The Federal Trade Commission (FTC) has just issued a Non-Compete Clause Rule banning all Non-Competes. 

This Final Rule provides that it is an unfair method of competition for persons to, among other things, enter into non-compete clauses. While this Final Rule does not include a salary threshold, it does allow for non-competes when a business is sold, and also allows existing non-competes to be enforced for senior executives.

So, existing non-competes for workers, who are not senior executives, are no longer enforceable (retroactively undoing contracts). Is that a violation of due process / impermissible taking for employers? Are constitutional challenges next?  

Yet, the most interesting paragraph of the Final Rule reads:

Non-solicitation agreements are generally not non-compete clauses under the final rule because, while they restrict who a worker may contact after they leave their job, they do not by their terms or necessarily in their effect prevent a worker from seeking or accepting other work or starting a business. However, non-solicitation agreements can satisfy the definition of non-compete clause in § 910.1 where they function to prevent a worker from seeking or accepting other work or starting a business after their employment ends. Whether a non-solicitation agreement—or a no-hire agreement or a no-business agreement, both of which were referenced by commenters, as discussed previously—meets this threshold is a fact-specific inquiry. The Commission further notes that—like all the restrictive employment agreements described in this Part III.D—non-solicitation agreements, no-hire, and no-business agreements are subject to section 5’s prohibition of unfair methods of competition, irrespective of whether they are covered by the final rule. 

Moving forward, non-competes are mostly gone, but non-solicitation agreements, no-hire, and no-business agreements are clearly also on the chopping block where the utilization of each could easily result in protected litigation as to whether they are covered by the Final Rule or generally by section 5's prohibition of unfair methods of competition.

You can read the FTC's press release here.

You can read the Final Non-Compete Clause Rule here.  

Attorney Andrew Lieb is conducting a Continuing Legal Education course on Thursday, March 14, 2024 through the Connecticut Bar Association. 

Proving and Calculating Front Pay and Back Pay in Employment Cases (EDU240314)

On December 22, 2023 Governor Hochul vetoed Bill A01278. This bill would have fundamentally altered New York State's Labor Law by prohibiting non-compete agreements and additional restrictive covenants in labor and employment contracts.

This bill would have addressed the usage of non-compete agreements in employment contracts. It defined critical terms and highlighted that employers, their representatives, or officers of corporations could not solicit, demand, or accept a non-compete agreement from a covered individual. However, it didn't prohibit employers from entering into agreements that protected trade secrets, client information, or client solicitation. 

The justification behind this legislation was grounded in the adverse impact of non-compete agreements on New York's labor market and economy. These agreements purportedly curtailed workers’ mobility, limiting their ability to explore better employment opportunities and potentially stifling competitive wages and benefits.

The federal government has shown interest in a nationwide ban on non-compete agreements. New York could have lead the charge in fostering a more open and competitive labor market by codifying this ban into state law. 

Now, non-competes live on and companies hiring those with non-competes should be worried about tortious interference with a contract claims being levied against them. 

To learn more about Bill A01278, click here. 

• Employers must report in-patient hospitalization within 24 hours of the work-related incident. A work-related incident means that the employee was exposed to COVID-19 in the workplace.
• The 24-hour reporting period starts when the employer:
• learns that an employee was in-patient hospitalized within 24 hours of a work-related incident; and
• determines afterward that the cause of the in-patient hospitalization was a work-related case of COVID-19.
• The above rules only apply to reporting but not to record keeping. Employers must still record work-related confirmed COVID-19 cases regardless of whether an employee was hospitalized.

• Employers must report them within 30 days of the work-related incident or the employee’s exposure to COVID-19 in the workplace.
• The employer must report the fatality to OSHA within 8 hours of knowing or determining:
• that the employee died within 30 days of exposure to COVID-19 in the workplace; AND
• that the cause of the death was a work-related case of COVID-19.
• Similar to in-patient hospitalization, the above limitations only apply to reporting and not to record-keeping.

• The ADA allows employers to terminate employees, or take other measures, based on the illegal use of opioids. However, legal or prescriptive opioid use cannot be a ground for automatic disqualification and employers must consider a way for the employee to do the job “safely and effectively” 
• Employees who test positive to a drug test must also be given an opportunity to provide information about their legal drug use that may cause a drug result to show opioid use. The employer can ask the employee before the test is done if he/she is taking any such medication or the employer can ask all employees who test positive for an explanation. Such should be established by protocol and implemented consistently. 

• Employees who legally use opioids must be given a reasonable accommodation before getting fired or not considered for a position. This also applies to employees who have a history of opioid, or treatment for opioid addiction, which an employer thinks can interfere with safe and effective job performance.
• Employees may also request a reasonable accommodation from taking prescription opioids to treat pain or from having other medical conditions related to opioid addiction as long as the condition is a disability under the ADA.
• It is the employees’ responsibility to request a reasonable accommodation and employers cannot legally fire or refuse to hire or promote an employee for making the request. A request protocol should be established and applied consistently.
• Employers must provide the reasonable accommodation if it does not involve significant difficulty or expense.