Sometimes all you need to navigate the legal landscape is a little information. Our blogs and articles touch on a wide spectrum of legal matters that can pop up in both business and everyday life, and we hope they’ll shed a little light wherever you happen to need it.

Minnesota Legalizes Recreational Marijuana-What employers should do now to prepare for the August 1st effective date

Effective August 1st, 2023, Minnesota becomes the 23rd state to legalize recreational marijuana. Minnesota already offered a medical marijuana program for patients with qualifying conditions-and as of March 2022, Minnesota permitted consumption by liquid, pills, and smoking dried, raw hemp-derived cannabis.

With the new law, an Office of Cannabis Management was created to oversee the program. And while the law goes into effect in August 2023, it is expected to take about 18 months for the first dispensaries to open.

So what is permitted under the new law?

Adults 21 and older may:

  • Use, possess, or transport cannabis paraphernalia
  • Possess or transport two ounces or less of adult-use cannabis flower in a public place
  • Possess two pounds or less of adult-use cannabis flower in individual’s private residence
  • Possess or transport eight grams or less of adult-use cannabis concentrate
  • Possess or transport edible cannabis products or lower-potency hemp edibles infused with a combined total of 800 mg or less of tetrahydrocannabinol

Marijuana may be used:

  • In a private residence, including the yard and area immediately surrounding the house
  • On private property that is not generally accessible by the public, unless explicitly banned
  • On the premises of an establishment licensed to permit on-site consumption

Notice anything missing? The workplace! How should employers react to this new law?

First, it’s important to note what the Lawful Consumable Products Statute will say after August 1, 2023:

“If an employee uses cannabis outside of work hours and off the work premises, then an employer may not lawfully discipline an employee for that behavior. However, employers can still prohibit the use of marijuana if the use of it would violate federal or state law or cause the employer to lose money or a licensing benefit under federal law.”

Adjusting your drug testing policy is good place to start.

Cannabis testing is different from drug and alcohol testing. After the effective date of this law, employers may test under compliant policy for the following reasons:

  • Reasonable suspicion
  • Random testing for certain employees
  • Treatment program testing

What about testing job applicants?

Nope, sorry. The new law prohibits testing job applicants for cannabis as a condition of employment. Going forward, an employer may not refuse to hire a job applicant solely because the applicant’s test results indicate the presence of cannabis. However, for certain positions, cannabis is still considered a drug and employers may test applicants for cannabis.

The positions are:

  • Safety-sensitive positions (as defined by statute**)
  • Peace officers
  • Firefighters
  • A position requiring face-to-face care, education, training, supervision, counseling, consultation, or medical assistance to children, vulnerable adults, or healthcare patients
  • A position requiring a commercial drier’s license or require the employee to operate a motor vehicle for which state or federal law requires drug or alcohol testing of the applicant or an employee
  • Any position funded by a federal grant
  • Or any other position for which state or federal law requires testing of a job applicant or an employee for cannabis.

It’s also important to note that under new regulations, employers may no longer require routine physical examination cannabis testing for most positions, nor can they require cannabis testing on an arbitrary or capricious basis.

Can employees be subject to discipline?

Yes, if the employee uses, possess, sells, transfers, or is impaired while working, while on company property, or operating company equipment and if any of the following requirements are met:

  • As a result of consuming a cannabis or hemp-derived product, the employee does not possess the clearness of intellect and control of self that the employee otherwise would have; or
  • If testing verifies the presence of cannabis following a confirmatory retest; or
  • If the employee’s written work rules for cannabis apply to such conduct and the policy meets the minimum requirements of the Minnesota Drug and Alcohol Testing in the Workplace Act (“DATWA”), Minn. Stat. § 181.952.
  • If the employer is required to do so under state or federal law or if a failure to do so would cause an employer to lose a monetary or licensing benefit under federal law.

Other DATWA requirements:

If it’s the employee’s first positive drug test, MN employers must offer the employee the chance to go to rehab instead of terminating them.

DATWA’s Written Policy Requirements:


The consequences of not paying attention to these regulations can be costly for employers. Job applicants or employees can bring a civil action based on an employer’s or laboratory’s violation of the DATWA.

Available remedies include:

  • Damages
  • Attorney’s fees, if the violation is knowing or reckless
  • Injunctions prohibiting the employer or laboratory from violating the DATWA
  • Any other equitable relief the court deems appropriate, including:
    • Hiring
    • Reinstatement
    • Back pay

If an employer violates the Lawful Consumable Products Law, a job applicant or employee can bring a civil action, and fi the court finds a violation, can award damages (limited to wages and benefits lost due to the violation) and/or court costs and attorney fees.

So what now?

Employers with Minnesota employees should revise their drug and alcohol testing policies and consider whether testing for cannabis makes sense for their company in light of these changes. Reminder that the medical marijuana program will still exist. There will be additional medical cannabis licenses allowed under the new law. It is still unlawful for an employer to discriminate against a person who is enrolled in the medical cannabis program unless the employer would lose a monetary or licensing-related benefit under federal law or regulations. Patients enrolled on the medical cannabis registry may still present their medical cannabis registration verification to their employer in the event the patient tests positive on an employer’s drug or cannabis test. However, employers are not required to permit an employee enrolled in the medical cannabis program to be under the influence at work.​

**“Safety-sensitive position” means a job, including any supervisory or management position, in which an impairment caused by drugs, alcohol, or cannabis usage would threaten the health or safety of any person.

We recommend revising your current drug policy with the consultation of counsel-reach out today to consult with a member of our team-before the new law goes into effect.

The Employment Law attorneys at Wagner, Falconer and Judd stay up to date on these regulations so you don’t have to. As always, laws are continuously changing and evolving-the information provided in this blog is up to date as of the published date.

New Minnesota Laws You May Have Missed

In what is likely to go down as one of the busiest legislative sessions for employment-related laws in Minnesota history, employers have been left with a lot to unpack. From legalizing recreational marijuana, banning non-compete agreements, and passing both paid sick and paid family and medical leave laws, the hits just kept coming. However, while some of these law changes were well-publicized, a few others have flown under the radar. These include expanding the Minnesota Parental Leave Act (“MPLA”), passing additional protections for pregnant and nursing mothers, and enacting a salary history ban.

Starting on July 1, 2023, employers with just one or more employees must provide unpaid leave under the MPLA. Previously, only employers with 21 or more employees needed to provide this leave. Further, where employees only became eligible for MPLA leave if they worked for an employer for one year and at least half-time, those prerequisites are gone as of July 1.

Additionally, the Minnesota statute that provides pregnancy accommodations and protections for nursing mothers, Minn. Stat. § 181.939, now applies to any employer with one or more employees, effective July 1, 2023.

Further, additional examples of reasonable accommodations for pregnant employees were added to the statute and include temporary leaves of absence, modifications in work schedules or job assignments, and more frequent restroom breaks.

The law changes also expanded nursing mother protections by:

1. Removing the limitation that only allows nursing mothers break times to express breast milk for 12 months following the birth of their child;

2. Removing the exemption employers could previously use to deny lactation breaks if they would unduly disrupt an employer’s operations;

3. Amending the statute to state that lactation breaks may, instead of must, run concurrently with any breaks time the employer already gives.

Employers must also provide notice to employees both at the time of hire and if an employee asks about parental leave. Companies that provide employee handbooks must also add information about parental leave rights in the handbook.

Last, beginning on January 1, 2024, employers may no longer inquire into a job applicant’s salary history. These salary history bans have been enacted across the United States to stem the tide of pay inequity. The thinking behind these bans is that if an employee has been historically underpaid due to their protected class status, a new employer, upon learning of the applicant’s salary history, will likely perpetuate that wage inequity by offering a wage that is lower than it may have been without that knowledge. While applicants can still volunteer information about their salary history, employers can only use that volunteered knowledge if the net result is the employer offering a higher wage than what was initially offered by the employer.

As should be clear by now, Minnesota employers have a lot of changes to learn about and prepare for. It is a good time to start reviewing existing employee handbooks and other policies to ensure compliance in the days and months ahead. For more information on how the Employment Law team at Wagner, Falconer, & Judd can improve your HR compliance, reach out to us today!



The Who, What, When & Where of Credit Applications

When developing a credit application for your customers, it’s important to remember that not only will that document serve as a contractual agreement between you and your customers, but should also be used to obtain critical information that could prove crucial if the customer fails to pay. A detailed, but straight-forward application will be a valuable resource during collection activities.

As you build your application, remember to ask yourself the important “who?”, “what?”, “when?”, and “where?” questions to ensure you are collecting all the necessary information.


  • Name of the business
  • Doing Business As (DBA) name


  • Confirm the type of business entity
    • Corporation, LLC, Sole Proprietor, Partnership, Limited Partnership, Limited Liability Partnership


  • Date of business started
  • Date formally created
    • Incorporated
    • Registered to do business


  • State formed or organized
  • Principal business address
  • Check the state’s Secretary of State online
    • Could be “foreign” e.g. Delaware corporation operating in Minnesota
  • Can learn more (registered agent, principal, other addresses, assumed/fictitious names (DBA)


Once you have gathered the information listed above, it’s time to dig a little deeper.

Specific Owner Information You Should Gather:

  • Name (you might be able to confirm this with the Secretary of State office)
  • Title
  • Ownership interest
  • Home address
  • Phone (cell + home)
  • Email address(s)
  • Social security number

Now that you have all your customer’s information, it’s your turn to take over. By creating a credit application that clearly states the terms and conditions of the agreement between you and your customer, you’re laying the groundwork for your future relationship. A clear credit application doesn’t leave much room for disagreement. It’s vital to understand your rights and obligations as the creditor, to mitigate any future risk due to non-payment or other financial issues.

Terms & Conditions We Recommend Including in Your Application:

  • Costs of collection (court fees, attorney fees, collection agency fees)
  • Chose of law, venue, jurisdiction
  • What law governs
  • Choice of venue at your discretion
  • Credit limit
  • Security interest
  • Security interest security interest
  • May need to perfect UCC-1 filing
  • Terms of Sale-e.g., Net 30
  • Interest (usury laws differ state to state)

Are you Going to Include a Personal Guarantee Requirement?

Putting a personal guarantee in place creates another pocket of risk, as it can be relatively easy for an owner to walk away from an LLC and form another. It also elevates your priority as a creditor to your customer. If your loan contains a personal guarantee, and a different loan does not, it’s likely that your customer will pay you first.

If you are going to include the personal guarantee, the owner/principal should be the signer, or whomever made money from your advancement of credit. We recommend making the personal guarantee portion of your credit application as clear and unambiguous as possible. If you put the guarantee within the credit application, it should be set apart, and include a clear, separate line for the signature. You also have the option to add the personal guarantee as an addendum in a new document if or when the credit risk has increased.

A personal guarantee doesn’t have to be a lengthy undertaking. Here are some terms that should be included in your personal guarantee:

  • Costs of collection-not dependent on success
    • court fees
    • attorney fees
    • collection agency fees
  • Choice of law, venue, and jurisdiction
  • Continuing
  • Sign with home address and SSN
  • Witness or notary

Taking the time to build your credit application in a way that supports your business and protects against risk should not only help you get paid on time, but also maintain a good relationship with your customers by eliminating the space for disagreement over repayment of loans. Make sure to keep good records of all signed copies of the credit application, personal guarantee, promissory notes, etc. We also recommend making yourself familiar with laws and statutes that impact creditors such as the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA).

Have questions about your credit application? Reach out to WFJ for a consultation today!


ADA-What Employers Need to Know

Many employers may be aware of the Americans with Disabilities Act (“ADA”), but may not understand what their specific responsibilities are when it comes to the ADA. For starters, the ADA defines disability as a physical or mental impairment that substantially limits one or more major life activities, thus interfering with the employee’s ability to perform their job. Major life activities include walking, sitting, standing, lifting, speaking, seeing hearing, learning, etc. This also includes major bodily functions such as circulatory, endocrine, hematic, cellular, and reproduction, among others.

Whether an employee is injured at work or while engaging in activities outside of work, or is navigating a mental or emotional hardship, the employee may fall under this ADA definition of disability, even if temporarily. If an employee requests an accommodation, employers are then responsible for engaging in the interactive process (that’s legalese for an open and honest dialogue) with the employee to find a suitable accommodation to keep them working. The goal of the ADA is to keep employees productive in their roles without undue hardship on the employer. You achieve this by clear communication and following the interactive process which will help both you the employer, and the employee in question, find a reasonable accommodation.

After establishing there is a need, the next step in the interactive process is an official accommodation discussion, outlining what tasks or light duty expectations the employer has for the employee. This accommodation should be aligned with their doctors’ recommendations, to the extent possible.

We have created a checklist to get you on the path for a successful interactive process. We have additional resources that can help you navigate those steps if, or when, this situation arises for your company.


ADA Reasonable Accommodation Checklist:

When an employer has information that a disability may be interfering with an employee’s ability to perform their job, the following steps may be taken:

Identify the need for accommodation.

Unless there is an observable basis or other objective evidence that the employee has an impairment that is affecting job performance, do not inquire about the need for an accommodation.

  • Ask the employee if there is any way the employer can assist the employee in the performance of job tasks. No reference to the Americans with Disabilities Act (ADA) is necessary at this point.
  • If the employee declines the need for assistance, no further action is necessary. The employee may be held to the same performance and conduct standards as all other employees.

Engage in the Interactive Process.

If the employee discloses the need for assistance due to a disability, continue with the following steps:

  • Determine whether there is a medical documentation or other reliable, objective information to conclude that the employee has a physical or mental impairment that substantially limits a major life activity.
  • Review the employee’s job description and determine the essential functions of the job. Identify nonessential job tasks that may be reassigned to other employees for purposes of accommodation.
  • Discuss possible accommodations with the employee, their health care providers, and supervisors who have knowledge of the worksite and the job. Engage other professionals, such as the employee assistance program (EAP) counselors or a vocational or rehabilitation counselor as appropriate.
  • Determine whether the employee’s preferred accommodation creates an undue hardship for the employer. If so, suggest and discuss alternative accommodations.

Obtain Medical Information (if necessary).

When the disability and/or the need for accommodation is not obvious, the employer may ask the individual for reasonable documentation about their disability and functional limitations.

  • If documentation from a health care provider is necessary, have the employee sign a medical release form.
  • Provide the employee with an ADA medical accommodation certification form to be completed by their health care provider.
  • Provide a copy of the job description to the health care provider and have the provider indicate what major life activity or activities are limited.

Identify the Existence of a Direct Threat.

Direct threat under the ADA is “a significant risk of substantial harm.” An assessment of direct threat should be based on valid medical analyses and/or other objective evidence, not on speculation. This is a very narrow exception that may warrant denial of an accommodation and/or termination of employment.

  • Determine whether the employee is a direct threat to themselves or to others in the performance of the job tasks.
  • Document the direct threat by identifying the risk caused by the limitation, the potential harm that could result, and the medical or observable facts on which the risk is based.

Retain Documentation

  • Identify and document the reasonable accommodation given, the reason no accommodation was needed or why the accommodation request was denied.
  • Keep all medical information in a file that is separate from the employee’s personnel file.

Additional resources to assist employers in understanding their responsibilities under the ADA:

Job Accommodation Network (JAN)    1-800-526-7234 (voice)

*If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services. JAN is a free, confidential service from the U.S. Department of Labor’s Office of Disability Employment Policy that provides individualized accommodation solutions and technical assistance on the ADA. Among the areas that JAN can address are:

  • Accommodation options and low-cost solutions
  • Hiring, retaining and promoting qualified employees with disabilities
  • Employer responsibilities under the ADA
  • Addressing accessibility issues, including accessible technology

Equal Employment Opportunity Commission (EEOC)        1-800-669-4000 (voice)

*If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services.

The EEOC enforces the ADA’s employment provisions. The section of its website titled “Disability Discrimination” provides access to numerous publications, including several specifically designed to answer employer questions and concerns.

U.S. Department of Justice (DOJ) ADA Homepage   1-800-514-0301 (voice):

If you are deaf, hard of hearing, or have a speech disability please dial 7-1-1 to access telecommunications relay services.

The ADA homepage includes many excellent resources for employers. The “ADA Business Connection” section of the site includes business briefs and tax incentive information.

Americans with Disabilities Act National Network     1-800-949-4232 (voice)

The Americans with Disabilities Act National Network, sponsored by the U.S. Department of Education’s National Institute on Disability, Independent Living, and Rehabilitation Research, consists of 10 regional centers and an ADA Knowledge Translation Center which provide ADA information, training and technical assistance across the nation.

Failing to make reasonable accommodations for your employees can leave you open to unnecessary risk. Consulting with the Employment Law team at Wagner, Falconer & Judd can set you, and your team, up for success.

The Art of Hiring Slow and Firing Fast: A Guide for Building a Successful Team

Building a successful team is one of the most critical aspects of running a business. Hiring the right people who are the perfect fit for your organization’s culture and goals can lead to increased productivity, innovation, and success. On the other hand, hiring the wrong people can result in costly mistakes, decreased morale, and a negative impact on your bottom line. That’s why it’s essential to adopt the strategy of hiring slow and firing fast.

Hiring slow means taking your time to carefully select and onboard new employees, while firing fast means swiftly letting go of employees who are not meeting expectations or not aligned with your company’s values. In this blog, we will explore the art of hiring slow and firing fast, and why it’s crucial for building a successful team.


The Importance of Hiring Slow

Hiring slow doesn’t mean delaying the hiring process unnecessarily. Instead, it’s about being intentional and thorough in your hiring process to ensure you make the best hiring decisions. Here are some key reasons why hiring slow is crucial:

  1. Cultural fit: Your team’s culture is the backbone of your organization. Hiring employees who align with your company’s values and culture can lead to better teamwork, higher employee engagement, and increased job satisfaction. Take the time to assess not only an applicant’s qualifications but also their fit with your company culture during the hiring process.
  2. Skillset and experience: Hiring slow allows you to thoroughly evaluate an applicant’s skillset and experience. You want to make sure that the candidate possesses the right skills and experience to perform the job effectively. Rushing through the hiring process may result in hiring someone who lacks the necessary qualifications, leading to poor performance and potential setbacks for your team.
  3. Long-term commitment: When you bring someone on board, you want them to be committed to your organization for the long haul. Hiring slow helps you assess a candidate’s long-term commitment to your company. Look for candidates who are genuinely interested in your organization and its vision, and who show potential for growth and advancement within the company.

The Benefits of Firing Fast

Firing fast means taking swift action when an employee is not meeting expectations or is not aligned with your company’s values. Here are some reasons why firing fast can be beneficial for your team:

  1. Maintaining productivity: When an employee is not performing up to par, it can impact the productivity and morale of the entire team. Allowing an underperforming employee to stay on the team for too long can drag down the overall performance and motivation of the team. Firing fast helps you address performance issues promptly and maintain a high level of productivity.
  2. Protecting company culture: Company culture is fragile, and one toxic employee can disrupt the entire team dynamic. If an employee consistently exhibits behavior that goes against your company’s values or culture, it’s crucial to take action swiftly to protect your team and maintain a healthy work environment.
  3. Saving resources: Keeping an underperforming employee on board can be costly in terms of time, money, and resources. Firing fast helps you avoid wasting valuable resources on an employee who is not contributing to your team’s success. It also opens up opportunities to hire a more suitable replacement who can add value to your organization.


Best Practices for Hiring Slow and Firing Fast

Implementing the strategy of hiring slow and firing fast requires careful planning and execution. Here are some best practices to keep in mind:

  1. Clearly define your hiring criteria: Before you start the hiring process, clearly define the qualifications, skills, and experience you’re looking for in a candidate. This will help you assess applicants more effectively and make informed decisions. Create a job description that clearly outlines the expectations and requirements for the role.
  2. Conduct thorough interviews: During the interview process, ask probing questions to assess a candidate’s skills, experience, and cultural fit. Use behavioral-based interview techniques to gain insights into how candidates have handled similar situations in the past. Also, consider conducting multiple rounds of interviews to ensure you have a well-rounded understanding of the candidate’s capabilities.
  3. Check references: Take the time to check the candidate’s references to validate their skills, experience, and cultural fit. Contact their previous employers or colleagues to gain insights into their performance, work ethic, and team dynamics.
  4. Onboard new employees effectively: Once you’ve made a hiring decision, invest in a comprehensive onboarding process. Provide new employees with the necessary tools, resources, and training to set them up for success. Clearly communicate your expectations, company culture, and values from the start to ensure a smooth transition into their role.
  5. Set performance expectations: Clearly communicate performance expectations to your employees from the beginning. Set measurable goals and objectives and regularly review and provide feedback on their performance. If an employee is not meeting expectations, address the issues early on and provide support and guidance to help them improve.
  6. Act swiftly when performance issues arise: If an employee is consistently underperforming or not meeting expectations, address the issues promptly. Have open and honest conversations with the employee to understand the reasons behind the performance issues and provide coaching and support to help them improve. However, if the employee does not show significant improvement despite the support provided, be prepared to take decisive action and part ways amicably.
  7. Communicate clearly and respectfully: When it comes to firing fast, it’s important to communicate clearly and respectfully with the employee. Clearly articulate the reasons for the decision and provide feedback on their performance. Be professional, empathetic, and supportive during the process.
  8. Learn from mistakes: Not every hiring decision will be perfect, and sometimes you may need to let employees go. It’s important to learn from any mistakes and use them as an opportunity to improve your hiring process. Assess what went wrong, identify any red flags or gaps in your hiring process, and make necessary adjustments to avoid similar situations in the future.


In conclusion, adopting the strategy of hiring slow and firing fast can be a valuable approach to building a successful team. By taking the time to thoroughly assess candidates, onboard them effectively, and set clear performance expectations, you can increase the likelihood of hiring the right employees who align with your company’s culture and values. At the same time, addressing performance issues promptly and parting ways amicably, when necessary, can help maintain team productivity, protect your company culture, and save valuable resources. Remember to always communicate clearly and respectfully throughout the process and learn from any mistakes to continuously improve your hiring practices.

Hourly Employee Travel

If a non-exempt employee must travel for work, how much of that travel time is compensable?

Since states do not have laws regarding non-exempt employee travel, this blog covers the federal Fair Labor Standards Act (ACT) and the Department of Labor’s regulations.

When travel requires an overnight stay, any time spent traveling as a passenger that falls within the employee’s “normal work hours” is to be paid, regardless of what day of the week the travel takes place. Therefore, the time spent waiting at the terminal until departure, through the subsequent arrival at the destination, needs to be compensated, when it falls during those normal work hours. However, similar to when an employee is at home, the time spent traveling from home to an airport or train station is considered commute time and is not treated as hours worked, thus not compensable.

For example, if your employee normally works Monday through Friday, 8:00 a.m. to 5:00 p.m., and they are required to travel by plane on a Sunday for business in another state, their travel time on Sunday between 8:00 a.m. and 5:00 p.m., is compensable. Therefore, if the employee arrives at the airport on Sunday at 3:00 p.m. and at their destination at 8:00 p.m., the employer is required to pay only form 3:00 p.m. to 5:00 p.m., the hours that correspond with their normally scheduled work hours. Alternatively, if the employee drives themselves or other (at the direction of the employer) rather than traveling as a passenger, all the time spent driving is payable work time, regardless of the normal work hours.

However-one caveat to those “normal work hours” is that an employee must be paid for any time they are performing work. This includes time spent working during travel as a passenger that would otherwise fall outside normal hours. For instance, if that employee from the above example works on a presentation during their flight until 6:30 p.m., the employer would need to pay them from 3:00 p.m. (arrival at airport) to 6:30 p.m. (turning off computer for the remainder of the flight).

A good practice is to require any traveling hourly employee to record all hours worked and the corresponding times throughout the duration of their trip. The employee needs to be paid for all hours worked even if outside of the normal hours.

Another factor to consider are the costs your hourly employees will incur during business travel-such as food and beverages, hotels, transportation, or incidentals. If there is not a company issued credit card the employee can use, another option is providing a stipend to your employees. Stipends are commonly used to either pre-pay, or pre-approve, the employer designated costs per day during business travel. Pre-paying the employee in this way helps reduce the daily financial burden of a business trip up-front when the employee doesn’t have a company issued credit card. Or, requiring pre-approved costs/rates allows for budgeting control if the employee is booking their own hotels, etc. For example, here is a link to per diem rates in each state that apply to traveling government employees. Many private business follow these rates as well because they are standardized by the cost of each location. The website contains current rates in the continental United State for any reference you might need.

Generally, offering either the stipend or company credit card can remove the reimbursement waiting period for the travel expenses afterwards, which is a common procedure to benefit the employee. Companies are not required to pay travel stipends to employees like they are require to reimburse business travel expenses in general, so the reimbursement process may look different for the individual companies.



New Federal Law Proposed-Who Should be Paying Attention? Employers.

The Fair Labor Standards Act (FLSA) is a federal law in the United States that sets minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in both the private and public sectors. The FLSA also establishes exemptions from these standards for certain employees who meet specific criteria.

One of the most common exemptions under the FLSA is the “white-collar” exemption, which applies to certain executive, administrative, and professional employees who earn above a certain salary threshold. The salary level threshold for this exemption is currently set at $684 per week or $35,568 per year, meaning that employees who earn less than that amount are generally entitled to overtime pay under the FLSA.

In 2019, the Department of Labor (DOL) announced a new final rule that would have increased the salary level threshold for the white-collar exemption to $913 per week or $47,476 per year. This rule was set to take effect on January 1, 2020, but was later blocked by a federal court and subsequently withdrawn by the DOL.

Now, the House and Senate have both introduced the Restoring Overtime Pay Act which, if signed into law, would immediately increase the salary threshold to $865 per week or $45,000 per year.  After the initial bump, the salary threshold would automatically increase by $10,000 in each subsequent year until the threshold reaches $75,000 in 2026.  Starting in 2027, the salary threshold will increase to an annualized amount equal to the rate of the 55th percentile of weekly earnings of full-time salaried workers nationally, which will be determined by the Bureau of Labor Statistics using data from the second quarter of 2026.

The stated purpose of the act is to strengthen overtime protections by increasing the number of workers who would be eligible for overtime pay.  For companies that employ exempt workers, we recommend keeping your finger on the pulse of these laws as you may need to raise salary thresholds in order to continue classifying these employees as exempt.  Stay tuned.