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BONUS EPISODE: The FTC Torpedoes Non-Competes

April 29, 2024 by John Ray

The FTC Torpedoes Non-Competes, with Jackie Voronov and Shylie Bannon, Litigators Lounge, Hall Booth Smith

Hall Booth Smith Podcast Network

BONUS EPISODE: The FTC Torpedoes Non-Competes

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BONUS EPISODE: The FTC Torpedoes Non-Competes (Litigators Lounge, Episode 10)

This bonus episode of Litigators Lounge delves into the recent move by the Federal Trade Commission (FTC), to largely ban non-compete clauses, a significant legal and employment issue. Hosts Jackie Voronov and Shylie Bannon discuss the FTC’s proclamation to invalidate existing non-competes, covering all workers across all levels, with very limited exceptions, and its implications. They explore the concepts behind non-compete agreements, their historical enforcement at the state level, and the potential overreach by the FTC into employment matters traditionally outside its purview. Jacki and Shylie also discuss the immediate reactions from the legal and business communities, including a lawsuit the U.S. Chamber of Commerce filed to contest the FTC’s rule. They unpack possible legal standings, weigh the ramifications for both employers and employees, and consider the future landscape of employment agreements. The episode closes with advice for stakeholders in the current climate of uncertainty surrounding non-competes and the FTC’s role.

Follow this link for additional commentary on this development from Hall Booth Smith labor and employment attorneys Jackie Voronov, Jeffrey Daitz, and Taylor Wood. The final FTC rule itself can be found here. To read the complaint, filed by the U.S. Chamber of Commerce, that seeks to block the enactment of the rule, follow this link.

Litigators Lounge is underwritten and presented by Hall Booth Smith. The show is produced by John Ray and the North Fulton studio of Business RadioX®.

Topics Discussed in this Episode

00:00 Welcome to Litigators Lounge: A Special Episode on Non-Competes
00:23 The FTC’s Bombshell on Non-Competes: Initial Reactions and Misconceptions
02:29 Understanding Non-Compete Agreements: Basics and Legal Landscape
04:51 The FTC’s Sweeping Rule Against Non-Competes: An Overview
05:32 Exploring the FTC’s Role and Authority in Employment Matters
07:33 Immediate Legal Challenges to the FTC’s Rule on Non-Competes
08:06 Future of Non-Competes: Analyzing the FTC Rule’s Impact and Exceptions
15:40 The Road Ahead: Litigation, Uncertainty, and Advice for Employers and Employees
20:56 Conclusion and Resources for Further Information

About Litigators Lounge

Jackie Voronov and Shylie Bannon, attorneys at Hall Booth Smith who specialize in labor and employment law, are the hosts of the engaging podcast Litigators Lounge. Listen as they delve into the intricate world of workplace legal issues as they explore real-life examples, unpack legal scenarios, and offer expert insights to help organizations and employees navigate the ever-changing legal landscape. With engaging discussions, diverse viewpoints from expert guests, and an ample touch of humor, Litigators Lounge is the go-to source for in-depth analysis and expert advice on law and the workplace.

Litigators Lounge is underwritten and presented by Hall Booth Smith. The show is produced by John Ray and the North Fulton studio of Business RadioX®.

If you have questions or feedback for Jackie and Shylie, feel free to follow this link and email them.

Jackie Voronov, Partner, Hall Booth Smith

Jackie Voronov is a Partner in Hall Booth Smith’s office in Paramus, New Jersey, and she represents management in a wide variety of employment matters and litigates employment claims before administrative agencies and state and federal courts. Her clients include major hotels, retailers, shipping companies, assisted living facilities and nursing homes, manufacturers, and national fast-food franchisees.

Jackie’s litigation experience includes the defense of employers in single and multi-plaintiff actions on claims of wrongful discharge, sexual harassment, race, national origin, gender, disability and age discrimination, breach of contract, family medical leave, failure to accommodate, retaliation, wage/hour laws, and related tort claims. Jackie also works with her clients to prepare various employment agreements (including non-compete, confidentiality, independent contractor, and separation agreements). She has extensive experience before various administrative tribunals, including the Equal Employment Opportunity Commission (EEOC), the State Division of Human Rights (SDHR), the Division of Civil Rights (DCR), and other state, federal, and local agencies.

In addition, Jackie frequently conducts management training for employers on a wide variety of employment law topics, such as:

EEO/anti-harassment
employee recruiting and hiring practices
family and medical leave
reasonable accommodations for disabilities and religion
preventing and investigating harassment, discrimination, and whistleblower claims
wage and hour compliance
discipline and termination of employees
privacy in the workplace

Jackie is regularly invited to speak nationally on best practices and other employment-related issues. Before joining Hall Booth Smith, she worked for one of the country’s largest law firms, where she defended employers in a wide range of labor and employment matters, including wage and hour class actions under the Fair Labor Standards Act (FLSA), claims related to the New York State Human Rights Law (NSHRL), the New Jersey Law Against Discrimination (LAD), the Americans With Disabilities Act (ADA), the New Jersey Conscientious Employee Protection Act (CEPA), and Title VII.

Jackie was selected for inclusion as a New Jersey Rising Star by Super Lawyers® for six consecutive years (2010-2016), which honors the top 2.5% of young lawyers in New Jersey.

Shylie Bannon, Partner, Hall Booth Smith

Shylie Bannon is a Partner in Hall Booth Smith’s Jacksonville, Florida, office. She also serves as Hiring Partner for the region of Florida, where she oversees associate attorney hiring endeavors. Prior to joining Hall Booth Smith, Shylie was a partner in both a multi-state, multi-specialty firm and a boutique practice.

At Hall Booth Smith, Shylie continues to represent physicians, mid-level providers, and health care providers in high-exposure medical negligence claims and in administrative proceedings before the Florida Department of Health. She also represents national retailers in high-exposure premises liability, negligent security, and transportation litigation with our National Trial Counsel team.

In addition to litigating matters involving personal injury and negligence, Shylie also represents management in all aspects of employment-related litigation arising from allegations of sex, disability, race, and pregnancy discrimination; whistleblower actions; and alleged violations of the National Labor Relations Act and Fair Labor Standards. She does so in administrative proceedings before both the Florida Commission on Human Relations and the US Equal Employment Opportunity Commission, as well as in all of the state and federal courts in Florida. She also provides employment-related counsel to clients, helping them avoid employment-related litigation through the implementation of best employment, investigation, and risk management practices.

Shylie earned a Juris Doctor from the University of Florida Levin College of Law, cum laude, and graduated magna cum laude from Tulane University with a Bachelor of Arts in Political Science and History.

Shylie volunteers with the Guardian Ad Litem program and supports child welfare advocacy efforts in Northeast Florida. She is also a Member of the Board for the Jewish Federation & Foundation of Northeast Florida.

About Hall Booth Smith, P.C.

Established in 1989, Hall Booth Smith, P.C. (HBS) is a full-service law firm headquartered in Atlanta, Georgia, with regional offices strategically located throughout Georgia and the United States. Experienced across a wide range of legal disciplines, HBS prides itself on providing knowledgeable, proactive, client-specific counsel to individuals, domestic and international corporations, state and federal agencies, and nonprofit organizations.

HBS possesses the legal knowledge, skill, and experience to meet their clients’ needs wherever they do business. HBS maintains the highest commitment to ethically and professionally serve their clients by providing the highest quality legal representation.

They deliver quality legal services in a variety of service areas. Experience across legal disciplines combined with a focus on the unique business or personal requirements of the client is the hallmark of the firm. Their clients receive the attention, expertise, and cost-effectiveness of a smaller law firm with the full-service and strong regional presence typical of a larger one.

Company website | LinkedIn | Facebook | Instagram

Disclaimer

Litigators Lounge is a production brought to you by Hall Booth Smith, PC. This podcast is published for the purposes of providing general information and education on topics which include those related to the law and legal issues, but the contents of the podcast do not constitute legal advice. Listening to this podcast or utilizing the information contained in it in any way does not constitute nor does it create an attorney-client relationship between you and Hall Booth Smith or its lawyers. The contents of this podcast should not be used as a substitute for competent legal advice from a professional attorney licensed in your jurisdiction.

FTC Proposed Ban on Non-Compete Agreements

February 17, 2023 by John Ray

Advisory Insights Podcast

FTC Proposed Ban on Non-Compete Agreements

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FTC Proposed Ban on Non-Compete Agreements (Advisory Insights Podcast, Episode 31)

On this episode of Advisory Insights, Stuart Oberman of Oberman Law Firm discussed the Federal Trade Commission’s (FTC) proposed ban on non-compete agreements. Stuart talked about how this ban, if enacted, would extend to nearly all work arrangements, including unpaid or volunteer positions, apprentices, and independent contractors, in addition to regular employees.

Advisory Insights is presented by Oberman Law Firm and produced by the North Fulton studio of Business RadioX®. The series can be found on all the major podcast apps. You can find the complete show archive here.

TRANSCRIPT

Intro: [00:00:01] Broadcasting from the Studios of Business RadioX, it’s time for Advisory Insights. Brought to you by Oberman Law Firm, serving clients nationwide with tailored service and exceptional results. Now, here’s your host.

Stuart Oberman: [00:00:20] Hello everyone, and welcome to Advisory Insights. Your host, Stuart Oberman, here. All right. Folks, we’re going to gear it up pretty quick on this one. As a firestorm continues, this episode, FTC Proposed Ban on Non-competes.

Stuart Oberman: [00:00:37] So, on our previous episode, we talked about some companies the FTC sort of slapped a little bit, if you will, in relation to their January 4, 2023 press release from the FTC. But now, I want to talk about the Biden Administration’s proposed ban on non-competes.

Stuart Oberman: [00:00:58] Look, I don’t care what your politics is. It doesn’t matter to me. I don’t care who you vote for. I don’t care what you do behind closed doors. It doesn’t matter to me. But what I’m looking at is we have to look at the cards that are on the table. Again, this is not politics. This is purely, purely law.

Stuart Oberman: [00:01:22] So, under the Biden Administration’s request, the FTC is looking into banning non-compete agreements. So, what does that mean? I’m going broad scope here. The FTC’s proposal would extend to nearly all work arrangements, including – got to get this, including -unpaid or volunteer positions, apprentices, independent contractors, in addition to regular employees. Now, that is extremely broad-based.

Stuart Oberman: [00:01:58] So, I don’t want to go too far in detail because there’s a lot of things that are going to go into this. There’s a lot of public notices that have to go out. But what I want to do is point out the extreme necessity that our employers need to look at regarding this non-competes.

Stuart Oberman: [00:02:15] So, under the rule, under the proposed rule, employers would be required – not optional, required – to rescind previously entered non-compete provisions and – get this – inform workers in writing via letter, email, text message that their agreement is no longer in effect or even enforceable.

Stuart Oberman: [00:02:45] Now, if you’ve got a large company with thousands and thousands of employees, under this rule – again, nothing’s etched in stone. There’s a lot of commentary. There’s a lot of things that we’re looking at. You got to look at the executive order and what that is exactly directing the FTC to do – employers would be required to rescind previously non-compete provisions and inform workers in writing, via letter, email, text message – assuming that everyone reads their emails and gets the emails – that the agreement is no longer enforceable.

Stuart Oberman: [00:03:25] So, a couple of carve outs. The proposed rule could potentially not apply to franchisee or franchise agreements or – and this is critical. This goes to the M&A field, mergers and acquisitions – agreements between buyers and sellers of a business. That’s a carve out, because if you look at what those buy-sell agreements are, they’re actually valuable consideration for those. So, if you’re paying someone $50 or $50 million to buy it out, you’ve got some kind of consideration. That’s a whole nother legal issue.

Stuart Oberman: [00:04:05] But both of these agreements would be continued to remain subject to, of course, antitrust laws, but wouldn’t necessarily affect the rule. So, I think those are two extremely carve outs, especially when we’re looking to buy-sell agreements. Now, that can be businesses, professional mergers and acquisitions.

Stuart Oberman: [00:04:27] So, last year, as a firm, we did about 135 transactions with about 350 million total dollar amount. So, I can see why that would be a carve out exception. But one thing to look at is, first and foremost, this rule doesn’t go into effect for many, many months. There’s a lot of commentary. And I don’t know that we want to waste a whole lot of time on what-could-be’s and a whole lot of Sunday morning talk show it matters. But what I want to do is put this in forefront of you’ve got to look at what you’re doing on a daily basis going forward.

Stuart Oberman: [00:05:04] So, first, I will guarantee you that if this law goes into effect, there’s going to be numerous legal challenges. There’s just going to be legal challenges. First, does this, in fact, exceed the FTC’s permission – I mean, authority within rulemaking authority under the Federal Trade Commission Act, first and foremost? That’s an issue. Then, under that act, you’ve got, of course, potential delegation clause. What does that look like?

Stuart Oberman: [00:05:30] And second, the rule making may very well invade the state’s province of contract law. So, we’ve got state issues to look at. And then, under the third provision, it may trigger major question doctrine, whether or not the ban would have to be something that would undertake by Congress, and not the FTC, as an executive rule.

Stuart Oberman: [00:06:03] Again, I’m going to repeat that. We have to look at whether or not this action, the ban would actually come under Congress’s authority and not the FTC. Again, a couple issues. So, we’ve got to look at what’s going on with the ban months away, a lot of commentary. I’m sure there’s going to be tweaks and challenges along the road.

Stuart Oberman: [00:06:30] Again, I don’t want to get into politics here, but we’ve got to look at what we have to look at. Then, we’re going to look into three areas that we say that it may not be enforceable. So, again, I want to put this on the forefront of our employers on state, local, national, and international level as to what’s to be expected.

Stuart Oberman: [00:06:50] Folks, that’s all I’m going to comment today – maybe not tomorrow, but today on non-compete agreements and the FTC ban. Folks, Stuart Oberman here, your host. Thanks again for joining us on Advisory Insights. If you have any questions, give us a call, 770-886-2400. Or send me an email, stuart, S-T-U-A-R-T, @obermanlaw.com. Folks, thanks for joining and have a fantastic day.

Outro: [00:07:16] Thank you for joining us on Advisory Insights. This show is brought to you by Oberman Law Firm, a business-centric law firm representing local, regional, and national clients in a wide range of practice areas, including health care, mergers and acquisitions, corporate transactions, and regulatory compliance.

About Advisory Insights Podcast

Presented by Oberman Law Firm, Advisory Insights Podcast covers legal, business, HR, and other topics of vital concern to healthcare practices and other business owners. This show series can be found here as well as on all the major podcast apps.

Stuart Oberman, Oberman Law Firm

Stuart Oberman is the founder and President of Oberman Law Firm. Mr. Oberman graduated from Urbana University and received his law degree from John Marshall Law School. Mr. Oberman has been practicing law for over 25 years, and before going into private practice, Mr. Oberman was in-house counsel for a Fortune 500 Company. Mr. Oberman is widely regarded as the go-to attorney in the area of Dental Law, which includes DSO formation, corporate business structures, mergers and acquisitions, regulatory compliance, advertising regulations, HIPAA, Compliance, and employment law regulations that affect dental practices.

In addition, Mr. Oberman’s expertise in the healthcare industry includes advising clients in the complex regulatory landscape as it relates to telehealth and telemedicine, including compliance of corporate structures, third-party reimbursement, contract negotiations, technology, health care fraud, and abuse law (Anti-Kickback Statute and the State Law), professional liability risk management, federal and state regulations.

As the long-term care industry evolves, Mr. Oberman has the knowledge and experience to guide clients in the long-term care sector with respect to corporate and regulatory matters, assisted living facilities, continuing care retirement communities (CCRCs). In addition, Mr. Oberman’s practice also focuses on health care facility acquisitions and other changes of ownership, as well as related licensure and Medicare/Medicaid certification matters, CCRC registrations, long-term care/skilled nursing facility management, operating agreements, assisted living licensure matters, and health care joint ventures.

In addition to his expertise in the health care industry, Mr. Oberman has a nationwide practice that focuses on all facets of contractual disputes, including corporate governance, fiduciary duty, trade secrets, unfair competition, covenants not to compete, trademark and copyright infringement, fraud, and deceptive trade practices, and other business-related matters. Mr. Oberman also represents clients throughout the United States in a wide range of practice areas, including mergers & acquisitions, partnership agreements, commercial real estate, entity formation, employment law, commercial leasing, intellectual property, and HIPAA/OSHA compliance.

Mr. Oberman is a national lecturer and has published articles in the U.S. and Canada.

Oberman Law Firm

Oberman Law Firm has a long history of civic service, noted national, regional, and local clients, and stands among the Southeast’s eminent and fast-growing full-service law firms. Oberman Law Firm’s areas of practice include Business Planning, Commercial & Technology Transactions, Corporate, Employment & Labor, Estate Planning, Health Care, Intellectual Property, Litigation, Privacy & Data Security, and Real Estate.

By meeting their client’s goals and becoming a trusted partner and advocate for our clients, their attorneys are recognized as legal go-getters who provide value-added service. Their attorneys understand that in a rapidly changing legal market, clients have new expectations, constantly evolving choices, and operate in an environment of heightened reputational and commercial risk.

Oberman Law Firm’s strength is its ability to solve complex legal problems by collaborating across borders and practice areas.

Connect with Oberman Law Firm:

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FTC Cracks Down on Companies Non-Compete Restrictions

February 10, 2023 by John Ray

Advisory Insights Podcast

FTC Cracks Down on Companies Non-Compete Restrictions

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FTC Cracks Down on Companies Non-Compete Restrictions (Advisory Insights Podcast, Episode 30)

On the episode of Advisory Insights, Stuart Oberman of Oberman Law Firm discussed how the Federal Trade Commission (FTC) is cracking down on companies that have non-compete restrictions. Stuart gives a quick update on the current state of non-compete agreements, noting that there is a lot of uncertainty and that this could have a chilling effect on the professional fields.

TRANSCRIPT

Stuart Oberman: [00:00:20] And welcome everyone to Advisory Insights. Stuart Oberman here, your host. All right. Folks, we’re going to be off and running today on the podcast. An enormous topic that is taking the business world by extreme uncertainty. We’ve got fires going everywhere. I want to talk about the FTC cracks down on company’s non-compete restrictions.

Stuart Oberman: [00:00:44] So, I want to briefly review this particular matter because this is a prelude to what I think the Federal Government is going to do down the road. So, I want to review a release dated January 4, 2023 that the FTC released. And I want to look at some broad things on this.

Stuart Oberman: [00:01:07] So, what happened is the FTC has taken action against three companies, two individuals – get this – forcing them to drop non-compete restrictions that would have imposed thousands and thousands of workers with restrictions. So, what does this mean?

Stuart Oberman: [00:01:27] So, according to the FTC, each of the companies and individuals illegally – illegally – impose non-compete restrictions on workers in positions that range from low level security guards to manufacturing workers to engineers that just stepped into the professional markets – engineers – which barred them from seeking or accepting another employer or operating a competing business after they left the company. Folks, that is extremely, extremely problematic going down the road.

Stuart Oberman: [00:02:13] Now, one of the things we need to look at in this particular order – and you’ve got to sort of read between the lines on this, what the FTC said – they issued a statement that they are going to vigorously – cannot just enforce, but vigorously – enforce Section 5, which prohibits unfair methods of competition. Which, from all indications is going to be non-compete agreements.

Stuart Oberman: [00:02:44] So, in each these cases – and I’m not going to go into names because it’s all public record, but I want to look at the ramifications – the FTC ordered the companies to cease enforcing, threatening to enforce, or imposing non-compete restrictions on relevant workers. Now, understand that. The FTC said, the government said you are not going to enforce these. You’re not going to threaten employees – which means you cannot allegedly send a letter of a cease and desist that if you do this, you’ll have this penalty, your contract says this, you’re going to be sued, whatever – or impose non-compete restrictions on relevant workers. So, they’ve also required – again, far reaching effect – the employer should notify the infected employees that they are no longer bound by the restrictions.

Stuart Oberman: [00:03:51] So, you got to understand this. They said, “Oh, by the way, three companies, two individuals, we’re nullifying your non-compete agreements.” And not only that, but now you’ve got to notify the employees that, “Oh, by the way, we’re not enforcing your non-compete.”

Stuart Oberman: [00:04:08] So, I want to go through some things that the FTC, in this order – which I’m going to give you my opinion. It’s going to be a prelude of what’s down the road. There’s a lot of things going on we need to look at, but this is the prelude – they have banned in the order the company from communicating to any relevant employee or other employer that the employee is subject to a non-compete – which means you’ve cut off communication to third parties – requiring them to void and nullify the challenge non-competes without penalizing the infected employees – without penalizing the infected employees.

Stuart Oberman: [00:04:56] Require them to provide copies of the order to current and past employees who are subject to the challenges non-compete. Again, get that, current and past employees. Require them to provide a copy of the complaint and order to current and future directors, officers, employees of the companies who are responsible for hiring and recruiting. That’s H.R., folks. That’s H.R. So, now this is their H.R. responsibility.

Stuart Oberman: [00:05:34] So then, here’s the interesting part, again, far reaching. Requires them for the next ten years – ten years, not ten days, but ten years – to provide a clear and conspicuous notice to any relevant employees that they may freely seek or accept a job with any company or person, run their own business, or compete with them at any time following their employment.

Stuart Oberman: [00:06:05] Folks, you understand what that is and how far reaching that is to these three businesses and two individuals? So, again, there’s been a lot of discussion as to what is going to take place as far as non-competes go. But what I’m giving you right now is an actual FTC release as to what occurred to these three companies and two individuals.

Stuart Oberman: [00:06:33] So, what do we do from here? I think that knowing what we know now, I think every, every, every company has got to look at their H.R. top to bottom. They’ve got to look at their non-competes. Now, are we non-solicitations, trade secrets. No. That’s non-competes. I think we’ve got to take a look at every contract. I don’t care what business you’re in, whether you’re in dental or manufacturing or global and you’ve got business in the United States. I think we need to look at every contract that has a non-compete agreement in it, and determine what the ramifications are and how broad this is.

Stuart Oberman: [00:07:11] First and foremost, we’ve got to determine, one, forget about the FTC, whether or not you’re non-compete, is it even enforceable? There’s very specific guidelines for that. It’s got to be geographically specific. It can’t be overly broad. So, there’s some very specifics. So, once we get through that that hurdle and say, “Yeah. It’s enforceable,” on a general basis, then we need to take a look at these these non-competes as a whole and figure out how as a company you’re going to approach this.

Stuart Oberman: [00:07:36] Folks, it is some Wild Wild West stuff going out there on non-compete agreements and in business environments. And I think this may have a chilling effect on, especially, the professional fields. Folks, that’s a quick update on a very, very broad topic that I could spend probably three hours on a whole event on.

Stuart Oberman: [00:07:55] But thank you again, folks, for joining us on the podcast for Advisory Insights. My name is Stuart Oberman. If you have any questions, please feel free to give us a call, 770-886-2400. Or send me an email, stuart, S-T-U-A-R-T, @obermanlaw.com Thanks, folks, and have a fantastic day.

Outro: [00:08:16] Thank you for joining us on Advisory Insights. This show is brought to you by Oberman Law Firm, a business-centric law firm representing local, regional, and national clients in a wide range of practice areas, including health care, mergers and acquisitions, corporate transactions, and regulatory compliance.