federal Register in the month of May, the non-compete ban could take place as early as September of 2024. However, there are legal challenges expected. Regardless of the potential challenges, employers should still prepare for this ban to take effect. In preparing, employers should examine all active non-compete agreements to see if there is a “senior executive” exemption. If the exemption does not apply, employers should prepare to send out notices. It is important to note that this rule is more restrictive than Oregon’s non-compete legislation. If and when the rule takes effect, Oregon and Washington employers will need to follow the FTC rule as it will supersede state laws.
BOLI Announces New Minimum Wage Rates
Cascade Compliance Team
compliance@cascadeemployers.com
On April 16th, Oregon’s Bureau of Labor and Industries (BOLI) announced the new minimum wage rates, which will take effect on July 1, 2024. The minimum wage will increase 50 cents based on inflation to the following:
- Standard Minimum Wage: $14.70 per hour
- Portland Metro Minimum Wage*: $15.95 per hour
- Non-Urban Minimum Wage**: $13.70 per hour
*Portland Metro Minimum Wage depends on the work location but generally is within Clackamas, Multnomah, and Washington Counties. To see if an exact address qualifies, click here.
**Non-Urban Counties: Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler.
As a reminder, as of 2023, BOLI’s Labor Commissioner calculates an adjustment to Oregon’s minimum wage rate no later than April 30th of each year. The minimum wage is adjusted annually based on the increase, if any, to the US City average Consumer Price Index for All Urban Consumers (CPI).
For the 2024 minimum wage rates, based on an increase in the CPI of 3.5% from March 2023 to March 2024, the new standard minimum rate is as follows:
- $14.20 X .035 = $0.50 (rounded to the nearest five cents), for a total of $14.70.
Oregon employers with minimum wage positions should properly evaluate how the minimum wage adjustments will impact your entry level employees effective as of July 1st.
Washington State Expands Paid Sick Leave Law
Cascade Compliance Team
compliance@cascadeemployers.com
On March 28th, Governor Inslee signed SB 5793 into law, expanding Washington State’s Paid Sick leave law. Effective January 1, 2025, Washington state employees will be able to take paid sick leave when an employee's child's school or place of care has been closed after the declaration of an emergency by a local or state government or agency, or by the federal government.
Additionally, also effective January 1, 2025, SB 5793 expands the definition of family member under Washington’s Paid Sick Leave to include “any individual who regularly resides in the employee's home or where the relationship creates an expectation that the employee care for the person, and that individual depends on the employee for care.”
As a reminder, all Washington employers must provide one hour of paid sick leave for every 40 hours worked to their employees, regardless of full-time, part-time, temporary, or seasonal status. Washington Paid Sick leave is available for the following reasons:
- An employee or family member’s illness or injury.
- An employee or family member’s physical or mental health conditions.
- An employee or family member’s doctor or dentist visits.
- An employee or family member’s preventive care.
- Workplace, child’s school, or daycare closures ordered by a public official for any health-related reason or after the declaration of an emergency by a local or state government or agency, or by the federal government (effective 1/1/25).
- Leave that qualifies under Washington's Domestic Violence Leave Act.
Washington employers should mark their calendars to update their sick leave and/or PTO policies according with these changes before January 1, 2025, as well as train their supervisors.
Q2 HR Trends Report Available Now
McKenna Arnold, Survey and Research Manager
surveys@cascadeemployers.com
The results are in! Cascade’s Q2 HR Trends Survey is in the books and ready for you to dig through. A big thank you to all organizations that participated!
This survey was the eighth in our series, collecting data on key workplace issues related to compliance, recruitment and retention, compensation, DEI and leadership. Cascade uses this data to make sure our members have the resources they need to address how these trends may impact their workplace.
Here are some highlights:
- Recruiting and retaining talent has remained the top workplace challenge for organizations. If your organization is struggling with recruitment, it might be time to check out our Recruiting services led by our talented Trudy Hylemon, Senior HR and Leadership Consultant.
- Another workplace challenge, “Keeping up with changes in laws, rules or regulations” has jumped up to tie for the top challenge this quarter. If this is your organization, consider signing up for our Mid-Year Compliance Update training to review all the changes to employment laws and rules for 2024 so far.
- Only 15% of organizations identified that they have a solid compensation philosophy and strategy defined and in place with no refresh needed. Our Compensation team is ready to help – reach out now to get started on your project.
This survey also covered questions relating to HR and Leadership training needs.
This report is free to members and can be found in the Members Only area of our website. Non-member participants also receive the report for free, and non-member non-participants can purchase the report here.
The next edition of this survey will be open for participation in November.
Supplemental Executive Retirement Plan for Nonprofit Organizations
By Dan O’Doherty CFP®, ChFC, AIF®
CSNW Benefits
How to keep your key people from walking out the door and protect your organization if something happens to them.
Let’s face it, it’s difficult to find and keep great leaders. The reality is that it has crossed their mind to explore other, more lucrative opportunities even if they love working for you and value your mission. If you aren’t strategizing how to keep top leaders with your organization, you run the risk of losing them. If money is tight in your organization, it can make sense to target specific dollars toward a key executive rather than spreading those dollars around the entire workforce and diluting their value.
In today's dynamic job market, individuals are increasingly prioritizing long-term financial security. While employer-sponsored retirement plans like 401(k)s and 403(b)s are commonplace, many nonprofit executives aren’t in a financial position to maximize them and feel they are falling farther and farther behind in securing their financial future.
In addition, what happens to their family and to your organization if the worst should happen? That’s where a supplemental executive retirement plan (SERP) can help.
In a typical plan design the employer agrees to “informally” fund the SERP over a period of time, often ten years or so. During that time, the executive does not earn a “vested interest” in those funds and therefore doesn’t have taxable income. If they leave, they forfeit the full account. As the account grows, it is a powerful incentive for the executive to remain with you, essentially acting in industry parlance as “golden handcuffs.”
At the end of the period, the employer hands those funds over to the executive and the funds become taxable.
In many cases, though not always, the funding vehicle is a cash value life insurance policy. If the key executive dies before they become vested in their account, the life insurance policy pays out a tax-free death benefit.
A common way to use a death benefit is to split it between the employer and the executive’s spouse/family. In this situation the employer has funds to search for and hire a replacement executive, while the family of the deceased person receives an amount equal to what the balance would have grown to had the executive survived through the term of the agreement.
Ultimately this plan serves multiple purposes.
- It protects the employer in the event a key person (for example the executive director, deputy director, or an employee playing a key role within the organization) passes away.
- It assists the key person in achieving a more secure financial future.
- It is a powerful incentive for the key person to remain with your organization.
- It protects the key person’s family should they pass away prematurely.
In conclusion, if you want to protect your organization from turnover in key roles and help those key executives achieve a more secure financial future, a SERP may be a good fit for your organization. Some states, including Oregon, have strict pay equity laws. While certain key positions can be viewed differently under pay equity laws for bonus and retention purposes, before implementing a SERP be sure to review your state’s rules.
CSNW Benefits is Cascade Employers Association’s partner for employee benefit offerings, including retirement plan management and employee group health insurance. Dan O'Doherty is a certified financial planner with CSNW Benefits, an Alera Group Co. in Portland, Oregon. Reach out to Dan with questions or if you would simply like to discuss if a SERP will work for your organization: odoherty@csnwinc.com (503)226-2171.
Hot Compliance Question
Cascade Compliance Team
compliance@cascadeemployers.com
Question: Under the ADA, is leave an option for a reasonable accommodation?
Answer: Yes, leave can be considered a reasonable accommodation in certain circumstances. Leave as an accommodation is unpaid and is not required if it would impose an undue hardship on the employer.
Although leave may not seem to directly enable an employee to perform the essential duties of their job, leave may allow an employee time to address medical issues and return to work. Medical issues that may be addressed by leave include but are not limited to: attending medical appointments related to a chronic medical issue; obtaining medical treatment; or recuperating from an illness, treatment, or surgery.
Online HR Resources at Your Fingertips
By Sheryl Kelsh, Membership Development Manager
skelsh@cascadeemployers.com
Have you had an opportunity to explore all the valuable HR Resources available in the “Members Only” section of Cascade’s website? Your login credentials are linked to your email address. In case you haven’t set up your password yet, the system will prompt you to do so. Within this exclusive area, accessible 24/7, you'll discover:
Cascade HR Library: A comprehensive toolbox comprising factsheets, surveys, sample forms, policies, and guidelines meticulously crafted by our team of experts.
FAQs: An extensive archive addressing our most frequently asked workplace questions, complete with detailed answers.
Paid Leave Oregon Resources: Up-to-date information on Paid Leave Oregon, including informative factsheets and FAQs.
HR Reinforce – Additional State & National Resources: A member-exclusive portal offering supplementary content and tools crucial for maintaining compliance, managing risk, and fostering a more robust workforce.
Publication Archives: Access to past issues of our monthly newsletter and weekly blog, ensuring you stay abreast of crucial workplace matters.
AnswerSource Helpline: Not finding the answer to your HR-related question? Simply submit your question via the online form provided and we’ll get back to you as soon as possible. Or, you can always just give us a call during normal business hours at 503.585.4320.
Additionally, we provide a special section catering to members of the Small Business HR Solutions package.
With access to these exclusive “Members Only” resources, your membership assures you of assistance in resolving even your toughest workplace queries.