Workplace Governance

Following the Federal Trade Commission’s (FTC’s) near-total ban on noncompete agreements, SHRM submitted a public comment and multiple amicus briefs advocating for a more balanced approach. On Oct. 18, 2024, the FTC announced its intention to appeal the ruling in Ryan LLC v. FTC. The decision, issued on Aug. 20, 2024, by Judge Ada E. Brown of the U.S. District Court for the Northern District of Texas, set aside the FTC’s Non-Compete Clause Rule.

SHRM has also worked closely with state legislatures to provide employer perspectives on proposed noncompete regulations, emphasizing the need for policies that balance workforce mobility with business interests. Through advocacy efforts, SHRM has engaged with policymakers and industry stakeholders to shape state-level approaches that align with evolving labor market needs while maintaining flexibility for employers.

SHRM asserts that a blanket ban on noncompete agreements overlooks the benefits of well-structured, targeted agreements with appropriate employees. Policymakers aiming to promote balanced labor markets should consider less restrictive options that address the needs of workers while supporting economic well-being.

It is imperative that workers and organizations alike understand who is and who is not an employee under federal laws such as the FLSA and the National Labor Relations Act (NLRA), among others. However, with no clear statutory definition, the Wage and Hour Division (WHD) of the U.S. Department of Labor and the National Labor Relations Board (NLRB) have offered regulatory guidance that provides a framework for assessing this relationship, often shifting widely according to the administration.

In response to the WHD’s Dec. 13, 2022, proposed rule, SHRM, alongside co-signers from 26 state councils, a submitted comment to keep the current worker classification test in place because it provides two clear factors to determine worker classification — the nature and degree of control over the work and the worker’s opportunity for profit or loss based on initiative and/or investment. Following the publication of the final rule, SHRM submitted an amicus brief in the Coalition for Workforce Innovation v. Su case to ensure a commonsense approach to worker classification that embraces both worker flexibility and choice while being grounded in long-standing judicial precedent.

SHRM is concerned about the increased uncertainty in employer-employee relationships and believes that the current shortcomings of the worker classification system cascade throughout the U.S. workforce. As detailed in SHRM’s June 26, 2024, Senate Request for Information (RFI) about updating labor and employment laws to include independent workers, some businesses may avoid offering independent workers safety or anti-harassment training and benefits to prevent misclassification, which hurts businesses and workers alike. SHRM supports a uniform, cross-agency definition of "employee" under labor law because a clear and consistent definition is essential for a thriving workplace.

Following the Sept. 23, 2023, publication of the WHD’s proposed rule for increases to the overtime salary threshold for “white-collar” executive, administrative, and professional (EAP) workers, SHRM, alongside 27 state chapter affiliates, submitted a public comment to express support for reasonable increases to the salary threshold. After publication of the final rule, SHRM closely monitored legal challenges to the 2024 overtime rule and potential changes to the salary threshold and duties tests. On Nov. 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the rule, setting overtime salary thresholds back to 2020 levels — $684 a week ($35,568 annually). The annual salary threshold for highly compensated employees is $107,432. SHRM will continue to monitor developments and provide resources to support compliance.

SHRM supports reasonable increases to the white-collar EAP salary threshold, but any increase should follow a notice-and-comment period, an analysis of worker earnings and economic trends, and a long compliance window. SHRM emphasizes the importance of setting the salary threshold based on realistic, relevant data as part of a test to determine bona fide EAP-exempt status under the law.

A joint employer relationship refers to when different entities exercise enough control over a worker that they have each formed an employment relationship with that individual. When the relationship is formed, it creates certain rights and obligations between the parties under different acts, including the FLSA, Title VII of the Civil Rights Act of 1964, and the NLRA. Joint employer status has been a topic of many prominent regulatory agencies, including the NLRB. The scope of the joint employer relationship also has significant consequences for several commonplace business models, including franchisees/franchisers and third-party staffing companies.

SHRM supports a uniform and clear framework that ensures businesses and workers have guidance to comply with laws and regulations. SHRM believes that any law or policy must provide clarity and be consistently applied for employers to predictably enter into and manage service arrangements without creating a joint employer relationship unbeknownst to employers and HR professionals.

SHRM’s membership of HR professionals and business leaders operate at the intersection of work, workers, and the workplace, shaping policies that impact day-to-day operations. They understand the importance of workplace laws that provide both clarity and flexibility on topics such as benefits design and internal communication. Recently, SHRM has been closely monitoring a growing trend of legislative proposals that seek to regulate workplace structure and flexibility, including bans on mandatory meetings, standardized 32-hour workweeks, and “right to disconnect” laws. These proposals are intended to enhance employee well-being, but they often introduce vague requirements that create compliance uncertainty or duplicate existing federal and state laws.

SHRM believes that a one-size-fits-all approach fails to account for the diversity of workplaces, industries, and organizational needs. Instead of rigid mandates, SHRM advocates for solutions that empower employers and employees to collaborate on workplace policies that foster innovation, productivity, and work/life integration. Through open communication and mutual respect, workplaces can adapt to evolving needs without compromising operational efficiency or employee engagement. SHRM remains committed to working with policymakers to craft practical, balanced solutions that support both business success and employee well-being.