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The FTC's Nationwide Ban on Non-Compete Agreements

25 Apr 2024 00:00:00 -0800

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule, by a 3-2 vote, banning non-compete agreements nationwide. The rule, once effective, bans all non-compete agreements between employers and employees. Existing non-compete agreements for most employees will also no longer be enforceable. Only those existing agreements with senior executives, earning greater than $151,164 annually, and who are in policy-making positions, are excluded from the ban. The final rule becomes effective 120 days after publication in the federal register.

The FTC issued its earlier proposed rule on January 5, 2023, prohibiting employers from using non-compete agreements with workers. The proposed rule also invalidated all existing non-compete agreements no later than the rule’s compliance date. The earlier proposed rule also significantly affected non-compete agreements in the sale of a business. The proposed rule banned any non-compete provisions in the sale of a business unless each selling party owned at least a 25% interest in the business entity being sold. Under the final rule recently issued, however, the proposed ban affecting non-compete agreements regarding the sale of a business was removed.

The final rule is already facing significant legal challenges. Various business groups, including the U.S. Chamber of Commerce, filed suit in Texas Federal Court arguing that the FTC lacks authority to issue rules regulating unfair competition. Various other legal challenges are expected, which may further delay or bar altogether the FTC’s enforcement of its final rule.

Even if the FTC’s final rule remains intact after intense judicial scrutiny, much of the Louisiana law on non-compete agreements will remain unaffected. Non-compete law in Louisiana is governed by a single statute, La. R.S. 23:921. This provision presumes non-compete agreements are unenforceable unless they meet one of eight narrowly construed exceptions. Each of the exceptions is based on relationships. They include the buyer and seller of the goodwill of a business, the employer/employee relationship, the franchisor/franchisee relationship, the computer employer/computer employee relationship, the corporation/shareholder relationship, the partner/partnership relationship in anticipation of dissolution, the partner/partnership relationship regardless of dissolution, and the limited liability/member relationship. Six of Louisiana’s exceptions to the general prohibition on non-compete agreements (unrelated to employees) remain unaffected by the FTC’s final rule.

Moreover, Louisiana law specifically allows a non-solicitation of customers agreement between employers and employees. Such a provision allows an ex-employee to continue working in the industry, but prohibits the ex-employee from soliciting customers of their former employer. This provision also appears unaffected by the FTC’s final rule. Confidentiality provisions prohibiting employees from disclosing an employer’s confidential information also remain intact after the final rule.

The final rule may never become law. Significant legal challenges to the rule will continue. If the final rule does become law, much of the Louisiana non-compete law remains viable. Louisiana businesses should continue taking advantage of the law as it exists today, until the viability of the FTC’s final rule is judicially determined, which may take years.

U.S. Department of Labor Issues Final Rule to Increase Minimum Salary Threshold for OT Eligibility

24 Apr 2024 00:00:00 -0800

On April 23, the U.S. Department of Labor (DOL) issued the long-awaited final rule increasing the minimum salary threshold necessary for an employee to possibly qualify as exempt from overtime.

Effective July 1, 2024, the salary threshold will increase from $684 per week or $35,568 annually to $844 per week or $43,888 annually, and to $1,128 per week or $58,656 annually on January 1, 2025.

Effective July 1, 2024, the minimum salary threshold to qualify for the highly compensated employee exemption will increase to $132,964 per year, and then increase again to $151,164 on January 1, 2025.

July 1 is not that far off. Employers need to begin the process of determining which of their currently exempt employees are likely to lose the exemption when the increased salary thresholds go into effect.

Federal Trade Commission Votes to Ban Most Non-Compete Agreements Throughout the United States

24 Apr 2024 00:00:00 -0800

The FTC just voted to approve a final rule that will effectively ban new non-compete agreements and clauses. In addition, the rule voids all existing non-compete agreements and requires employers to notify current and former employees that their non-compete provisions are no longer in effect. (This provision does not apply to senior executives.)

The rule also applies to some agreements requiring employees to refund employers for training costs.

Although the rule does not specifically apply to other types of limitations, such as nondisclosure agreements, the FTC indicated that they could be subject to the rule if they were so broad that they had the effect of a noncompete agreement.

The new rule goes into effect 120 days after its publication in the Federal Register. It is highly likely that the rule will be even further delayed by legal challenges. For right now, employers need not make any notifications to workers regarding existing noncompetition agreements or provisions.

Some of the High-Points of the Final Pregnant Worker Fairness Act Regulations!

23 Apr 2024 00:00:00 -0800

By now, most of us are aware that last week the EEOC published the final regulations for the Pregnant Worker Fairness Act, all 400 pages of them. I thought that it might be helpful to hit some of the high points of the Regulations.

The Regulations will become effective around June 12, 2024, although the Act itself is already in effect.

Big Picture:

The PWFA and Regulations require employers to make “ADA-like accommodations” for known limitations related to, affected by, or arising out of pregnancy, childbirth, and related medical conditions, including but not limited to IVF treatments and abortions.

The Regulations allow for some exceptions for religious organizations, but they will be taken on a case-by-case basis; meaning they will be few and far between.

A “known limitation” is one communicated by the applicant, employee or their representative. This is probably going to place a slightly higher burden of communication upon the employee than does the ADA.

“Related to, affected by, or arising out of" means that the pregnancy, childbirth or related medical condition need not be the only, sole, original or substantial cause of the limitation for which the accommodation is requested. This will greatly expand an employer’s obligation to make reasonable accommodations.

The “limitation” requiring and accommodation:

Need not rise to level of disability.
May be modest, minor, or episodic.
Must be of the applicant/employee themselves-not family
Can be related to maintain employee/fetus health or to seek healthcare related to the pregnancy, childbirth, or related medical condition. (Employees can seek reasonable accommodation to alleviate pain or risk to health).

An applicant or employee is “qualified” if she can currently perform the essential functions of her job or her inability to do so is “temporary.”

“Temporary” means the applicant/employee will be able to perform the essential functions “in the near future”.

“In the near future” means up to forty (40) weeks.

Temporary suspension of one or more essential function may be required if the employee can resume performing the essential functions in the near future unless the employer can establish undue hardship.

Additional factors to be considered when evaluating the suspension of essential function: length of time of suspension, other work that employee can perform, nature and frequency of the essential function, has employer-provided similarly situated employees with suspension of essential functions, can temporary workers be hired to perform the essential functions and, can employer simply not perform the essential functions for the duration of the employee’s leave.

This does not mean that 40 weeks of leave is guaranteed. An employer may still argue undue hardship.

“Undue hardship” is similar to ADA and means “significant difficulty or expense.”

Certain “predictable assessments” will almost always be a reasonable accommodation:

allowing an employee to carry or keep water near and drink, as needed (This is different than a water break.)
allowing an employee to take additional restroom breaks, as needed;
allowing an employee whose work requires standing to sit and whose work requires sitting to stand, as needed; and
allowing an employee to take breaks to eat and drink, as needed.

Other examples of reasonable accommodations include: closer parking/flexible hours/proper size uniform and PPE/additional bathroom time/leave time/relieved of strenuous duties/avoid exposure to dangerous compounds/telework/changing schedule/prenatal health appointment/limited exposure to secondhand smoke/time off for IVF treatment/termination of pregnancy.

Employer and employee must engage in ADA-like “interactive process.” DOCUMENT!

Like ADA, employers can limit damages if they can show that they made a good-faith effort to accommodate. DOCUMENT!

Employers cannot require employees to accept an accommodation without first discussing it. The Regulations do not say that the employer and employee must agree on the accommodation.

Employers may not require employees to take leave if another reasonable accommodation would allow the employees to keep working.

Employers can ask questions to verify that the limitation is related to pregnancy, childbirth, or related medical condition, but an informal conversation will usually be sufficient.

Employee requests for accommodation can be minimal: 1. Identify limitation related to PCRMC, and 2. Requires adjustment to work due to limitation.

I am having trouble getting to work at my scheduled starting time because of morning sickness. This will be sufficient.

Employee can choose to use paid leave or unpaid leave to same extent that employer allows other employees to use leave.

Providing “interim accommodation” while employer determines if requested accommodation is reasonable is not required but will be a “best practice.”

Suggestions:

Confirm that you have put up the PWFA poster.

Train your supervisors to spot PWFA issues and requests for accommodation and to push them to HR.

Develop your written PWFA policy.

Develop your PWFA Accommodation Request form. You cannot require an employee to complete the form, but HR can fill it out and use it to track requests.

Stranger Danger: OSHA's New Rule Permits Enigmatic Third Wheel at Inspections

11 Apr 2024 00:00:00 -0800

Who exactly can tag-along with an OSHA Compliance Safety and Health Officer (CSHO) during a worksite inspection of a workplace? A new OSHA rule seeks to dramatically broaden this group to include union agents, even in non-union workplaces.

Employers and employees typically have the right to have a third-party representative present during an OSHA inspection of a workplace. Traditionally, the employee representative must be an employee of the employer at the site being inspected. However, a new OSHA rule, which takes effect on May 31, 2024, “clarifies” that the employee representative may also be a non-employee third-party not affiliated with the employer. Additionally, the new rule no longer limits employees' options for third-party representation during OSHA inspections to persons with formal credentials, such as an industrial hygienist or safety engineer. Thus, the new rule broadens the scope of representation, potentially altering the dynamics of workplace inspections and introducing new challenges for employers.

Employers should be wary of the potential implications of the vague new “Walkaround” Rule. For example, the new rule inevitably invites labor activists or even plaintiffs’ attorneys into non-union workplaces to potentially influence union organizing campaigns. Moreover, the new rule leaves much to be desired in terms of how outside representatives will be selected in non-union workplaces. The unclear process ultimately grants the CSHO considerable discretion in determining who accompanies them during inspections.

Employers should take every precaution possible when OSHA knocks on their door for inspections. This includes asking the pertinent questions; raising appropriate objections to third-party representatives when necessary; and lawfully limiting access to an employer’s worksite and the third-party representatives’ involvement during onsite inspections. Neglecting these measures could lead to regrettable consequences for employers, as the presence of OSHA’s newfound third wheel may result in unforeseen challenges and adverse outcomes that extend far beyond an unfavorable OSHA inspection. A starting point should be a legal review of an employer’s solicitation and distribution rules.

Management Update Newsletter Volume 13, Issue 4

01 Apr 2024 00:00:00 -0800

The FTC's Proposed Nationwide Ban on Non-Compete Agreements – Where Are We Today?

22 Mar 2024 00:00:00 -0800

In January of 2023, the Federal Trade Commission (“FTC”) issued a proposed new rule banning non-compete agreements nationwide. The proposed rule sought not only a ban of future non-compete agreements, but also required recission of existing agreements. The FTC then sought public comments on the proposed rule before modifying the rule or issuing a final ruling. The public comment was extended until the Spring of 2023. It was then widely reported that the FTC’s vote on the proposed ban would not take place until April of 2024. At this point, it is unclear when the FTC will modify the proposed rule or issue a final rule. In the meantime, non-compete agreements are enforceable in Louisiana, if drafted correctly.

The validity of non-compete agreements in Louisiana is controlled by a single statute. La. R.S. 23:921, Louisiana's controlling statute, begins with a general prohibition against any agreement whereby anyone is restrained from exercising a lawful profession, trade, or business unless one of the narrow exceptions to the general prohibition contained therein has been satisfied. It provides:

Every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this section, shall be null and void.

This opening paragraph of La. R.S. 23:921 reflects Louisiana's strong public policy against these agreements. The exceptions to the general prohibition, for the most part, are based upon relationships. They include the employer/employee relationship, the sale of the goodwill of the business, the dissolution of a partnership, the Franchisor/Franchisee relationship, and the Employer/Computer Employee relationship. Additional exceptions added by the Louisiana Legislature in recent years are again based upon relationships. They include the Corporation/Shareholder relationship, the Partner/Partnership relationship, without consideration of any possible dissolution, and the Limited Liability Company/Member relationship.

Because these agreements are in derogation of the common right to earn a living, Louisiana jurisprudence has strictly construed these exceptions to the general prohibition. To fall within these exceptions, most Louisiana courts have required non-compete agreements to list the area of prohibition by parishes, municipalities, or parts thereof, together with a term of no longer than two (2) years from the date of termination of the relationship.

While not specifically contained within the statute, various Louisiana courts have also required that a valid non-compete agreement accurately define the business in which the individual is prohibited from competing. Other Louisiana courts deny the need for this additional non-statutory-based requirement. If the business is defined within the agreement, however, the definition should be narrow and accurate.

The FTC’s proposed ban appears primarily concerned with the Employer/Employee relationship. It is not clear how the FTC’s proposed rule, if it takes effect, would deal with other relationships in Louisiana where non-compete agreements are allowed, including the partner/partnership relationship, the corporation/shareholder relationship, and the limited liability company/member relationships.

The proposed rule, if it becomes final, will have to survive serious legal challenges by the individual states and the business community before ever effecting the use of non-compete agreements nationwide. It is therefore suggested in today’s competitive marketplace that the use of non-compete agreements in Louisiana continue until further notice.

Court Rules Historical Horse Racing Gambling is Illegal in Louisiana

11 Mar 2024 00:00:00 -0800

EPA Unleashes The Public On Industry

08 Mar 2024 00:00:00 -0800

EPA has issued two final rules that provide significant rights to the public that may, and likely will, increase litigation or otherwise be used against industry. First, EPA issued the final Risk Management Program revisions which contain requirements to provide voluminous information to the public regarding the regulated substances at a facility. Second, EPA empowered ‘third-party’ notifiers to record and report “super emitter” events. Together, they create a greater possibility of agency enforcement and private litigation.

On February 27, 2024, EPA issued the “Safer Communities by Chemical Accident Prevention” rule, which added numerous provisions to the Risk Management Program. Most concerning is the addition of an obligation for a facility to provide detailed, internal information about the facility to the public.

Upon “request by any member of the public residing, working, or spending significant time within 6 miles of the fence line of a stationary source,” the owner or operator must provide, within 45 days of the request, the information specified in the rule. Of course, there is no definition or indication of how much time a person must spend within six miles to be considered significant.

The facility must provide the names of regulated substances held in a process, safety data sheets for all regulated substances located at the facility, the five-year accident history information required to be reported to EPA, information about the facility’s emergency response program, and LEPC contact information. Additionally, the facility must provide information about “declined recommendations and justifications,” such as those regarding recommendations declined from natural hazard, power loss, and siting hazard evaluations and justifications and from inherently safer technology or design measures.

The owner or operator must also provide an “ongoing notification on a company website, social media platforms, or through other publicly accessible means” that the above information is available to the public. It must also provide instructions as to how to request the information.

On December 2, 2023, EPA issued a final rule related to methane and volatile organic compounds emissions from new and existing sources in the oil and natural gas industry. While there are many problematic provisions, the most problematic could be the “super-emitter” program.

A super-emitter event is defined as any emissions event with a quantified emission rate of 100 kg/hr of methane or greater that is located at or near an oil and natural gas facility and that is detected using remote detection methods. A person may be approved by EPA to become “a third-party notifier of super-emitter events.” A person must submit certain information to EPA, such as a description of the technologies the entity will use, its standard operating procedures, and a quality management plan.

Once so certified, a third-party notifier can use specified detection methods, such as satellite detection, remote-sensing equipment on aircraft, and/or mobile monitoring platforms, to record a super-emitter event. The third-party notifier provides the information of the super-emitter event to EPA and, once EPA determines the notification is complete and accurate to a reasonable degree of certainty, the EPA will make the notification publicly available and provide the super-emitter event notification to the owner or operator. The owner or operator must initiate an investigation to determine the sources of the event and has 15 days to submit a report to EPA.

Providing information to the public relating to regulated substances and the internal operations of a facility and posting information regarding super-emitter events for public review will likely foster litigation against the regulated entities. Indeed, most of the information necessary to support a private litigant’s claim will now be readily available and easy to obtain. Instead of focusing dwindling resources on compliance and ensuring that accidents or emission events do not occur, owners and operators will now be defending lawsuits. This seems to be the result desired by EPA. Regardless, industry will soon be awash in requests, notices, internal investigations, report writing, and unfortunately additional litigation.

No Permits, Just Guns - at Work? (Oh My!)

07 Mar 2024 00:00:00 -0800

Effective July 4, 2024, a concealed carry permit will no longer be required for law-abiding Louisianans, age 18 years or older, to carry weapons. So, if an employee walks into a workplace on July 5th with their gun, what should employers do?

Despite the new gun law, guns-at-work are not a new phenomenon in this State. Louisiana's "Guns at Work" law permits an employer to restrict an employee's access to weapons while on the employer's premises. Employees do, however, generally maintain the right to lawfully possess firearms in their locked, privately-owned vehicle in an employer’s parking lot, parking garage, or other designated parking area. This right does not infringe on an employer’s ability to implement and enforce policies governing the storage of firearms.

No law – not even the new gun law – requires employers to allow guns at an employer’s actual worksite. Louisiana’s new gun law did not amend or restrict an employer’s rights regarding handguns at work.

Simply put, employers may continue with the status quo when it comes to guns. However, employers may wish to revisit and revise policies as needed to comply with the newest requirements for lawful possession of handguns in Louisiana.