Wilson Ratledge is pleased to welcome Campbell K. Kargo to our Workers’ Compensation Defense group as an associate of the firm!
“I am excited and grateful for the opportunity to join this premiere firm and learn from such seasoned and talented attorneys” Kargo said.
With her extensive proficiency in legal research and writing, Ms. Kargo brings new perspective and objectivity to the team.
By wrlaw
You might already be aware that earlier this year, on February 14, 2024, the U.S. Department of Labor (DOL) announced that it would be releasing a new rule regarding overtime in April of this year. The proposed rule, which was announced in September, 2023, would significantly increase both the minimum salary for an exempt employee, and the minimum salary for an employee to be considered “highly compensated” for purposes of that exemption from overtime pay requirements.
While the proposed rule is being reviewed by the United States Office of Management and Budget (OMB), a division of the White House, we want to share with you specifics it’s expected to include when it is released.
”Exempt employees” are not required to get overtime pay (time and a half) for hours worked more than 40 in any one week.
The minimum salary for an exempt employee is $35,568 per year, which equates to $684 weekly.
Employees making the minimum salary, in order to be exempt, must also be employed in roles such as the following, each of which has its own guidance and requirements for proper classification:
The regulations contain a special rule for “highly compensated” employees who are paid total annual compensation of $107,432 or more. A highly compensated employee is deemed exempt under Section 13(a)(1) if:
For example, an employee may qualify as an exempt highly compensated executive if the employee customarily and regularly directs the work of two or more other employees, even though the employee does not meet all of the other requirements in the standard test for exemption as an executive.
The anticipated new rule regarding overtime is expected to increase the minimum salary threshold for an exempt employee, and the threshold for the highly compensated exempt employee. The minimum salary for an exempt employee is proposed to increase by nearly $20,000 per year to $55,000 or nearly $400 weekly to $1,059 (the 35th percentile of compensation to full-time, salaried employees). The minimum salary for the “highly compensated” employee exemption is proposed to increase from $107,432 to $143,988 (the 85th percentile of compensation to full-time, salaried employees). In addition, the proposed rule provides for automatic updates every three years
The review process for regulations like these by the White House’s Office of Information and Regulatory Affairs (OIRA), a division of the OMB, is outlined in an executive order (EO). EO 12866 gives OIRA 90 days to review new rules. However, they can request an extension of that timeline.
If the review commenced upon the DOL’s announcement of the new overtime rule in mid-February of this year is extended, it’s plausible that it may not be completed until May or even later. In other words, the previously publicized April deadline may come and go without a final announcement of this new rule occurring.
Should the salary thresholds increase as anticipated with the announcement of the new rule, the expectation is that potentially millions of workers may be impacted by the shift in policy perhaps as soon as June of this year. It’s important to note that once rules like these are formally announced, there is, typically, a transition period for employers to integrate new policies like these into their operations. You will want to evaluate staff pay and their roles and responsibilities to ensure they’re properly classified. At Wilson Ratledge, we have a lengthy history of working with businesses at all stages of their operations and can help you protect your company’s interests every step of the way. So, contact our law firm to learn more, and how we can best support you.
By wrlaw
On January 10, 2024, the U.S. Department of Labor (DOL) issued new guidance for how employees and independent contractors are classified under the Fair Labor Standards Act (FLSA). This final rule went into effect on March 11, 2024.
As a business owner, it’s imperative that you understand this new DOL final rule regarding worker classification to ensure you don’t unnecessarily expose your company to various legal and tax liabilities for not complying with the rule. In addition to it being important to apprise yourself of this rule as a company that intends to continue operating above the law, doing so is also critical if you’re preparing to sell or raise capital for your business.
Below, we’ll summarize what the new rule says regarding employee and independent contractor classification and address how compliance impacts your business.
The new rule centers around employers applying an “economic reality test” when classifying those who work for them as either independent contractors or employees per FLSA. The latter is a federal law that was enacted in 1938 to ensure, among other protections, that workers receive the federal minimum wage or better plus overtime pay at 1.5 times their regular pay rate.
When announcing the new ruling, the DOL outlined a 6-factor test to replace the 2-factor one previously utilized by employers trying to determine worker status per FLSA. The previously used 2-part test focused on “core factors,” which were “the nature and degree of the worker’s control over the work” and “the worker’s opportunity for profit or loss based on initiative, investment, or both.”
The new economic reality test provides that employers assess a worker’s classification on the following six factors, without “predetermined weight” on any single one:
As you can likely tell, there’s now more of a focus on whether you, as a company, and your potential workers are economically dependent or independent from one another. Dependence indicates your company may need to classify a worker as an employee instead of an independent contractor.
Whether you own a business here in Raleigh or elsewhere, the next step is to take some time to review the classification of your contractors and employees as soon as possible. It’s important to do so to verify that they’re not improperly categorized under the new employee classification directive. Failing to do so could result in fines and other civil penalties you may be able to avoid.
In addition, if you are positioning your company for possible investors or purchasers, you do want to be confident in your employee classifications when embarking on the due diligence process.
Despite being a federal agency, the DOL does not have the authority to implement and enforce laws. However, past guidance like this that it has issued has been cited by workers, employers, advocacy groups, and attorneys when filing motions in court cases and in other matters.
It’s not uncommon for judges to be asked to consider rules like these when weighing arguments in employment-related cases.
New rules like these also have the potential to shape future laws that are legally binding.
Here at Wilson Ratledge, we’ve long worked with businesses on operational matters to avoid or mitigate the consequences that come with uninformed decisions. We are here to explain this new DOL final rule more in-depth and to help you assess whether your workers are indeed classified correctly. Reach out to our law firm if you need assistance with this or any business matters.
On March 1, 2024, a U.S. District Judge in Alabama issued a memorandum opinion and final judgment in National Small Business United v. Yellen, finding that the Corporate Transparency Act (CTA) is unconstitutional because it exceeds the Constitution’s limits on Congress’ power.
The court permanently enjoined the FinCEN (Treasury Department’s Financial Crimes Enforcement Network) from enforcing the CTA against plaintiffs in that case.
It remains to be seen how the decision of this ruling will impact other Reporting Companies and their Beneficial Owners and Company Applicants, though we anticipate an immediate appeal by the Treasury.
At this time, there is no direct change to CTA compliance requirements, and it remains prudent practice for clients to continue to abide by the reporting requirements set forth under the Act. Our prior memorandum (which can be found here) gives further detail about the CTA’s requirements.
Wilson Ratledge will continue to monitor the developments and its implications on the future of the CTA.
By wrlaw
Whether you’re considering pursuing a merger or acquisition for your North Carolina business, in researching whether one of these options is best for you, you’re bound to have encountered the concepts of “stock purchase” and “asset purchase.” If you’re wondering how these differ, continue reading, where we’ll describe some of the differences between them.
In a stock purchase, the buyer purchases shares of stock or other equity interests in the target company directly from the owners. The buyer becomes the new owner of the target business.
Whether a particular factor associated with a stock sale is positive or negative will vary depending on one’s role in the transaction. However, some commonly cited advantages associated with stock purchases from a selling business owner’s perspective include:
At the same time, there are some factors that, depending on one’s perspective, may be seen as disadvantageous to those considering a stock purchase, such as:
In an asset purchase, a buyer purchased all or substantially all of a target company’s assets, or those of a business division. Asset purchases generally involve buyers taking on only specified pre-existing liabilities of the target company.
Pros and cons of asset purchases vary depending on one’s point of view as a buyer or seller. Some benefits associated with asset purchases include:
Conversely, some commonly cited downsides of asset purchases include:
Above is only a brief introduction to what stock and asset sales are and some of the pros and cons associated with each option. Reach out to our law office, Wilson Ratledge, and we will put you in contact with an experienced attorney who has guided other companies here in Raleigh and elsewhere in NC in growing their business’ reach through strategic acquisitions.
Wilson Ratledge is proud to announce that attorney Reginald B. Gillespie, Jr. was elected by his peers for inclusion in the 2024 edition of Business North Carolina’s Legal Elite.
Since 2002, Business North Carolina magazine has honored North Carolina’s top lawyers in fourteen business-related categories, as chosen by their peers. This recognition showcased in the recent publication is a testament to Mr. Gillespie’s exceptional legal skills in the litigation field.
Congratulations Reggie!