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SAGA Newsletter: New regulations for your agency

I had different plans for this week’s newsletter, but two decisions by U.S. government agencies came out in the past few days and they will have an impact on agencies.

So I’m going to talk about that instead.

First, the Federal Trade Commission voted to prohibit employee non-compete agreements in most circumstances — including those you may have with previous employees.

Second, the Department of Labor issued a new rule with updated minimum salary levels for employees to be exempt from overtime pay.

Both of these decisions are being challenged, but unless blocked or delayed they will take effect in the next few months and have a real impact on many PR and marketing agencies.

I’ll talk more about these items a bit later in the newsletter, but for now let’s take a look at Jen’s roundup of resources from the week.

— Chip Griffin, SAGA Founder

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Weekly Roundup

Below are some articles, blog posts, podcasts, and videos that we came across during the past week or so that provide useful perspective and information for PR and marketing agency owners. While we don’t necessarily endorse all of the views expressed in these links, we think they are worth your time.

— Jen Griffin, SAGA Community Manager

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AI in Focus

New regulations for your agency

The Federal Trade Commission (FTC) and Department of Labor (DOL) both published new rules this week that will impact the relationship between many agencies and their employees.

Standard non-compete agreements — a staple of many agencies’ new hire process — will no longer be permitted, according to an FTC decision. The ban also applies to contractors/freelancers and even partners in the agency in many cases.

If you have a non-compete agreement with a past employee, it would likely be automatically invalidated by this rule.

Meanwhile, the DOL put out revised regulations that would substantially increase the minimum salary for employees to be considered exempt from overtime pay from the current $33,568 to $58,656 on January 1 (with an intermediate jump to $43,888 on July 1).

Although these rules are both facing challenges, it makes sense for most agencies to prepare for them to take effect so that there isn’t a last-minute scramble to comply if they hold up.

I wrote about both the non-compete ban and overtime rules in more detailed articles this week, and I encourage you to check them out for more information.

But from a broader perspective, these new rules represent part of a larger trend — not just at the federal government level — to reset the relationship between employers and employees.

This trend is unlikely to abate even if these rules ultimately get altered or scrapped by the courts or Congress.

Many states have been working to adopt their own regulations to give employees more rights and higher pay. Regardless of the outcome of the FTC and DOL rules, this will continue — and in fact may even pick up steam if there is successful intervention.

As agencies focus on hiring the best employees no matter where they live as part of the remote/hybrid models that have become the new normal, it becomes increasingly important to understand all of the rules that may apply.

If I have a remote worker in California, for example, chances are I need to abide by their employment laws. 

Every agency should be working with experienced HR and/or legal professionals to ensure that they are in compliance with all of the applicable rules — not just these new ones.

Before you hire a remote employee, make sure that you understand the implications not just on your employment relationships but also on other aspects of your business (like business registrations and tax filing requirements).

These new regulations aren’t automatically bad things (I have advised against non-compete agreements for many years, for example) but they shouldn’t simply be ignored.

I will continue to use this space to keep owners updated on further developments with these rules, but in the meantime check out the resources that I have shared and talk with your own professional advisers about what you need to do to get ready.

Webinar: What to do when employees leave you for another agency or a client

Few of us enjoy hearing from an employee that they have taken another job, but when they depart for another agency or a client it can quickly move from disappointment to fear and frustration.

Employees job-hop now more than ever, so just about every agency is going to deal with this issue from time to time.

In this webinar, Chip Griffin will explore how you can prepare yourself for the inevitable in advance.

This webinar will be on Tuesday May 7 from 1-2 PM ET, and you can register here.

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