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ABC Newsline
On May 14, ABC joined a broad group of trade associations in filing an amicus brief in support of plaintiffs’ request for injunctive relief against the Federal Trade Commission’s final rule to ban noncompete clauses. Injunctive relief is appropriate and necessary to avoid the immediate and irreparable harm the FTC’s final rule would impose on the hundreds of thousands of American businesses—like construction companies—that appropriately rely on narrowly tailored noncompetes.
"Ultimately, this vastly overbroad rule will invalidate millions of reasonable contracts around the country that are beneficial for both businesses and employees. ABC members have valid business justifications for utilizing noncompete agreements, such as protecting confidential information and intellectual property. This new rule will have a harmful effect on their companies as well as their employees, forcing companies to rework their compensation and talent strategies."
Background:
On April 23, the Federal Trade Commission voted 3-2 to issue its final rule to ban noncompete clauses. The rule is effective Sept. 4, 2024.
According to the FTC, under the new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. Existing noncompetes for senior executives can remain in force, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives. Employers will be required to provide notice to workers other than senior executives who are bound by an existing noncompete that they will not be enforcing any noncompetes against them.
ABC issued a news release opposing the rule:
“The final rule to ban all noncompete agreements nationwide—except existing noncompetes for senior executives—is a radical departure from hundreds of years of legal precedent,” said Ben Brubeck, ABC vice president of regulatory, legal and state affairs. “Ultimately, this vastly overbroad rule will invalidate millions of reasonable contracts—including construction project contracts—around the country that are beneficial for both businesses and employees.”
ABC members have valid business justifications for utilizing noncompete agreements, such as protecting confidential information and intellectual property. This new rule will have a harmful effect on their companies as well as their employees, forcing companies to rework their compensation and talent strategies.
FTC Resources on the Final Rule:
To learn more about the final rule and what happens next, read ABC general counsel Littler Mendelson’s analysis.
In April 2023, ABC submitted comments in opposition to the FTC’s unprecedented proposal to ban noncompetes. ABC also joined the U.S. Chamber of Commerce and 280 business groups in submitting comments urging the FTC to rescind the proposed rule.
The final rule is currently being litigated. Continue to monitor Newsline for updates.
On May 13, ABC sent a letter to Rep. Jay Obernolte, R-Calif., and the U.S. House Energy and Commerce Committee’s Environment, Manufacturing, and Critical Materials Subcommittee, urging the committee to oppose the U.S. Environmental Protection Agency’s authorization of new California regulations on locomotive emissions.
The regulations, implemented by the California Air Resources Board, state that all locomotives in California must be zero-emission models by 2030. Under the Clean Air Act, the EPA must approve CARB’s regulations before they can be finalized, but the agency has yet to issue a final decision.
ABC’s letter, submitted in advance of a May 15 subcommittee hearing on the EPA’s budget with Administrator Michael Regan, outlines the enormous cost of compliance with this regulation and the potential for wide-ranging impacts on key aspects of the construction materials supply chain. The letter requested that the subcommittee strongly question Administrator Regan regarding the agency’s position on the ban.
ABC previously joined a coalition of industry stakeholders in comments to the EPA asking the agency to deny authorization of the ban.
ABC, as a member of the Partnership to Protect Workplace Opportunity, called upon the U.S. Department of Labor’s Wage and Hour Division to extend the implementation date of the first increase to the minimum salary threshold under its new final rule altering the overtime regulations under the Fair Labor Standards Act.
“WHD is providing the regulated community with only two months to analyze the rule, determine what changes to their operations and payrolls will be necessary, explain to the impacted workers how and why their pay, titles, or workplace responsibilities will change, and then implement those changes,” the letter states. “This is an arbitrary and burdensome timeline for the regulated community to meet, especially smaller businesses that do not have the resources to make such changes quickly.” PPWO is requesting that the WHD extend implementation from its current date of July 1, 2024, to at least Sept. 1, 2024. Read the PPWO’s statement about the letter.
The PPWO also created a grassroots toolkit to urge Congress to call for a delay in implementation of the first increase. The grassroots portal allows you to send a model letter directly to Congress educating them about the difficulties of the current effective date, but you can also edit the letter as you see fit.
On April 23, the DOL issued its final rule on overtime, which will change overtime regulations under the Fair Labor Standards Act. The final rule increases the minimum annual salary level threshold for exemption in two phases: from the current level of $35,568 to $43,888 on July 1, 2024, and to $58,656 on Jan. 1, 2025. In addition, the threshold for highly compensated employees will be increase from the current threshold of $107,432 to $132,964 on July 1 and then to $151,164 on Jan. 1. Further, salary thresholds will update every three years starting on July 1, 2027. Learn more about the final rule and read ABC’s press release opposing it.
ABC members and chapter staff are encouraged to register for an ABC webinar on May 30 with Littler Mendelson Shareholder Jim Paretti to gain insight on the overtime final rule.
Both the U.S. Senate and U.S. House of Representatives held hearings in early May featuring testimony from U.S. Department of Labor Acting Secretary Julie Su, the sole witness at both events, to review the president’s Fiscal Year 2025 Budget Request for the Department of Labor and discuss the policies and priorities of the department.
Prior to the hearings, ABC sent letters to the committees expressing concern with the DOL’s actions under Acting Secretary Su's leadership. The letters detail the detrimental rulemakings issued by the DOL in the 2023 and 2024 fiscal years, specifically the overtime, worker walkaround, independent contractor, Davis-Bacon and national apprenticeship system rules.
On May 9, the U.S. Senate Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies held a hearing to review the DOL’s Fiscal Year 2025 budget request with Acting Secretary Su.
During the hearing, Ranking Member Shelley Moore Capito, R-W.Va., expressed concern that the DOL’s priorities hurt workers and create red tape. She emphasized the DOL should focus on workforce training and creating new jobs rather than mandating new burdens that restrict worker choice and flexibility. She noted the independent contractor rule jeopardized 27 million Americans’ ability to work in a way that best fits their needs and schedules. In addition, she stated the overtime rule would force small businesses to absorb costs, which would likely lead to workers facing fewer hours, more restrictions and layoffs.
On May 1, 2024, the U.S. House Committee on Education and the Workforce held a hearing, “Examining the Policies and Priorities of the Department of Labor.” Prior to the hearing, ABC sent a letter to the committee expressing concern with the DOL’s actions under Su’s leadership.
In her opening statement, Committee Chair Virginia Foxx, R-N.C., expressed concern about the DOL’s rulemakings. Specifically, she stated that the Davis-Bacon rule would make federal construction projects more unaffordable, the overtime rule would force employers to cut hours, the independent contractor rule would bankrupt freelancers, and the apprenticeship rule would further handcuff employers. She emphasized that the Biden administration’s policies focused on serving the interests of big labor union bosses and were detrimental to American workers, job creators and taxpayers.
Rep. Lloyd Smucker, R-Pa., expressed concern about the Davis-Bacon final rule’s impact on federal construction project costs and emphasized it abandons free market principles. He cited a nonpartisan Beacon Hill Institute study, which estimates Davis-Bacon’s methodology increases project costs by 7%. At a time when construction costs have risen dramatically due to inflation, Rep. Smucker asked if applying additional costs through project labor agreements was fair to taxpayers.
In addition, Rep. Smucker expressed concern about the DOL’s apprenticeship rule, stating that it would lead to less involvement in apprenticeship programs.
In April 2023, ABC submitted comments in opposition to the FTC’s unprecedented proposal to ban noncompete agreements. ABC also joined the U.S. Chamber of Commerce and 280 business groups in submitting comments urging the FTC to rescind the proposed rule.
On May 1, the Council on Environmental Quality issued its final rule on National Environmental Policy Act Implementing Regulations Revisions Phase 2. The final rule implements wide-ranging changes that will add unnecessarily burdensome and costly provisions to the federal environmental review and permitting process.
ABC issued a statement on the release of the final rule:
“These unnecessarily onerous new NEPA regulations will make it more difficult to build important projects and are a major step backward for critical infrastructure, the construction industry and America’s economic future,” said Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “While both Republicans and Democrats have long agreed on the need for commonsense permitting reform, this final rule fails to meaningfully improve environmental protections and actually expands and lengthens environmental reviews that already take years.”
The final rule reverses important streamlining provisions of the ABC-supported 2020 NEPA rule and adds new layers of complexity to the NEPA process, including by doing the following:
Additionally, the final rule favors projects deemed to have environmental benefits (such as solar/wind energy, electric vehicle charging facilities and electrical transmission infrastructure) by allowing them to receive categorical exclusions that bypass the NEPA process.
Further information on the final rule is available in the White House’s press release. The final rule takes effect July 1. Federal agencies have until July 1, 2025, to implement the regulations into their own environmental review procedures.
On April 23, the U.S. Department of Labor issued its final rule on overtime, which will change overtime regulations under the Fair Labor Standards Act. The final rule increases the minimum annual salary level threshold for exemption in two phases: from the current level of $35,568 to $43,888 on July 1, 2024, and to $58,656 on Jan. 1, 2025. In addition, the threshold for highly compensated employees will be increase from the current threshold of $107,432 to $132,964 on July 1 and then to $151,164 on Jan. 1. Further, salary thresholds will update every three years starting on July 1, 2027.
“ABC appreciates that the DOL recognized the value in retaining the methodology used by the prior administration in the 2019 overtime rule update for the phase I increase,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Regrettably, the DOL decided to use a new methodology for phase II, which results in a 65% increase to $58,656 from the current threshold only nine months from now—further complicating the current economic outlook. Multiple industries, like construction, are grappling with uncertain economic conditions such as inflation, supply chain disruptions, high materials prices and workforce shortages, all of which push operational costs ever higher. Specifically, ABC estimates that the construction industry must hire more than half a million additional workers in 2024 to meet demand.”
“Virtually all of ABC’s members employ workers who qualify for exempt status, and phase II of the final rule will reclassify huge numbers of these employees as nonexempt,” said Brubeck. “This will disrupt the entire construction industry, specifically harming small businesses, as the rule will greatly restrict employee workplace flexibility in setting schedules and hours, hurting career advancement opportunities. These issues will recur repeatedly because the DOL rule will automatically increase the salary level every three years beginning in 2027. Additionally, the rule’s significant increase in the salary level threshold fails to account for disparate income levels in different regions of the country.
“ABC will consider all options, including a legal challenge, against this final rule,” said Burbeck.
DOL resources on the final rule:
Additionally, read ABC general counsel Littler Mendelson’s analysis of the overtime final rule.
On Nov. 8, 2023, ABC submitted comments to the DOL in response to the proposed rulemaking, calling on the DOL to withdraw it. ABC also signed onto coalition comments criticizing the overtime proposed rule, joining 244 national, state and local organizations representing employers from a wide range of private industry and public, nonprofit and education sectors.
Continue to monitor Newsline for further updates.
On April 22, the Federal Acquisition Regulatory Council published a final rule, Federal Acquisition Regulation: Sustainable Procurement, with the stated goal of restructuring and updating existing requirements for sustainability in federal procurement. The rule was first announced in an April 19 White House press release.
The final rule reorganizes and implements changes to FAR part 23, with key provisions that:
The FAR Council also released a Small Entity Compliance Guide. The final rule will take effect May 22.
On April 18, the U.S. Department of Labor’s Mine Safety and Health Administration issued the final rule on Lowering Miners’ Exposure to Respirable Crystalline Silica and Improving Respiratory Protection, which lowers the permissible exposure limit of respirable crystalline silica to 50 micrograms per cubic meter of air for a full-shift exposure, calculated as an eight-hour, time-weighted average. If a miner’s exposure exceeds the limit, mine operators are required to take immediate corrective actions to come into compliance.
The final rule will take effect on June 17, 2024. Coal mine operators have 12 months to come into compliance with the final rule’s requirements while metal and nonmetal mine operators have 24 months to come into compliance (including medical surveillance). Read MSHA’s fact sheet on the rule.
ABC, as a steering committee member of the Construction Industry Safety Coalition, submitted comments on the proposed rule, stating, “While the CISC supports MSHA’s efforts to protect mine workers from overexposure to crystalline silica, the coalition requests that MSHA exempt construction activities conducted on MSHA sites. Construction activities are currently covered under the Occupational Safety and Health Administration’s final rule addressing exposure to crystalline silica (‘silica standard’). Having to comply with two different sets of rules is confusing, duplicative and unnecessary, especially when compliance with the OSHA silica standard has proven effective for construction operations.” CISC urged MSHA to develop a Table 1, like the one found in the OSHA silica standard, so that the industry has clear-cut standards and options for complying with the MSHA rule.
CISC’s comments further stated, “Our internal review of such exposure data indicates that most if not all job tasks in those surface quarrying operations are incapable of exceeding the proposed PEL. We therefore request MSHA review such data and produce a report for review and comment.”
MSHA did not include CISC’s recommendations in the final rule, instead determining that a Table 1 approach does not adequately protect miners, due to the diverse range of activities involved in mining, and constantly changing mining conditions.
According to OSHA, in addition to reducing exposure limits, the final rule does the following:
To learn more about the final rule visit MSHA.
On April 19, the U.S. Equal Employment Opportunity Commission issued a final rule to implement the Pregnant Workers Fairness Act, which has been in effect since June 27, 2023. As the EEOC explains, the PWFA requires most employers with 15 or more employees “to provide a ‘reasonable accommodation’ to a qualified employee’s or applicant’s known limitations related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions, unless the accommodation will cause the employer an ‘undue hardship.’” The final rule goes into effect on June 18.
The final regulation provides guidance on what constitutes a limitation under the PWFA, reasonable accommodations, employee-employer communication practices and when accommodations may impose an undue hardship on an employer. It also provides information on employer defenses or exemptions, such as those based on religion.
In December 2022, the PWFA was signed into law as part of H.R.2617, the Consolidated Appropriations Act, 2023. Specifically, the PWFA requires that employers provide reasonable accommodations to workers with qualifying limitations and prohibits employers from denying employment opportunities because of the need for accommodations, retaliating against employees for requesting accommodations and forcing employees to take leave when an accommodation is possible.
ABC’s general counsel, Littler Mendelson, states the following in its analysis of the final rule, “Employers should become familiar with the final regulations and the examples of reasonable accommodation in the EEOC’s interpretive guidance to better understand their obligations under the PWFA and how the EEOC will be interpreting and enforcing it in specific cases. Employers also may want to work closely with counsel to update any pregnancy accommodation policies and related forms to ensure that they comply with the final regulations.”
EEOC Resources:
To learn more, visit eeoc.gov and see ABC general counsel Littler Mendelson’s publication on the rule.