Federal Corner – November 2024
The Federal Corner is an initiative of the Florida Chamber under the Small Business Council and the Litigation & Regulatory Reform Center that tracks and engages in federal rules out of Washington, D.C., that may be problematic for Florida businesses.
Occupation Safety and Health Administration Heat Rule (Published in Federal Register, Deadline for Public Comment 01/14/2025)
In August, the Occupational Safety and Health Administration (OSHA) proposed a first-ever, national rule in an effort to create consistency across industry sectors and territories as it relates to safeguarding workers from heat illness and injury. The rule would require employers to enact robust heat illness preventative measures in the workplace. With many steps between now and a final rule being implemented, please take a look at the letter the Florida Chamber sent to Florida’s congressional delegation and one pager outlining resources available to local Florida business through the Florida Chamber Safety Council, such as the Heat Stress Prevention Platform.
Earlier this year, Governor Ron DeSantis signed Chamber-backed House Bill 433 into law, which prohibits local governments from adopting heat illness ordinances for outdoor workers. Florida businesses are already required to protect employees from heat illness under OSHA’s General Duty Clause, which requires employers to keep employees safe from known hazards, and OSHA’s National Emphasis Program on heat.
With the change in administration, OSHA’s proposed heat safety rule, originally expected to become final in early 2025, may be scaled back dramatically, delayed, or scrapped altogether. Already, OSHA has expanded the period to comment by 15 days and announced a public hearing for Summer 2025, slowing down the rulemaking process. Regardless of outcome, the Florida Chamber will continue to lead on heat safety efforts in the workplace, and provide resources to businesses. The Florida Chamber Leadership Cabinet on Safety, Health and Sustainability will also be submitting comments on the OSHA rule on behalf of Florida businesses.
Department of Labor Proposed Overtime Rule (Invalidated by Federal Court)
The United States Department of Labor (DOL) proposed overtime rule was finalized in April of 2024 and took effect on July 1. In November, the U.S. District Court for the Eastern District of Texas struck down the overtime rule, stating that the DOL exceeded its authority by raising the threshold too high and allowing for automatic adjustments every three years. The implementation was set to come in two phases, with the salary threshold for certain exempt employees already increased to approximately $44K on July 1, and jumping to nearly $59K beginning in 2025, a 69 percent increase that would result in approximately four million more Americans and hundreds of thousands of Floridians now becoming eligible for overtime pay.
The Florida Chamber submitted formal comments to the DOL in opposition to the proposed overtime salary threshold changes in November 2023. An almost identical proposal by the Obama Administration, at the urging of the business community, was also struck down by the same federal Texas court back in 2017.
The judge struck down both phases of the rule, setting the threshold back to the roughly $35k that was in place prior to the rule being implemented. The DOL may appeal the ruling, but the Chamber believes it is unlikely the Trump Administration will pick up the legal battle in January.
Basel III Endgame Rule (Federal Reserve in Process of Making Changes, Re-Proposing)
The Federal Reserve’s proposed “Basel III Endgame” rule will significantly increase capital requirements for U.S. banks, driving up the cost of capital and credit for businesses of all sizes. Small and mid-size businesses, which are vital to Florida’s economic growth, would be particularly vulnerable, due to heavier reliance on bank financing to support operations and growth. If enacted, this rule could make financing prohibitively expensive for businesses already facing a challenging economic environment.
While intended to strengthen financial stability, the rule risks tightening credit availability and increasing borrowing costs for small businesses. Smaller, privately held companies, which represent the vast majority of U.S. businesses, could be hit hardest by higher risk weights on loans. Were this rule to be finalized as written, it would limit companies’ ability to hire, invest, and grow, ultimately affecting economic growth and employment.
In September 2024, following advocacy from the Florida Chamber and the broader business community, the Federal Reserve announced plans to revise and re-propose the rule. With the change in the administration on the horizon, further adjustments to the proposal could lead to a more balanced framework that better supports small businesses.
Department of Labor 80/20/30 Rule (Invalidated by Federal Court)
In December 2021, the Department of Labor’s Wage and Hour Division reinstated the 80/20/30 rule, amending tip credit provisions for hospitality employers with tipped employees. The tip credit allows employers to pay tipped employees less than the federal minimum wage, provided that the employee earns enough in tips to make up the difference This rule governs when and how employers can apply the tip credit for workers who receive tips, particularly regarding non-tipped tasks.
Under the 80/20/30 rule, employers lose the ability to claim a tip credit if an employee spends more than 20 percent of their total working hours on non-tipped, direct support tasks—such as rolling silverware, setting and clearing tables, or making coffee. These tasks are considered part of the job but are not directly tipped, and exceeding this 20 percent threshold results in the loss of the tip credit for that time. The 30 percent applies, and an employer loses the tipped credit, when the time a tipped employee performs directly supporting work for a continuous period exceeds 30 minutes – regardless if this work amounts to less than 20 percent of the employee’s total work hours for the week.
Restaurant industry groups sought to halt the rule on the grounds that the rule was “arbitrary, capricious, and contrary to the Fair Labor Standards Act, promulgated in violation of the Administrative Procedures Act, and a violation of separation of powers.” Following a friendly ruling by the district court, the U.S. Fifth Circuit Court of Appeals overturned the ruling, granting a win to hospitality employers by vacating the regulation. The ruling could be overturned by the U.S. Supreme Court if successfully appealed by the Department of Labor, but is null and void for now.
Federal Trade Commission Non-Compete Rule (Invalidated by Federal Court, Under Appeal)
Last year, the Federal Trade Commission (FTC) proposed a rule that would broadly ban non-compete clauses in employment contracts. Earlier this year, the FTC published their final rule in the Federal Register, imposing a national ban on non-complete agreements, with minimal exceptions. The U.S. Chamber and businesses across the country filed lawsuits challenging the FTC’s authority to issue the rule.
The Florida Chamber Litigation & Regulatory Reform Center aided in the effort by signing a coalition letter asking the FTC to self-stay their rule while the non-compete rule is being litigated, so businesses have certainty and lower compliance costs in the meantime. The Florida Chamber believes this rule is a drastic overreach of the federal government, negatively impacts Florida businesses, and is likely unconstitutional. Prior to the period for public comment closing, the Florida Chamber also submitted formal comments opposing the rule.
In August, a federal judge in Texas struck down the FTC’s near-complete ban on non-competes nationwide, citing concerns over the FTC’s lack of statutory authority to issue substantive rules regulating unfair methods of competition. Citing different conclusions, a Florida judge also prevented the FTC from enforcing the ban based on the “major questions” doctrine, stating that the FTC had to show it had “clear congressional authorization” to issue the ban since the rule was of “extraordinary” economic and political significance. The Florida court held that the FTC failed to make that showing. The FTC has appealed both the Texas and Florida decisions to the 5th and 11th Circuit Court of Appeals, respectively.
U.S. Department of Labor Independent Contractor Rule (In Effect)
Earlier this year, the DOL independent contractor rule took effect. The final rule interferes in the employer-employee relationship and could result in many more workers being classified as employees as opposed to independent contractors. The rule replaces the more business-friendly “core factors” approach of the first Trump Administration and reimplements the pro-labor Obama Administration “totality of the circumstances” test, meaning that no single factor determines the worker’s status, and all aspects of the work relationship may be considered.
The rule is expected to increase costs on Florida businesses that have to reclassify some contractors as employees – leading to minimum wage, overtime pay, and benefit obligations. The rule could also lead to increased compliance costs and liability concerns due to the misclassification of workers. The DOL’s final independent contractor rule could have significant implications for Florida businesses, especially small businesses that rely on the independent contractor model.
Multiple business groups filed suit against the DOL’s authority to issue this ruling. The final impact remains to be seen, but it is now in effect while the legal process unfolds. Regardless of the outcome of the litigation, it is expected based on past history that the new Trump administration will reverse President Biden’s efforts that made it harder for businesses to classify certain workers as independent contractors.
U.S. Treasury Benefit Ownership Information Reporting Rule (In Effect)
Businesses may now have to report information to the U.S. Treasury’s Financial Crimes Enforcement, or FinCEN, following a final rule that took effect on January 1, 2024. FinCEN’s final rule requires many companies, limited liability companies, and other entities formed or registered in the United States to report information about themselves, and their beneficial owners – the individuals who own or control the company – to the U.S. Treasury. The rule aims to fight against illegal financial activities like money laundering and terrorist financing but comes with increased reporting and compliance costs for businesses.
Businesses formed on or before January 1, 2024, have one year to comply with the new requirements. Businesses can learn more about the scope of the rule and the requirements for businesses by visiting FinCEN’s guide to beneficial ownership information reporting HERE. You will also find a guide for small businesses to comply from the U.S. Chamber HERE.
Due to a court decision, this rule does not apply to members of the National Small Business Administration at this time.
Occupational Safety and Health Administration Union Walkthrough Rule (In Effect, Pending Ongoing Litigation)
The Occupational Safety and Health Administration (OSHA) finalized a rule allowing workers to select a union representative to accompany OSHA inspectors walking through employers’ workplaces – regardless of whether the workplace is unionized or the representative selected by the workers is an employee of the business being inspected. The new rule changes the previous requirement that the representative accompanying the OSHA inspector must be an employee and could present significant challenges for employers.
The final rule is likely to increase union participation in the inspection process and could potentially be problematic as representatives with unknown motives will now be allowed to participate in inspections of employers’ property. The rule also means sensitive information could potentially be shared with union representatives, even in non-union workplaces, which could lead to increased union participation. There have also been concerns raised that representatives may be more focused on finding violations rather than working collaboratively to improve safety.
The final rule took effect on May 31. A coalition of business leaders have filed a lawsuit challenging the OSHA rule. The Trump administration may review this rule and could potentially overturn the rule in the coming years.
If you have any questions on any of these rules or would like more information, please contact Chad Kunde at ckunde@flchamber.com.