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Federal agencies make sweeping employment rules

On Behalf of | May 20, 2024 | Employment Law

Alaska businesses need to pay careful attention to two new rules that different federal agencies issued last month.

These rules have the force of law, meaning employers that fall under the umbrella of these federal regulations will have to follow these rules once they go into effect.

The Federal Trade Commission has banned most non-compete agreements

In April, the Federal Trade Commission, or FTC, issued a regulation banning most non-compete agreements. Under Alaska law, non-compete agreements are allowed so long as they are reasonable.

Alaska courts currently have the authority either to void an unreasonable non-compete agreement or “blue pencil” contracts that a court deems to have been in good faith but that nonetheless require some cleaning up to make reasonable.

The FTC’s rule will at the earliest take effect in September, but business groups have already challenged the validity of the rule. The pending lawsuits could delay the full implementation of this rule for months or even years.

Still, Alaska employers should keep a close eye on any developments. If implemented as written, the rule will even invalidate existing non-compete agreements. Businesses in Anchorage and throughout the state will have to come up with other ways to protect their interests.

The Department of Labor has limited an important overtime exemption

Around the same time as the FTC issued its rule, the Department of Labor changed an important federal exemption to overtime rules.

Effective in July, to take advantage of the so-called executive, professional and administrative employee exemption, an employer must pay an employee a salary of at least $43,888 a year. If the rule takes effect as planned, this salary amount will increase to $58,656 on January 1, 2025.

Currently, the minimum salary to take advantage of this exemption from overtime rules is $35,568.

Assuming this rule take effect as scheduled, employers either must raise their salaried employees’ compensation, make sure the employees do not work overtime or determine how they will pay their employees overtime compensation.

Again, Alaska employers should monitor developments with respect to this regulation.