The Department of Labor issued a rule increasing the salary basis threshold under the Fair Labor Standards Act (FLSA) for executive, administrative, and professional employees to $43,888/year on July 1st and to $58,656/year on January 1, 2025. The Equal Employment Opportunity Commission (EEOC) finalized the regulation implementing the Pregnant Workers Fairness Act. In a case alleging sex discrimination, a unanimous United States Supreme Court ruled that Title VII of the Civil Rights Act of 1964 does not require a showing of significant harm when a forced transfer is challenged.
DOL Finalizes Increase to FLSA Overtime Exemption Threshold – The Wage and Hour Division of the Department of Labor (DOL) finalized a Fair Labor Standards Act (FLSA) rule increasing the salary basis threshold for executive, administrative, and professional employees effective July 1, 2024, to $844/week or $43,888 per year and to $1,128/week or $58,656 per year effective January 1, 2025. The current salary basis threshold is $684/week or $35,568/year. The new rule, effective January 1, 2025, will set the salary level at the 35th percentile of weekly earnings of full-time salaried workers in the lowest wage census region. Currently, it is set at the 20th percentile of weekly earnings of full-time salaried workers in the lowest wage census region. The Wage and Hour Division stated, “the new standard salary level will ensure that, consistent with the Department’s historical approach to the exemption, fewer lower-paid white-collar employees who perform significant amounts of nonexempt work are included in the exemption.”
The exemption for highly compensated employees will increase to $132,964/year on July 1, 2024, and to $151,164/year on January 1, 2025. The exemption for highly compensated employees will be set at the 85th percentile of the annualized weekly earnings of full-time salaried workers nationally. Currently, it is set at the 80th percentile. This exemption combines a significantly higher annual compensation requirement with only having to meet one of the duties enumerated in the regulation for executive, administrative, and professional employees.
The earnings threshold would increase automatically every three years, with the next increase slated for July 1, 2027. DOL estimates that one million additional employees will be impacted by the initial update on July 1st and three million employees will be impacted by the increase that will be effective on January 1, 2025. DOL predicts that the new rule will increase employer costs by $803 million over the next ten years. Litigation challenging the rule is expected to be filed.
EEOC Finalizes Pregnant Workers Fairness Act Rule – The Equal Employment Opportunity Commission (EEOC) issued a final rule implementing the Pregnant Workers Fairness Act (PWFA). The rule becomes effective on June 18, 2024. The Act requires employers with at least 15 employees to provide reasonable accommodations for employees with limitations related to pregnancy, childbirth, or related medical conditions unless the accommodation would result in an undue hardship for the employer. In the final regulation, the Commission noted that it included abortion in its definition of pregnancy, childbirth, or related medical conditions but stated, “nothing in the PWFA shall be construed by regulation or otherwise, to require an employer-sponsored health plan to pay for or cover any particular item, procedure, or treatment.”
The EEOC reported that it received close to 100,000 comments on the rule. EEOC Chair Charlotte A. Burrows stated, “This final rule provides important information and guidance to help employers meet their responsibilities, and to jobseekers and employees about their rights.”
The rule includes Interpretive Guidance that includes almost 80 examples addressing according to the EEOC, “the major provisions of the PWFA and its regulation and explains the major concepts pertaining to nondiscrimination with respect to reasonable accommodations for known limitations (physical or mental conditions related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions) under the statute.”
Examples of reasonable accommodation cited in the Interpretive Guidance include providing more frequent breaks, a stool to sit on while working, sit/stand desks, or the ability to stand for those jobs that require sitting, schedule changes, part-time work, paid/unpaid leave, time off for health care appointments, telework, providing a reserved parking space, light duty, making existing facilities accessible or modifying the work environment to allow access to an elevator, moving the employee’s workspace closer to a bathroom, avoiding exposure to chemical fumes, providing enhanced personal protective equipment, temporary reassignment, or job restructuring to remove a marginal function or temporarily suspending one or more essential functions, and acquiring or modifying equipment, uniforms or devices.
Title VII Does Not Require Showing Significant Harm – By unanimous decision, the United States Supreme Court in the case of Muldrow v. City of St. Louis ruled that Title VII of the Civil Rights Act of 1964 does not require an employee who is challenging her transfer to show that she suffered significant harm. According to Justice Kagan, who wrote the opinion for the Supreme Court, “Although an employee must show some harm from a forced transfer to prevail in a Title VII suit, she need not show that the injury satisfies a significance test. Title VII’s text nowhere establishes that high bar.”
JaTonya Muldrow worked for 9 years as a Sergeant in the St. Louis Police Department’s Intelligence Division. Due to her position, she was also deputized as a Task Force Officer with the Federal Bureau of Investigation (FBI), which gave her FBI credentials, an unmarked take home vehicle and the authority to pursue investigations outside of St. Louis. When a new Intelligence Division commander was appointed in 2017, he decided to transfer her out of the unit and replace her with a male police officer. Sergeant Muldrow was reassigned to a uniformed job where while her rank and pay remained the same, her responsibilities, perks, and schedule did not. Her new duties included supervising neighborhood patrol officers. She lost her FBI status and the take home vehicle, and she was required to work a rotating schedule that often included weekend shifts.
She filed a lawsuit claiming that her transfer constituted sex discrimination in violation of Title VII of the Civil Rights Act of 1964. She contended that she went from having more visibility and responsibility to administrative work and supervising officers on patrol. The District Court and the Eighth Circuit Court of Appeals both ruled for the City of St. Louis since Ms. Muldrow did not show a significant employment disadvantage. The Supreme Court agreed to review the case to resolve a Circuit split over whether an employee challenging a transfer under Title VII must “meet a heightened threshold of harm—be it dubbed significant, serious, or something similar.”
In deciding that significant harm is not a requirement, Justice Kagan stated, “To demand significance is to add words – and significant words, as it were to the statute Congress enacted. It is to impose a new requirement on a Title VII claimant, so that the law as applied demands something more of her than the law as written.” Justice Kagan concluded that Sergeant Muldrow “need show only some injury respecting her employment terms or conditions. The transfer must have left her worse off but need not have left her significantly so.” The Supreme Court went on to note that Ms. Muldrow’s allegations if supported would meet the test “with room to spare.” The case is remanded to the District Court for additional proceedings.
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.