Compliance Stuff

In a significant decision, the Delaware Supreme Court reversed the dismissal of Payscale, Inc.’s breach of contract claims arising from Erin Norman’s alleged violations of the noncompete, non-solicitation, and confidentiality provisions contained in the incentive equity agreement that she signed as an employee. The decision reaffirms: (1) nationwide, 18-month noncompetes may be enforceable when they are sufficiently tied to an employer’s articulated economic interests, (2) contingent equity awards are legally sufficient consideration for restrictive covenants , and (3) a plaintiff may plead circumstantial allegations to support claims for breach of non-solicitation and confidentiality provisions. Background Norman entered into an incentive equity agreement that included noncompete, non-solicitation, and confidentiality provisions. In exchange, she received “Profit Interest Units” (PIUs) in Payscale’s parent holding company. At the time, the PIUs were valued at $0, but the PIUs would v...

A public workshop hosted by the Federal Trade Commission earlier this week signaled that the agency is still pursuing an aggressive enforcement agenda when it comes to noncompete agreements. While the Trump FTC takes the position that it does not have the authority to ban noncompetes outright, Tuesday’s workshop made clear that it will take on “abusive” agreements on a case-by-case basis – on behalf of both workers and consumers . Read on for highlights from the workshop and steps employers can take to stay on the FTC’s good side. 3 Biggest Takeaways From FTC Workshop The message from the FTC under both the Biden and Trump administrations is the same: abusive noncompetes are a problem. The difference is in their approach.   Chairman Andrew Ferguson began the workshop by explaining how he views the FTC’s role in regulating noncompete agreements between employers and employees. He reiterated his position that  the attempted Biden-era FTC noncompete ban  was unlawful and tha...

  It’s hard to keep up with all the recent changes to labor and employment law, especially since the law always seems to evolve at a rapid pace. In order to ensure you stay on top of the latest changes and have an action plan for compliance, here is a quick review of some critical developments we tracked in September and a checklist of the essential items you should consider addressing in October and beyond. _____ Get ready for Election Day.  Employers have their hands full this election season – and FP is here to help. Do your employees get  time off to vote ? If you’re in California, did you know you need to  post a notice  informing employees of their paid-time-off-to-vote rights by October 26? What are  your rights and responsibilities as an employer  during election season? Visit our  Election Season Resource Center  to review all our thought leadership and practical resources. _____ Create your year-end checklist.  As the final qua...

  A federal judge in Florida ruled Aug. 14 against the Federal Trade Commission’s (FTC’s) proposed ban on most noncompete agreements. Chief Judge Timothy Corrigan of the U.S. District Court for the Middle District of Florida held that the FTC didn’t have the authority to issue such a broad action. But his decision only applies to the plaintiff, a real estate agency in The Villages, Fla. Nothing has changed for employers across the country that are preparing for the FTC rule to take effect Sept. 4. We’ve rounded up articles and resources from  SHRM Online  and other outlets to provide more context on the news. Waiting for Texas, Again This is the second federal court to stop the FTC noncompete ban from taking effect, but again only for the parties involved in the suit. A U.S. district court in Texas issued a similar ruling on July 3 in a case brought by the U.S. Chamber of Commerce and other business groups. All eyes now turn back to Texas, where the judge in that case ind...

  At present, the   Federal Trade Commission’s (FTC) final rule on non-competes   (the “Rule”) is set to go into effect on September 4, 2024 for virtually every for-profit employer in the United States. Though legal challenges  remain pending , there is uncertainty as to whether any nationwide injunction will be entered prior to September 4. Given the existing uncertainty, employers should consider preparing for compliance . At the very least, employers should focus on the potential implications of non-compliance. The Final Rule: Scope and Required, Individual Notice As a reminder, subject to limited exceptions discussed below, the Rule invalidates existing non-competes and prohibits future non-competes, regardless of industry and regardless of whether a worker is an employee or an independent contractor . The Rule bans all non-competes nationwide, including  de facto  non-competes , with narrow exceptions for (1) existing non-competes with “senior executiv...

It’s hard to keep up with all the recent changes to labor and employment law, especially since the law always seems to evolve at a rapid pace. In order to ensure you stay on top of the latest changes and have an action plan for compliance, here is a quick review of some critical developments we tracked in July and a c hecklist of the essential items you should consider addressing in August and beyond. _____ Get Ready for the   First-Ever National Heat Safety Rule.  OSHA proposed regulations on July 2 that could soon require you to implement robust measures to safeguard your employees from extreme heat both indoors and outdoors.   The proposal still needs to wind its way through a months-long administrative process and could even be derailed by new standards set by the Supreme Court that take aim at agency overreach, so you’ll want to follow the process closely.  Here are the 10 steps you should consider taking to prepare for the new rule . _____ Prepare for the Impac...

In a motion for reconsideration filed on July 10, 2024, the plaintiffs in Ryan LLC v. Federal Trade Commission, No. 3:24-cv-00986-E (N.D. Tex. Apr. 23, 2024) urged the court to expand the scope of its limited preliminary injunction issued on July 3, 2024. The preliminary injunction was limited to only the named plaintiffs in the case and stayed the effective date and enforcement of the Federal Trade Commission’s (“FTC”) proposed final rule (“Final Rule”) b anning non-compete agreements only as to those plaintiffs. Plaintiffs’ motion sought an injunction that would cover, at minimum, the members of the plaintiff associations: the U.S. Chamber of Commerce, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce. On July 11, 2024, the court denied plaintiffs’ request in a summary order. The order is immediately appealable to the 5th Circuit. Even if no appeal is made, any question as to the scope of injunctive relief will be resolved by the court’s final jud...

Does the Federal Trade Commission’s (FTC) ban on non-compete clauses apply to non-solicitation clauses? It depends. The FTC ban on non-compete clauses can apply to non-solicitation agreements . However, only those that are so broad that they function as a non-compete clause by preventing the worker from or penalizing them for seeking or accepting other work or starting their own business. First, How Does the FTC Define “Non-Compete Clause”? A non-compete clause under the FTC’s “non-compete clause final rule” is defined as “a term or condition of employment that either ‘prohibits’ a worker from, ‘penalizes’ a worker for, or ‘functions to prevent’ a worker from: 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 operating a business in the United States after the conclusion of the employment that includes the term or condition.” In using the phrase “functions t...