Category: News

MID PENN BANCORP, INC. TO ACQUIRE WILLIAM PENN BANCORPORATION

HARRISBURG, PENNSYLVANIA (November 1, 2024) – Mid Penn Bancorp, Inc. (NASDAQ: MPB) (“Mid Penn”) and William Penn Bancorporation (“William Penn”) (NASDAQ: WMPN) jointly announced today that they have entered into a definitive agreement and plan of merger, pursuant to which William Penn will merge with and into Mid Penn (the “Merger”) in an all-stock transaction valued at approximately $127 million, based on Mid Penn’s closing stock price as of October 30, 2024. The Merger has been approved unanimously by each company’s board of directors and is expected to close in the first half of 2025. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of Mid Penn and William Penn shareholders.

Headquartered in Bristol, Pennsylvania, William Penn operates 12 branches across Pennsylvania and New Jersey. As of September 30, 2024, William Penn had approximately $812 million in total assets, $465 million in total loans and $630 million in total deposits. The Merger will create a powerful combined community banking franchise with approximately $6.3 billion in total assets, $4.9 billion in total loans and $5.3 billion in total deposits, based on financial data as of September 30, 2024.

“We are excited to welcome the William Penn shareholders, customers and employees to Mid Penn. As longstanding community banks headquartered in Pennsylvania, both Mid Penn and William Penn have grown to know and respect each other’s operating philosophy, dedication to providing best-in-class customer service and commitment to the communities in which we operate,” Mid Penn Chair, President, and Chief Executive Officer, Rory G. Ritrievi said. “This merger will bolster Mid Penn’s presence in the attractive greater Philadelphia metro area market, aligning with our strategic plan of disciplined growth in the southeastern region of Pennsylvania and the southern region of New Jersey. Together, we look forward to joining the two companies to expand our footprint and, in turn, enhance our ability to deliver for our customers, communities and shareholders.”

William Penn Chairman, President and Chief Executive Officer, Kenneth J. Stephon, said, “We are incredibly pleased to partner with Mid Penn in this strategic combination that allows our shareholders to participate in a fabulous long-term growth opportunity while also providing them with immediate value. The merger enables us to accelerate our growth far more rapidly than we could as an independent company, while also creating excellent value for our shareholders, customers, and employees.” Mr. Stephon will join Mid Penn’s Board of Directors and will become the Vice Chairman of Mid Penn Bank.

According to the terms of the merger agreement, shareholders of William Penn will receive 0.4260 shares of Mid Penn common stock for each share of William Penn common stock. Additionally, all options of William Penn will be rolled into Mid Penn equivalent options. Based on Mid Penn’s closing stock price of $31.88 per share as of October 30, 2024, the implied transaction value is approximately $13.58 per William Penn share, or $127 million, in the aggregate. The merger is expected to be immediately accretive to Mid Penn’s estimated earnings per share and to have a positive long-term impact on Mid Penn’s key profitability and operating ratios.

Stephens Inc. is serving as Mid Penn’s exclusive financial advisor, and Pillar + Aught is serving as its legal advisor. Keefe, Bruyette & Woods, A Stifel Company, rendered a fairness opinion to Mid Penn’s board of directors. Piper Sandler & Co. is serving as William Penn’s exclusive financial advisor and rendered a fairness opinion to William Penn’s board of directors, and Kilpatrick Townsend & Stockton LLP is serving as its legal advisor.

ABOUT MID PENN BANCORP, INC.:

Mid Penn Bancorp Inc. (NASDAQ: MPB), headquartered in Harrisburg, Pennsylvania, is the parent company of Mid Penn Bank, a full-service commercial bank. Mid Penn operates 45 retail locations throughout Pennsylvania and central New Jersey, has total assets of approximately $5 billion, and offers a comprehensive portfolio of financial products and services to the communities it serves. To learn more, please visit www.midpennbank.com.

ABOUT WILLIAM PENN BANCORPORATION:

William Penn Bancorporation (NASDAQ: WMPN), headquartered in Bristol, Pennsylvania, is the parent company of William Penn Bank and provides community banking services to individuals and small – to medium-sized businesses in the Delaware Valley area. William Penn currently conducts business through 12 branch offices located in Pennsylvania and New Jersey.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, expectations or predictions of future financial or business performance, conditions relating to Mid Penn and William Penn, or other effects of the proposed Merger of Mid Penn and William Penn. Forward-looking statements are typically identified by words such as “believe,” “approximately,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may,” or by variations of such words or by similar expressions. These forward-looking statements may include the expectations relating to the anticipated opportunities and financial and other benefits for the proposed Merger between Mid Penn and William Penn, and the projections of, or guidance on, Mid Penn’s or the combined company’s future financial performance, asset quality, liquidity, capital levels, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in Mid Penn’s business or financial results. Mid Penn and William Penn are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements are made only as of the date of this press release, and neither Mid Penn nor William Penn undertakes any obligation to update any forward-looking statements contained in this presentation to reflect events or conditions after the date hereof. Actual results may differ materially from those described in any such forward-looking statements.

In addition to factors previously disclosed in the reports filed by Mid Penn and William Penn with the SEC and those identified elsewhere in this document, the following factors, among others, could cause actual results to differ materially from forward looking statements or historical performance: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the Merger Agreement entered into between Mid Penn and William Penn;  the ability to obtain regulatory approvals and satisfy other closing conditions to the Merger, including approval by shareholders of Mid Penn and William Penn; the outcome of any legal proceedings that may be instituted against Mid Penn or William Penn; the possibility that the Merger may be more expensive to complete than anticipated; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Merger; changes in Mid Penn’s share price before the closing of the Merger; risks relating to the potential dilutive effect of shares of Mid Penn company stock to be issued in the Merger; the timing of closing the Merger; difficulties and delays in integrating the business or fully realizing cost savings and other benefits; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of products and services; customer borrowing, repayment, investment and deposit practices; competitive conditions; economic conditions, including downturns in the local, regional or national economies; the impact, extent and timing of technological changes; changes in accounting policies or practices; changes in laws and regulations; other actions of the Federal Reserve Board and other legislative and regulatory actions and reforms; and any other factors that may affect future results of Mid Penn, William Penn and the combined company.

Important Additional Information About the Merger and Where to Find It

The proposed Merger transaction will be submitted to the shareholders of William Penn and Mid Penn for their consideration and approval. In connection with the proposed Merger transaction, Mid Penn will be filing with the SEC a registration statement on Form S-4, which will include a joint proxy statement of Mid Penn and William Penn and a prospectus of Mid Penn and other relevant documents concerning the proposed transaction. INVESTORS AND SHAREHOLDERS OF MID PENN AND WILLIAM PENN ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about Mid Penn and William Penn, free of charge from the SEC’s Internet site (www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, free of charge, or by contacting Mid Penn Bancorp, Inc., 2407 Park Drive, Harrisburg, Pennsylvania, 17110, attention: Investor Relations (telephone (866) 642-7736); or William Penn Bancorporation, 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007, attention: Kenneth J. Stephon, President and CEO (telephone (267) 540-8500).

No Offer or Solicitation

This communication not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed Merger and shall not constitute an offer to sell or a solicitation of an offer to buy any securities nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Participants in the Solicitation

Mid Penn, William Penn and their respective directors, executive officers, and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from Mid Penn and/or William Penn shareholders in connection with the proposed Merger transaction under the rules of the SEC. Information regarding the directors and executive officers of Mid Penn and William Penn is available in each company’s respective most recent definitive proxy statement filed with the SEC and other documents filed by Mid Penn and William Penn with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC, which may be obtained free of charge as described under the heading “Important Additional Information About the Merger and Where to Find It.”

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GETTYSBURG, Pa., July 24, 2024 /PRNewswire/ — ACNB Corporation (NASDAQ: ACNB) (“ACNB” or the “Corporation”), financial holding company for ACNB Bank and ACNB Insurance Services, Inc., and Traditions Bancorp, Inc. (OTCPink: TRBK) (“Traditions”), holding company for Traditions Bank, York, Pennsylvania, announced today the execution of a definitive merger agreement whereby ACNB will acquire Traditions and Traditions Bank in an all-stock transaction. This strategic acquisition will result in a premier community bank that is locally headquartered, managed, and focused.

Speaking on behalf of ACNB, James P. Helt, President and CEO, stated that “ACNB Corporation has been executing a multi-year strategic plan to be the community bank of choice in the markets that we serve and thereby deliver superior financial results, performance and value to our shareholders and other stakeholders. At the core of this strategic plan has been profitable organic and inorganic growth. As demonstrated in today’s previously released Second Quarter of 2024 financial results press release, we continue to deliver on profitable organic growth in our core community banking and insurance agency lines of business. The announcement of our proposed strategic acquisition of Traditions and Traditions Bank is also in furtherance of this strategic plan. This transaction will provide the resources to expand our presence in York County and enhance our penetration in the vibrant and demographically compelling Lancaster County market.”

Speaking on behalf of Traditions, Eugene J. Draganosky, Traditions Bancorp, Inc. Chair of the Board and Chief Executive Officer, said “ACNB and Traditions share common cultures, values, vision and operating philosophies of what a community bank can and should be in today’s ever-changing business environment. For more than two decades, Traditions has done an exceptional job of creating a premier community bank, with an outstanding commercial banking team and an industry leading mortgage banking unit.”

Mr. Helt further stated, “The success of this investment will be accomplished with a group of bankers from both companies that are respected market leaders in their fields. We value the insights and perspectives of the team leaders and members from Traditions that will join us. To that end, three members of the Traditions Board will join the ACNB Corporation and ACNB Bank Boards of Directors with Eugene Draganosky, Traditions’ Chief Executive Officer and Chairman of the Board joining the ACNB Boards as a Vice Chair. Thomas J. Sposito, II, Traditions’ President, will join ACNB Bank, as President of our Traditions Bank, a division of ACNB Bank upon completion of the transaction. Further, Traditions Founder, Michael E. Kochenour, will join ACNB as a Director Emeritus.”

Traditions Bank operates eight bank branch locations spanning York and Lancaster counties, a loan production office in Cumberland County, and an operations center located at 226 Pauline Drive, York, PA. Established in 2002, Traditions Bank is a full-service community bank serving businesses, individuals, and community organizations. As of June 30, 2024, Traditions had total assets of $859 million, total deposits of $738 million, and total loans of $673 million. Upon the consummation of the strategic acquisition, ACNB Bank will operate former Traditions Bank locations in the York and Lancaster County markets as “Traditions Bank, A Division of ACNB Bank.” The current Traditions Bank administrative headquarters on Pauline Drive will continue to serve as a regional sales and operations center.

Pursuant to the terms of the Definitive Agreement, Traditions shareholders will receive 0.7300 shares of ACNB common stock for each share of Traditions common stock that they own as of the closing date. Based on the 20-day Volume Weighted Average Price of ACNB common stock as of July 19, 2024, the transaction is valued at $73.5 million or $26.43 per share of common stock. Following completion of the transaction, Traditions shareholders will receive a quarterly cash dividend equal to approximately $0.23 per Traditions share of common stock based on ACNB’s current quarterly dividend of $0.32 per ACNB share of common stock. This dividend is approximately 192% higher than Tradition’s current quarterly dividend of $0.08 per Traditions share of common stock. The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes. The transaction has been unanimously approved by the boards of directors of both companies. It is subject to Traditions shareholder approval, ACNB shareholder approval of the shares to be issued in this transaction, regulatory approvals, and other customary closing conditions. The Definitive Agreement contains customary “deal protection” provisions including a “termination fee” payable to ACNB upon certain events delineated in the definitive agreement in an amount equal to approximately four percent (4%) of the transaction value.

Currently, the transaction is expected to close in the first quarter of 2025, after all such conditions provided in the definitive agreement have been met or, where permissible, waived. Two Traditions branch locations, 235 St. Charles Way, York, PA 17402 and 361 Eisenhower Drive, Hanover, PA 17731 and an ACNB loan production office, 1601 South Queen Street, York, PA, 17403 are currently anticipated to be consolidated to the nearest ACNB or Traditions Bank location at a date to be determined following completion of the strategic acquisition.

Mr. Helt further stated, “We are excited to welcome Traditions as ACNB Corporation expands its presence in the Pennsylvania market. York and Lancaster are growing, vibrant markets for community banking, which is at the core of ACNB Corporation’s success for more than 165 years. This strategic acquisition is intended to complement our operations with profitable growth opportunities adjacent to our current footprint, while contributing to the Corporation’s established commitment of enhancing long-term shareholder value. We certainly look forward to sharing our commitment to community banking with customers and other stakeholders in the York and Lancaster markets.”

Based on the financial results as of June 30, 2024, the combined company would have pro forma total assets of $3.3 billion, total deposits of $2.6 billion, and total gross loans of $2.4 billion. Once the acquisition and consolidation are complete, ACNB will have 32 community banking offices in Pennsylvania and Maryland, offering a full range of integrated financial services including banking, trust, retail brokerage, insurance and expanded mortgage products and services.

“As Traditions has been customer-focused since its founding in 2002, we are sincerely seeking to minimize any transition impacts on customers. And, although we know there will be changes as operations and systems are combined in 2025, the customer experience is also fundamental at ACNB Corporation. Familiar people with familiar faces are an important component of community banking, and we recognize and embrace that dynamic,” Mr. Helt said.

Mr. Draganosky added, “We are pleased to join forces with a company that has laid a clear course for the future, and one which we believe meets the objectives of our stakeholders due to its rich history, strong financial performance, and solid record of delivering shareholder value. ACNB Corporation provides the opportunity to continue the community banking vision upon which Traditions was founded with greater resources to serve the York and Lancaster communities into the future.”

Bybel Rutledge LLP is serving as legal counsel and Piper Sandler Companies is serving as financial advisor to ACNB Corporation Hovde Group provided a Fairness Opinion to ACNB.

Pillar+Aught is serving as legal counsel and Stephens Inc. is serving as financial advisor to Traditions Bancorp, Inc. and rendered a Fairness Opinion to Traditions. For more information regarding ACNB Corporation and Traditions Bancorp, Inc., please visit acnb.com and traditions.bank, respectively.

About ACNB Corporation

ACNB Corporation, headquartered in Gettysburg, PA, is the $2.46 billion financial holding company for the wholly-owned subsidiaries of ACNB Bank, Gettysburg, PA, and ACNB Insurance Services, Inc., Westminster, MD. Originally founded in 1857, ACNB Bank serves its marketplace with banking and wealth management services, including trust and retail brokerage, via a network of 26 community banking offices and three loan offices located in the Pennsylvania counties of Adams, Cumberland, Franklin, Lancaster and York and the Maryland counties of Baltimore, Carroll and Frederick. ACNB Insurance Services, Inc. is a full-service insurance agency with licenses in 46 states. The agency offers a broad range of property, casualty, health, life and disability insurance serving personal and commercial clients through office locations in Westminster and Jarrettsville, MD, and Gettysburg, PA. For more information regarding ACNB Corporation and its subsidiaries, please visit investor.acnb.com.

About Traditions Bancorp, Inc.

Formed in 2002 with administrative headquarters in York, Pennsylvania, Traditions Bank operates eight full-service branch offices located in York, Hanover, and Lancaster, as well as a loan production office in Lemoyne, Cumberland County. With assets of $858.6 million as of June 30, 2024, and 141 associates, Traditions Bank provides depository and borrowing services to businesses and individuals located in south-central Pennsylvania. The Bank is a leading provider of residential mortgages and has been a Bauer Financial recommended financial institution for more than a decade.

Caution Regarding Forward-Looking Statements

This information presented herein contains forward-looking statements. These forward-looking statements include, but are not limited to, statements about (i) the benefits of the proposed merger between ACNB and Traditions, (ii) ACNB’s and Traditions’ plans, obligations, expectations and intentions and (iii) other statements presented herein that are not historical facts. Words such as “anticipates,” “believes,” “intends,” “should,” “expects,” “will,” and variations of similar expressions are intended to identify forward-looking statements. These statements are based on the beliefs of the respective managements of ACNB and Traditions as to the expected outcome of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, and degree of occurrence. Results and outcomes may differ materially from what may be expressed or forecasted in forward-looking statements. Factors that could cause results and outcomes to differ

materially include, among others, the ability to obtain required regulatory and shareholder approvals and meet other closing conditions to the transaction; the ability to complete the merger as expected and within the expected timeframe; disruptions to customer and employee relationships and business operations caused by the merger; the ability to implement integration plans associated with the transaction, which integration may be more difficult, time-consuming or costly than expected; the ability to achieve the cost savings and synergies contemplated by the merger within the expected timeframe, or at all; changes in local and national economies, or market conditions; changes in interest rates; regulations and accounting principles; changes in policies or guidelines; loan demand and asset quality, including real estate values and collateral values; deposit flow; the impact of competition from traditional or new sources; and the other factors detailed in ACNB’s publicly filed documents, including its Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. ACNB and Traditions assume no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this press release.

No Offer or Solicitation

The information presented herein does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Additional Information about the Merger and Where to Find It

In connection with the proposed merger, ACNB will file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 with respect to the offering of ACNB common stock as the merger consideration under the Securities Act of 1933, as amended, which will include a joint proxy statement of Traditions and ACNB and a prospectus of ACNB. A definitive joint proxy statement/prospectus will be sent to the shareholders of Traditions and ACNB seeking the required shareholder approvals. Before making any voting or investment decision, investors and security holders are urged to read the registration statement and joint proxy statement/prospectus and other relevant documents when they become available because they will contain important information about ACNB, Traditions, and the proposed merger.

Investors and security holders will be able to obtain free copies of these documents, and any other documents, through the website maintained by the SEC at http://www.sec.gov, or by accessing ACNB’s website at www.acnb.com under the “Investor Relations” link and then under the heading “SEC Filings.” Investors and security holders may also obtain free copies of these documents by directing a request by mail or telephone to ACNB Corporation at 16 Lincoln Square, Gettysburg, PA 17325 or (717) 334-3161, or by directing a request by mail or telephone to Traditions Bancorp, Inc. at 226 Pauline Drive, P.O. Box 3658, York, PA 17402 or (717) 747-2600.

Participants in the Solicitation

ACNB, Traditions, and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Traditions and ACNB in connection with the merger. Information about ACNB’s directors and executive officers is included in the proxy statement for its 2024 annual meeting of ACNB’s shareholders, which was filed with the SEC on April 2, 2024. Information about the directors and executive officers of Traditions and their ownership of Traditions common stock may be obtained by reading the joint proxy statement/prospectus regarding the merger when it becomes available. Additional information regarding the interests of these participants and other persons who may be deemed participants in the merger may be obtained by reading the joint proxy statement/prospectus regarding the merger when it becomes available.

On July 3, 2024, the U.S. District Court for the Northern District of Texas issued a decision enjoining the Federal Trade Commission (FTC) from enforcing its ban on employee non-compete agreements. This decision has critical implications for businesses that rely on non-compete clauses to protect their proprietary information, client relationships, and competitive positioning.

Background

In January 2024, the FTC announced a rule that broadly prohibits the use of non-compete agreements in employment contracts. The rule was aimed at promoting fair competition and employee mobility. However, the business community expressed concerns about the rule’s potential negative impact on the ability to safeguard trade secrets and maintain stable, skilled workforces.

The Court’s Decision

In a lawsuit brought by a coalition of business groups, the Northern District of Texas granted a preliminary injunction against the FTC’s rule. Significantly, the court found that the FTC may have exceeded its statutory authority in issuing the ban. The court’s decision temporarily halts the enforcement of the rule, but only with respect to the plaintiffs in that case. While the court stopped short of issuing a nationwide preliminary injunction against the FTC’s rule, the decision will most likely influence how other courts approach the issue, including at least one Pennsylvania-based federal court.

Next Steps

We are monitoring this evolving situation and will keep you updated on any further developments. In the meantime, our team is available to assist you in reviewing and updating your employment agreements to ensure compliance with current legal standards. If you have any questions or need assistance with your employment agreements, please do not hesitate to contact us.

On April 23, 2024, the U.S. Department of Labor (DOL) released a final overtime rule – significantly increasing the minimum salary for certain employees in order to be exempt from the Fair Labor Standard Act’s (FLSA’s) overtime payment requirements. The final overtime rule will produce mid-year changes to the salary threshold for overtime exemptions, with the potential to affect millions of workers.  The rule has three substantial changes to the framing of exempt employee status under the FLSA.

HIGHLY COMPENSATED EMPLOYEE SALARY INCREASE:

The final overtime rule explains that the salary threshold for highly compensated employees to receive an exempt status will initially rise from its current $107,432 to $132,964 on July 1 of this year and will then increase to $151,164 on January 1, 2025. This increase will implement about a 24 percent increase from the current salary requirements. As a reminder to Pennsylvania employers, a “highly compensated employee” is not recognized as an exempt status under Pennsylvania’s Minimum Wage Act of 1968.

“WHITE COLLAR” EMPLOYEE SALARY INCREASE:

Currently, a “white collar” employee, meaning executive, administrative, or professional employee, must receive an annual salary of $35,568 ($684 per week) to receive an exempt employee status. This will increase to $43,888 ($844 per week), effective July 1, 2024, and as of January 1, 2025, the annual salary threshold will rise to $58,656 ($1,128 per week). The final increase will implement a near 65 percent increase from the current salary requirements.

THREE-YEAR AUTOMATIC UPDATING TO THRESHOLDS:

The final rule also provides that the threshold salary requirements are subject to automatic updates and adjustments every three years to align with worker salaries and provide employers with a predictable schedule for those future adjustments starting on July 1, 2027. This means that employers will face additional overtime exemption salary threshold changes in the future.

Employees who are salaried, work in a “bona fide executive, administrative, or professional capacity” or are “highly compensated,” and make more than the thresholds requirements addressed herein are exempt from the FLSA requirements that employers must pay a time-and-a-half rate for any work logged beyond 40 hours in a week. Employees must meet all three of these requirements for the exemption to apply. The changes to the rule do not modify the duty requirements for exempt employment status.

The threshold salary requirements are higher that what the DOL previewed in the August 2023 proposed rule. While it is expected for a salary threshold to reflect the modern economy, it is unclear if the increase from the current levels corresponds with local wage rate for employees holding administrative, professional, and executive position in all locations throughout the county.

Employer Takeaways:

Employers should prepare for the final rule that takes effect on July 1, 2024. The following concepts should be considered by employers in the wake of this rule:

• Look to exempt employees whose salaries fall between the current salary threshold and the proposed new threshold and decide whether to increase their salary to maintain their exempt or convert the employee to a nonexempt classification. Approximately 1 million exempt workers are between the new salary threshold level and the current threshold.
• Develop an accurate picture of the current exempt workforce and plan for how to roll out the reclassification decisions. This will include training reclassified employees on potential timekeeping requirements and rules against work employees perform outside of their working hours, and managing employee relations concerns that employees might raise if they are upset about losing their salaried status.
• Employer should budget for increases in salary and overtime expenses for those employees that were previously classified as exempt that will now be subject to overtime pay.
• Decide whether the salary changes will be accomplished in two phases or move straight to the 2025 threshold, given the interim and 2025 salary-level thresholds.
• Be mindful that state and local wage and hour laws may also update to impose additional requirements in order for employees to maintain an exempt status.
• Work with attorneys to understand how these changes affect the workforce. Employers should consider other potential changes to employment and any important training and communication that should be done.

The final overtime rule will likely face challenges in the event of presidential administration turnover following the November 2024 election. Previous administrations have attempted to revise the FLSA exemption requirements in a similar manner (i.e., an increased salary threshold with automatic, inflation-based salary threshold adjustments), but such revisions never came into effect due to legal challenges. Nevertheless, employers should prepare for the changes in advance to avoid violations to the FLSA.

The DOL’s final overtime rule: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees

Name, image, and likeness rights are a hot topic in the college sports world. Many states, including Pennsylvania, allow high school athletes to participate and reap the benefits. Kevin Gold recently wrote an article on the issue and how the concept of being an amateur athlete has changed. You can read the article here.

Pillar+Aught is proud to be selected in the 2024 Best Law Firms®, ranked by Best Lawyers®.

The firm was recognized as being in the top tier of Harrisburg firms in the area of “Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law.” Information regarding the methodology used by Best Lawyers® in establishing these rankings can be found here.

Even in these uncertain economic times, you can be certain of the service and expertise that Pillar+Aught provides to help meet your needs.

Pillar+Aught co-founder and principal, Kate Deringer Sallie, was recently selected by her peers for inclusion in the 2024 edition of The Best Lawyers in America® in the fields of Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law.

Best Lawyers has been regarded by lawyers and the public for more than 40 years as the most credible measure of legal integrity and distinction in the United States. Inclusion in The Best Lawyers in America® is based on a comprehensive peer-review survey, which this year, comprised of more than 13.7 million confidential evaluations.

Kate Deringer Sallie, co-founder and principal of Pillar+Aught, has been nominated as a “Visionary” at this year’s Luminary Awards, hosted by the West Shore Chamber of Commerce. The event will take place on September 7th from 11:30 AM – 1:30 PM at the Penn Harris Hotel.

More information about the event can be found here and here.

Kate Deringer Sallie, co-founder and principal of Pillar+Aught, was honored to receive the 2023 Business Woman of the Year Award at the Business Women’s Forum on May 17, 2023.

The Business Women’s Forum is the largest one-day event for professional women in the Central PA area.