By Liz Hartsel
The salary threshold of a highly compensated worker is increasing in January, which directly impacts whether non-competes are enforceable. In our previous blog post regarding changes to the enforceability of non-compete agreements, we explained that an employer’s ability to use or enforce non-compete agreements (including the non-solicitation of customers) is directly tied to certain salary thresholds for employees. Those thresholds are increasing in 2024 and will continue to increase annually.
The minimum salary threshold for highly compensated workers will increase to $123,750 in 2024. This means that non-competition agreements will be valid only if they are (1) entered into with a working earning at least $123,750 in 2024, (2) designed to protect trade secrets, and (3) no broader than necessary to protect the employer’s legitimate interest in protecting trade secrets.
Non-solicitation of customers restrictions are only enforceable against workers who earn at least 60% of the threshold for “highly compensated workers,” which for 2024 is $74,250. Agreements not to solicit an employer’s customers will, therefore, be valid only if they are (1) entered into with workers making at least $74,250 in 2024 and (2) no broader than necessary to protect the employer’s legitimate interest in protecting trade secrets.
If you have questions about the validity of your business’s restrictive covenants agreements or want to update your non-competes, please contact a member of Fortis Law Partners employment team or your principal contact at Fortis.