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Home Health & Hospice Week

Regulations:

Feds Issue Rules On Non-Competes, Overtime Threshold

Published on Fri Apr 26, 2024

Don’t be so sure that non-solicitation label will save you.

Medicare doesn’t have the market cornered on new rules this month. Check out the other significant rules federal agencies have released that may affect how you do business:

Non-Competes: On April 23, the Federal Trade Commission “issued a final rule to promote competition by banning noncompetes nationwide, protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation,” the agency says in a release. The FTC issued the proposed rule in January 2023 (see HHHW by AAPC, Vol. XXXII, No. 18) and received more than 26,000 comments on it, it notes.

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina Khan says in the release. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

Expect legal challenges to abound. On “the same day the final rule was issued … an initial challenge was filed in the U.S. District Court for the Northern District of Texas. The complaint argues the FTC lacks the statutory authority to issue the rule, or such authority violates the U.S. Constitution,” attorneys with law firm McGuireWoods report in online analysis of the final rule.

“The FTC’s final rule banning non-compete agreements for all employees across all sectors of the economy is bad law, bad policy, and a clear sign of an agency run amok,” judges American Hospital Association General Counsel Chad Golder in an AHA release. “The only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage,” Golder insists.

Possible good news: “The FTC’s lack of clear jurisdiction over nonprofit entities under the FTC Act may insulate a significant segment of the health care industry from enforcement under the Final Rule,” offer attorneys Dana Stutzman, John Bowen, and Abigail Kaericher with law firm Hall Render in online analysis of the rule.

Do this: But “now is … a good time for businesses to take a close look both at existing non-compete clauses and other contractual provisions that may be argued to function as a non-compete provision under the regulation, including non-disclosure, non-solicitation, and provisions requiring employees to reimburse employers for certain training expenses,” advise attorneys Colton Long, Melissa McDonagh, James Paretti, Jr., and James Witz with law firm Littler Mendelson in online analysis.

However, providers may want to take a more measured approach. They can opt to “wait and see what happens,” advise attorneys Scott McLaughlin, Christine Bestor Townsend, James J. Plunkett, and Tobias Schlueter with law firm Ogletree Deakins. “Worst case, employers will have 120 days after publication of the rule to comply with it. And it is more likely that the legal challenges to the rule will result in a stay of its effective date, meaning it may be years before the rule is effective, if ever,” they predict in rule analysis.

Plus: “Hew very close to state and local laws on non-competes, where most of the action on non-competes is happening,” attorneys with law firm Crowell & Moring advise.

Resource: The 570-page final rule is at www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf.

Overtime salary threshold: Also on April 23, the Department of Labor released its final rule “increasing the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements,” DOL says in a release. “Effective July 1, 2024, the salary threshold will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025,” it specifies.

“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” Acting DOL Secretary Julie Su says in the release. “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable,” Su insists

“As has been the case with previous attempts at increases through DOL rules, we anticipate there will be challenges to the rule,” observe attorneys Jason Plowman and Matthew Linnabary with law firm Polsinelli. “And employers should remember that some states have higher salary thresholds for exemption under their state wage-and hour laws,” Plowman and Linnabary add in online analysis.

Resource: The 383-page final rule is at www.dol.gov/sites/dolgov/files/WHD/flsa/ot-541-final-rule.pdf.

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