Minimum Salary Level Increases and Non-Compete Agreements Will Soon Be Unlawful

Apr 25, 2024 | Uncategorized

The U.S. Department of Labor (DOL) announced that it is increasing the annual salary level threshold for the most common salaried exempt job categories (those who are exempt from overtime requirements).  These are the Executive, Administrative, and Professional exemptions.  Most salaried managers fall into one of those exemptions.

  • Currently, employees in those exemptions must be paid at least $35,568 annually.
  • Effective July 1, 2024, the minimum salary level increases to $43,888 annually.
  • Effective January 1, 2025, the minimum salary level increases to $58,656 annually.
  • Beginning July 1, 2027, the minimum salary level will increase every three years.

If there are salaried exempt employees at your place of business making less than the announced thresholds, their salaries will need to increase by the specified dates or they could be converted from a salaried employee to an hourly paid employee subject to overtime requirements.  For more information, here is the press release from the Department of Labor:  Biden-Harris administration finalizes rule to increase compensation thresholds for overtime eligibility, expanding protections for millions of workers | U.S. Department of Labor (dol.gov)

Also, the Federal Trade Commission (FTC) issued a final rule which bans employers from using non-compete agreements when employees leave the employer.   Effective in late August 2024, employers will no longer be able to prevent former employees from working for a competitor or starting up a competing business.  And, if the employer has active non-compete agreements at the time the rule is effective, the employer will need to notify those employees/former employees in writing that the non-compete clause will not be enforced.  There is an exception for senior executives.  Here is more information from the FTC:  Noncompete Rule | Federal Trade Commission (ftc.gov)

There will likely be legal challenges to both rules and it’s possible (but by no means guaranteed) that one or both may be delayed pending litigation.  Employers should make plans to comply based on the announced timelines.

Slater & Rutherford offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.

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