Judge Blocks FTC Noncompete Ban

 Just a brief post to note that, as I predicted, a red state judge, at the urging of Republicans, has blocked the FTC from implementing its ban on noncompete agreements. 

Here is the ruling.

The Supreme Court, as currently constituted, will almost certainly uphold this ruling. So I would urge you, if you think noncompetes should be eliminated, to vote for Democrats in every single election this cycle. Republicans have blocked every single attempt to ban or reduce noncompete agreements since I started practicing in 1986. They will keep doing so.

Noncompetes are abused to force workers into staying in terrible working conditions. They suppress wages. They are terrible for the economy and innovation. 

Until some new Supreme Court judges can be appointed, the law won't change on the federal level so you will have to look to state legislatures to change things in your state. There have been substantial limitations placed on noncompetes in blue states like California, New York, and Massachusetts. So if your state legislature won't change the law, vote to change your legislators.

Supreme Guts Agencies Like OSHA, DOL, FTC, EEOC, and NLRB

 You may not have been paying attention to the Supreme Court's recent decision about fishing, but it's yuuuge. They overturned a ruling from 1984 saying that courts must defer to federal agencies' reasonable interpretations of federal statutes. This is commonly referred to as "Chevron deference" or the "Chevron defense," in case you hear those terms. And on first blush, you're probably asking yourself what the heck a case about fishing regulations has to do with employment law.

The answer is: a lot.

This year, federal agencies under the Biden administration have actively taken actions that benefit workers. I've written about some of these. NLRB has said that noncompete and nonsolicitation agreements mostly violate the National Labor Relations Act, that many handbooks contain illegal provisions, and that advocating for non-employees is legally protected against retaliation. EEOC has posted updated guidelines on harassment, pregnant workers, and visual disabilities. The FTC has banned most noncompete agreements (litigation pending). OSHA has posted guidelines about wildfire smoke and other workplace safety issues. The Department of Labor has posted guidelines on which employees are independent contractors. Even the Treasury Department got into the act and issued a report blasting noncompete agreements. 

These are just a few of the many pro-employee actions taken by the Biden Administration's federal agencies.

To make things even more difficult the Supremes also gutted the 5 year statute of limitations that Congress passed for challenging agency regulations, so companies that want to challenge old rules just have to form a new entity and sue away. The courts will soon be overwhelmed with these lawsuits.

For workers, this means that every single pro-employee regulation will be challenged, no matter how old. I guess the good news is that unions can step into the fray and start challenging old anti-employee regulations. There will be no settled federal law on many important employment law issues for years to come, thanks to this ruling.

Vote well, friends.

NLRB Says Noncompete and Nonsolicitation Agreements May Violate National Labor Relations Act

President Biden issued an executive order that all federal agencies look into noncompete agreements, and they have been doing so. The FTC recently banned most of them (don't get too excited though as Republicans challenge this), and now NLRB is stepping in.

In a recent decision, the NLRB determined that an employer's 12 month noncompete and 24 month nonsolicitation agreements violated the National Labor Relations Act. Some key takeaways:

a.    These agreements can have a chilling effect on employees who want to discuss possible unionization or working conditions.

b.    Employees dependent on a paycheck will be afraid to rock the boat.

c.    If employees are unable to find similar work because it's prohibited, they will be even more afraid to speak up.

d.    Employees could be afraid of discussing unionization for fear of being accused of inducing employees to leave.

e.    There are far less oppressive ways to protect confidential information.

f.    The very existence of a rule, whether or not there has been any attempt to enforce, can violate the law.

Here are some key quotes from the opinion that might help you if an employer seeks to enforce one of these agreements against you:

• An employee who is dependent on Respondent for a paycheck would reasonably view the cited provisions in the employment agreement as limiting their ability to engage in union and other protected activities. The prohibition in Provision 1(C) on soliciting employees to leave Respondent’s employ would dissuade a reasonable employee from engaging in protected activity like telling their coworkers about the wages and benefits offered by the Union out of a reasonable fear that Respondent might accuse them of inducing other employees to quit. 
• Not only is this provision ridiculously broad in scope (could an employee indirectly engage with a competitor by sending a family member to buy something from its store?), but it would also cause a reasonable employee to refrain from engaging in protected activities that come with a risk of retaliation. 
• If an employee knows they are barred from being involved in any capacity with any company that operates a similar business to Respondent, they will logically be more fearful of being fired and less willing to rock the boat because they face the prospect of being unable to find any work in their geographic area if they are fired or forced to leave their job. 
• All three of the challenged provisions would deter a reasonable employee from working for other employers in the area as a union salt or recruiting others to do so for fear of being accused of inducing other employees to leave, being forced to tell their supervisors about job offers they receive, or having Respondent find out they are working for one of its competitors.
• The non-competition clause in Provision 2(A) applies for 12 months after employees leave, but in practice it also applies to employees while they are working for Respondent, as most employees find a new job before leaving their old job, and the knowledge that they will be unable to work for a competitor in their geographic area if they are fired or leave would necessarily impact their behavior before and after they leave Respondent’s employ. 
• Because employees are required to sign Respondent’s employment agreement at a time when they are economically dependent on Respondent, I find that the above provisions unlawfully chill employees from participating in protected activities both during and after their employment with Respondent. 
• A reasonable former employee would continue to be chilled from engaging in union and other protected activity by the threat of damages and legal fees for violating the agreement. It is unlawful for an employer to restrain former employees from engaging in protected activity.
• The agreement itself states that the rule against soliciting other employees prevents “pirating,” the requirement that employees report job offers is in place to “protect [Respondent’s] rights under this Agreement” and that the noncompetition provisions are in place because employees may have information about its customers, employees, and business arrangements. There are other, unchallenged, portions of the agreement that address these concerns, including provisions requiring employees to turn over confidential and proprietary information and prohibiting them from trying to divert Respondent’s customers. Therefore, the stated justifications are insufficient to rebut the presumption that the provisions are unlawful, particularly in the absence of any evidence that Respondent’s objectives could not be addressed with a more narrowly tailored rule.
• When a rule chills employees in the exercise of their Section 7 rights, the Board has the authority to prevent it from “cowing…employees into inaction” by blocking it even before the “chill is manifest.”
• Nor does the Board have to wait for a work rule to be enforced before it acts, as it “has long and consistently recognized that an employer’s mere maintenance of a work rule may unlawfully interfere with, restrain, or coerce employees in the exercise of their Section 7 rights.”

Noncompete agreements and, to some extent, nonsolicitation agreements, work to suppress wages, make employees afraid of being fired, force employees to put up with terrible working conditions, and are generally a menace to society. I'm glad to see that the federal agencies are finally waking up to their evils. 

Vote well in the upcoming election if you want to let President Biden keep pushing to limit these awful agreements.

If you have a noncompete or nonsolicitation agreement and want to know if it's enforceable, talk to an employee-side employment lawyer in your state.

Supreme Court Says Discriminatory Transfers Are Illegal Even Without Significant Harm

 Up until recently, if your employer transferred you due to race, age, sex, national origin, religion, sexual orientation, disability, or other legally protected status, but you kept the same pay and job title, you might have been out of luck bringing legal claims against them. Most courts, including here in Florida, were saying you had to prove that the transfer caused you significant, serious, or substantial harm.

The Supreme Court fixed that in a recent decision. A female police officer was discriminatorily transferred so her boss could replace her with a male, but the appeals court said she could not prove the transfer caused her a "materially significant disadvantage." The Supremes said nah. 

The standard for suing for a discriminatory transfer is now that you have to prove "some harm with respect to an identifiable term or condition of employment, but that harm need not be significant."

What does this mean? What kind of harm would count? The Court gave some examples:

• Change to less desirable shift
• Change to a role supervising fewer employees
• Change to a less desirable worksite
• Change to a less prestigious position
• Given fewer responsibilities
• Less regular schedule
• Less interaction with upper management
• Given work with less visibility and assigned to administrative work
• Loss of perks like take-home car

While retaliation claims still require proof of a significant disadvantage, discrimination claims do not. Discrimination is, in itself, a harm that is illegal.

If you think your transfer was discriminatory, contact an employee-side employment lawyer in your state to discuss your rights.

EEOC Posts Guidelines On Harassment

 I can't tell you how many times per week I have to tell people that harassment is not generally illegal. Bullying, general harassment because you're you, just being mean, are not illegal. If they were, I'd be a billionaire.

But some kinds of harassment are illegal. EEOC has posted guidelinesposted guidelines on what kinds of discriminatory harassment are illegal. Here are some key provisions:

Types of harassment: "All laws enforced by the EEOC prohibit workplace harassment that is based on a protected characteristic. The protected characteristics covered by the laws the EEOC enforces are race, color, religion, sex (including sexual orientation; gender identity; and pregnancy, childbirth, or related medical conditions), national origin, disability, age (40 or older), and genetic information (including family medical history)."

When is harassment illegal: "To violate the law, harassment based on a protected characteristic must either:involve a change to the victim’s employment (e.g., an employee is fired, demoted, denied a promotion or transfer, reassigned, or receives reduced hours or pay because the employee rejected a supervisor’s sexual advances); or create a “hostile work environment”"

Examples of illegal harassment: EEOC gives these examples:

• saying or writing an ethnic, racial, or sex-based slur;
• forwarding an offensive or derogatory “joke” email;
• displaying offensive material (such as a noose, swastika, or other hate symbols, or offensive cartoons, photographs, or graffiti); threatening or intimidating a person because of the person’s religious beliefs or lack of religious beliefs;
• sharing pornography or sexually demeaning depictions of people, including AI-generated and deepfake images and videos;
• making comments based on stereotypes about older workers;
• mimicking a person’s disability;
• mocking a person’s accent;
• making fun of a person’s religious garments, jewelry, or displays;
• asking intrusive questions about a person’s sexual orientation, gender identity, gender transition, or intimate body parts;
• groping, touching, or otherwise physically assaulting a person;
• making sexualized gestures or comments, even when this behavior is not motivated by a desire to have sex with the victim; and
• threatening a person’s job or offering preferential treatment in exchange for sexual favors.

I would add that bullies tend to pick on the weak and the different. Who's weak? Pregnant, disabled, and older employees. Who's different? Race, sex, national origin, color, religion, etc. So look at who the bully is targeting and you might find that they are indeed engaging in illegal harassment. 

Do they have to get it right?: No. If the employer assumes you are Muslim, Black, or have some other protected characteristic and are harassing you because of it, that's illegal

Association: If you're being harassed due to your association with someone with a protected characteristic, such as being married to a Hispanic or a person with a disability, that's illegal.

What is a hostile environment: It isn't easy to prove, but EEOC offers this:

A “hostile work environment” exists when harassment is so severe or frequent (called “pervasive” in the law) that a reasonable person in the employee’s position would find the situation to be abusive.

Each claim must be considered on a case-by-case basis and take into consideration all of the circumstances. Some general guidelines to consider include:

• A victim does not need to show that harassment was both severe and frequent – just one or the other.* Sometimes, the more severe the harassment, the less frequent it must be, and vice versa.
• One instance of very serious misconduct may be severe enough. For example, one instance of somebody touching an intimate body part, acting violently, or a supervisor using the n-word can be enough to violate the law.
• The harasser’s status at the employing organization can be important. Harassment by the company’s owner or the victim’s supervisor can sometimes carry more weight than similar behavior by a coworker or customer.
• The victim does not need to show that the harassment led to a change in employment, such as a demotion, reduction of hours or rate of pay, or denial of a promotion. Similarly, the complainant does not need to show that the harassment made them perform worse.

*I'm emphasizing this because management-side lawyers like to argue that it must be both severe and pervasive. That's obviously not the law but it needs to be said. Over and over. SMH

What must employers do: Employers are responsible for preventing and for quickly ending harassing behavior once they learn about it , even if the harassment has not yet been severe enough or frequent enough to create a hostile work environment. But they have to know about it, so report it! EEOC offers this: "An employer typically learns about potential harassment when:Somebody complains. The person who complains does not need to be the victim.

• An owner, manager, or supervisor witnesses the harassing conduct.
• The harassing conduct is so open and obvious that an owner, manager, or supervisor reasonably should have known what was happening."

These are just a few of the key points raised in this new guidance. It might help if you think you are being subjected to illegal harassment. When in doubt, talk to an employee-side employment lawyer in your state employee-side employment lawyer in your state about your rights.

FTC Bans Most Noncompetes - But Don't Get Too Excited

The long-awaited rule from the Federal Trade Commission regarding noncompetes was released yesterday, and it's a doozy. The FTC "has determined that it is an unfair method of competition, and therefore a violation of Section 5 of the FTC Act, for employers to enter into noncompetes with workers and to enforce certain noncompetes."

You can safely assume there will be lots of litigation over this new rule. And I wouldn't hold my breath that the Supreme Court in its current makeup will uphold it. Meanwhile, until a court says otherwise, the rule is in place. What does it mean?

Effective date: The rule isn't effective until 120 days after publication in the Federal Register, so presumably that will be from yesterday. That means the rule will be in effect on August 21, 2024.

Existing noncompetes: Most of them are now deemed illegal and unenforceable, except those involving "senior executives," defined as those earning more than $151,164 who are in a “policy-making position”. But most noncompetes are illegal anyhow, with or without the rule, in my opinion. There are many defenses to noncompetes that exist even if this rule is tossed, and that can help people who are waiting for the effective date.

Future noncompetes: Most will be illegal except those for business purchases.

Noncompete clause defined: "Non-compete clause means: (1) A term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from:  (i) seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (ii) operating a business in the United States after the conclusion of the employment that includes the term or condition.  (2) For the purposes of this part 910, term or condition of employment includes, but is not limited to, a contractual term or workplace policy, whether written or oral." 

Nonsolicitation agreements: These are provisions saying you can't solicit employees or clients of the company for 1 - 2 years or so. They aren't specifically banned. However, many will be banned in my opinion. The FTC says this:

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. 

Weasel words:  “It is not an unfair method of competition to enforce or attempt to enforce a non-compete clause or to make representations about a noncompete clause where a person has a good-faith basis to believe that this part 910 is inapplicable.” Not particularly helpful to give a weaselly way out. But the Court or FTC would have to determine that there was a good faith basis to believe that it fell within an exception or that the rule had been stayed by a court.

Notice required: Employers will have to send notices to everyone they have noncompetes with to advise them that the noncompete clause won't be enforced. It has to be hand-delivered or emailed/mailed. 

Existing causes of action: If you're sued for a noncompete or breached one before the effective date, the new rule doesn't apply. However, the FTC did a very nice brief on why these things shouldn't be enforced, and you should be able to use some of their analysis to argue issues like lack of a legitimate interest other than preventing competition, lack of good faith, and some other defenses.

How will this play out? I think the rule will be stayed by a red-friendly court and will be litigated. So it's unlikely it will actually go into effect this year, if at all. 

But let's say employers send out those notices and then the rule is stayed or reversed? What will happen then? Can they say never mind? Or is the noncompete void? Will employers who send the notices have to get new ones signed? I would think that they would be difficult to enforce after the notice goes out. 

One thing is for sure - employment lawyers will be plenty busy for awhile after this.

Noncompete law is very state-specific until this rule goes into effect, so if you have a noncompete agreement, talk to an employee-side employment lawyer in your state if you want to understand your rights and responsibilities.

11th Circuit Stops Florida's "Stop Woke" Law Based on 1st Amendment

I know. I know. I keep saying there's no such thing as free speech at work. But while you workers don't have First Amendment protection in private workplaces, private employers do. Because corporations are "people" too. The distinction: the First Amendment prohibits restrictions on speech by government, not by individuals or corporations.

Confused yet? Well, I'm here specifically to discuss Florida's "Stop Woke" law* that said employers couldn't have trainings about not engaging in racism and discrimination in the workplace. The 11th Circuit just held that "Stop Woke" is a clearly illegal restriction on corporate free speech.

Here are some key excerpts from the opinion:

The State of Florida seeks to bar employers from holding mandatory meetings for their employees if those meetings endorse viewpoints the state finds offensive.  But meetings on those same topics are allowed if speakers endorse viewpoints the state agrees with, or at least does not object to.  This law, as Florida concedes, draws its distinctions based on viewpoint—the most pernicious of dividing lines under the First Amendment.  But the state insists that ordinary First Amendment review does not apply because the law restricts conduct, not speech.

The Act says employers cannot subject “any individual, as a condition of employment,” to “training, instruction, or any other required activity that espouses, promotes, advances, inculcates, or compels” a certain set of beliefs.  Id.  It goes on to list the rejected ideas, all of which relate to race, color, sex, or national origin

Discussion of these topics, however, is not completely barred—the law prohibits requiring attendance only for sessions endorsing them.  Id. § 760.10(8)(b).  Employers can still require employees to attend sessions that reject these ideas or present them in an “objective manner without endorsement of the concepts.” 

 By limiting its restrictions to a list of ideas designated as offensive, the Act targets speech based on its content.  And by barring only speech that endorses any of those ideas, it penalizes certain viewpoints—the greatest First Amendment sin.  Florida concedes as much, even admitting that the Act rejects certain viewpoints. 

Florida has no compelling interest in creating a per se rule that some speech, regardless of its context or the effect it has on the listener, is offensive and discriminatory.  “It is firmly settled that under our Constitution the public expression of ideas may not be prohibited merely because the ideas are themselves offensive to some of their hearers.” 

No matter how hard Florida tries to get around it, “viewpoint discrimination is inherent in the design and structure of this Act.”  NIFLA, 585 U.S. at 779 (Kennedy, J., concurring).  Given our “profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open,” the answer is clear: Florida’s law exceeds the bounds of the First Amendment.  New York Times Co. v. Sullivan, 376 U.S. 254, 270 (1964).  No matter how controversial the ideas, allowing the government to set the terms of the debate is poison, not antidote.

* I've written about this law before, here and here.