Navigating the New Federal Workplace Rules

Banks of all sizes should take note of these changes and update policies and procedures to avoid running afoul of new rules and regulations. Here is an overview of some notable changes that have taken place in recent months.

The Expansion of Federal Overtime Eligibility
A U.S. Department of Labor’s final rule that went into effect on July 1 raised the salary threshold for certain employees to be classified as exempt from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime requirements. The law exempts certain employees from its coverage — most commonly executive, administrative and professional employees. To qualify for an exemption, an employee must perform certain job duties, be paid on a pre-determined fixed salary not subject to reduction due to work quality or quantity and earn a salary above a threshold determined by the Labor Department. As of July 1, the required salary increased to $844 per week, and there will be another increase on Jan. 1, 2025, to $1,128 per week.

The FLSA recognizes an exemption for highly compensated employees whose primary duty includes office or non-manual work and who regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee. The salary threshold for this exemption increased on July 1 to $132,964 per year, with another increase set for Jan. 1, 2025. The Department of Labor says it will update the thresholds every three years to maintain consistency and keep pace with inflation.

More Employees, Less Independent Contractors
Following the passage of its final rule on March 11, the Department of Labor will focus on six factors to classify employees as independent contractors:

1. A worker’s opportunity for profit or loss.
2. Investments made by the worker and bank.
3. How permanent the work relationship is.
4. The degree of control a bank has over the work.
5. How integral the work is to the bank’s business.
6. The use of the worker’s skill and own initiative.

More workers will likely be considered employees, subjecting them to various legal protections. To properly classify someone as an independent contractor, banks should have their legal counsel craft agreements incorporating the six factors, and the proposed contractor should ideally have their own business license.

Stricter Standards for Workplace Rules
In August 2023, the National Labor Relations Board (NLRB) adopted a somewhat new standard for evaluating work rules outlined in employee handbooks. Banks will no longer be able to establish broad workplace rules governing employee conduct, especially those involving an employee’s personal conduct like social media policies or acceptable use policies, conflicts of interest and confidentiality of harassment complaints. Essentially, any rule established by a bank that affects its employees’ ability to discuss issues or conditions in the workplace must be narrowly tailored. The bank’s intent does not matter; the NLRB will focus on how employees interpret the rule itself.

Enforcement Guidance on Harassment in the Workplace
The U.S. Equal Employment Opportunity Commission (EEOC) submitted its final version of enforcement guidance on workplace harassment in April. Some of the new topics addressed include remote work, the #MeToo movement and the Supreme Court’s decision in Bostock v. Clayton County, Georgia, in which the Court extended protections under Title VII of the Civil Rights Act to workers who are discriminated against based on their sexual orientation and/or gender identity. The guidance also serves as a unified agency resource on EEOC-enforced workplace harassment law.

Pregnant Workers Fairness Act Regulations
On June 18, the EEOC’s final rule on interpreting the Pregnant Workers Fairness Act (PWFA) went into effect.

The law requires reasonable accommodations for qualified applicants or employees who have known limitations related to pregnancy, defines as “physical or mental conditions related to, affected by, arising out of pregnancy, childbirth, or related medical conditions” that the employee has communicated to her employer. The limitation may be modest, related to maintaining the employee’s or a pregnancy’s health or an employee seeking healthcare related to the pregnancy or childbirth. The condition need not be the sole or substantial cause of the condition.

Even if employees cannot currently perform the essential functions of their job, with or without a reasonable accommodation, the employee will still be protected by the PWFA if this inability is only temporary.

The EEOC gives the following examples of accommodations that are reasonable under the law:

• Frequent breaks.
• Schedule changes.
• Part-time work.
• Paid and unpaid leave.
• Temporarily suspending essential functions.
• Acquiring or modifying equipment, uniforms or devices and adjusting existing work policies, allowing more restroom breaks or letting standing employees sit.

Banks must to review their policies and procedures and consider training HR, supervisors and managers regarding these new rules to ensure they follow proper procedure.