LATEST UPDATE: On December 23, 2024, a federal appellate court lifted a nationwide preliminary injunction on Beneficial Ownership Information (BOI) reporting. FinCEN then said the deadline for BOI action for reporting companies that were created or registered prior to January 1, 2024, would be January 13, 2025. Three days after the appellate court ruling, another panel in the same appellate court reinstated the injunction, and FinCEN reverted to voluntary submissions. On December 31, 2024, the DOJ filed an emergency application with the U.S. Supreme Court asking that the injunction be lifted while an appellate court determines whether the Corporate Transparency Act (CTA), which created BOI reporting, is constitutional. On January 23, 2025, the Supreme Court issued a stay, effectively lifting the nationwide injunction, but there are other cases pending. What’s more, a bill in Congress would repeal the CTA. In view of ongoing litigation, as of January 24, 2025 (after the Supreme Court ruling) FinCEN still says registration is voluntary. Continue to monitor developments.
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Many things happened in 2024—locally, nationally, and internationally. Some of these changes directly impact small businesses. Here’s a roundup of some key developments on the federal level of note. There are many more that are not included.
Some key developments include:
BOI reporting on pause
The Corporate Transparency Act (CTA) of 2021 imposed Beneficial Ownership Information reporting for small corporations and limited liability companies (larger ones were exempt). This began January 1, 2024. Then, on December 3, 2024, a federal district court in Texas issued a nationwide preliminary injunction barring the government from enforcing the law. Two days later, the government filed a notice of appeal with the appellate court, and FinCEN now says on its website: “deadline stay—voluntary submission only”. Is this the end of the story? There are cases in other courts challenging CTA that are still pending. The government could prevail in the appellate court. Or Congress could repeal the law (there are bills in both the House and Senate to do this). For those businesses that could be required to report, pay attention to developments.
Supreme Court limits administrative authority
For almost 40 years, courts have given deference to interpretations of the law by administrative agencies. Now, not so much. In June, the U.S. Supreme Court decided a case on point; you may see it referred to as Loper Bright. It involved commercial fishermen who challenged the National Marine Fisheries Service’s authority to create and charge a fee for a sea-monitoring program. The Court, in a 6-3 decision, sided with the fishermen. In doing so, the court overturned the nearly 40-year old Chevron doctrine which had given latitude to agencies in interpreting laws. It’s one thing when a law directs an agency, such as the IRS, to flesh it out; it’s another thing when an agency effectively makes law. In the wake of Loper Bright, there have been a slew of cases challenging administrative rules and regulations. In one case that’s been decided, the court refused to apply the Chevron doctrine (which would have allowed the Department of Agriculture’s interpretation of a law to fly); Loper Bright now controls.
Noncompete agreements are still permissible under federal law
In April, the FTC issued a rule barring the use of noncompete agreements in most situations. However, in August, a district court in Texas said the FTC didn’t have the authority to make this rule that was to become effective in September; Loper Bright was not mentioned. The decision bars the FTC from enforcing the law. On its site, the FTC notes: “The FTC has appealed that decision. The district court’s decision does not prevent the FTC from addressing noncompetes through case-by-case enforcement actions.”
Status quo for federal overtime rule
Employers must pay employees not exempt from the overtime rule for hours worked past 40 hours in a work week at time-and-a-half. In April, the Department of Labor issued a new final rule to change the threshold for determining exempt employees. The rule took effect on July 1, 2024, with another change set for January 1, 2025. On November 15, 2024, a district court vacated the DoL’s final rule without mentioning Loper Bright. This means that at present, the overtime rule that went into effect in 2019 applies today. The 2019 rule’s minimum salary level of $684 per week and total annual compensation requirement for highly compensated employees of $107,432 per year is in effect; higher levels in the 2024 rules do not apply at this time. The DoL appealed the decision.
Final thought
The 119th Congress is sworn in on January 3, 2025. The Presidential inauguration is January 20, 2025. There will be new cabinet members and new heads of federal agencies (including Sen. Kelly Loeffler to head the SBA if she’s confirmed). What will all this mean for small businesses? I expect there will be lots of changes, some presenting new opportunities and less regulatory burdens, there could be new compliance headaches as well. Let’s hope for the best.
You can find other blogs published concerning federal legislation for small businesses here.
