Home Health & Hospice Week

Give the feds your 2 cents by March 10.

Your labor landscape could look very different if the FTC finalizes a new proposal to all but eliminate non-compete agreements with employees.

“The Federal Trade Commission proposes preventing employers from entering into non-compete clauses with workers and requiring employers to rescind existing non-compete clauses,” it says in a statement about its new rule issued on Jan. 5. About one in five American workers are bound by a non-compete, and the proposal could increase workers’ earnings by nearly $300 billion per year, the FTC estimates.

It’s “a move that would likely have a monumental impact for employers across the country,” say attorneys William Berlin, Dana Stutzman, and John Williams with law firm Hall Render.

That’s the case for home health and hospice agencies too. “Once primarily used for executive-level employees, usage of non-competes has increased over the last several years and many employers have adopted their use for all staff, including nurses, therapists, aides and caregivers,” notes the National Association for Home Care & Hospice on its member listserv.

Between this new rule and three legal actions against companies using noncompetes, “non-competes are under attack by [the] FTC,” say attorneys Emma Schuering, Jack Blum, and Isaac Caverly with law firm Polsinelli.

The Biden administration has been leading up to this since a July 2021 Executive Order in which the President “called on the FTC to review and use its rulemaking authority to curtail the unfair use of non-compete clauses,” the Hall Render attorneys note in online legal analysis.

The FTC issued the proposed rule after a 3-1 vote along party lines, with lone Republican Commissioner Christine Wilson dissenting, the Hall Render attorneys point out.

Exception: One exception that will work in some home health and hospice agencies’ favor is for non-profits, Berlin, Stutzman, and William highlight. “The FTC has limited jurisdiction over non-profit entities under the law used to promulgate the proposed rule, so [it] should not apply to non-profit health systems and hospitals,” they say.

Watch out: “That being said, in the past, there has been bipartisan support to remove the non-profit limitation,” Berlin, Stutzman, and William warn. “Coupled with the FTC more recently taking an aggressive stance towards enforcement, there could be a push to make the proposed rule applicable to non-profit entities.”

Don’t give up hope. “The FTC has specifically asked for comments on possible alternatives … including whether there should be additional exceptions or different standards for different categories of workers based on job function, occupation, earnings or other factors,” the Hall Render attorneys note.

To do: Right now, agencies should read the rule. Then they should submit comments on the proposal by March 10, experts advise.

The timeline for the final rule will likely be slow, Berlin, Stutzman, and William expect. Thousands of comments are expected, meaning “it will likely take a long time for the FTC to review all of the comments and issue a final rule,” they predict. At press time, more than 600 comments had already been submitted on the rule.

And once a final rule is issued, if it generally bans non-competes, “employers can anticipate the non-compete ban will face immediate legal challenge on numerous grounds,” the Polsinelli attorneys forecast.

“Given the importance of non-compete agreements to many employers’ efforts to protect their competitive information and relationships, employers should carefully monitor these developments,” Schuering, Blum, and Caverly advise.

Note: Links to the 216-page proposed rule, a fact sheet, and to comment are at www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking.