FTC Issues Proposed Rule to Ban Non-Compete Provisions Nationally Last week, the Federal Trade Commission issued a proposed rule that, if finalized, would ban the use of non-compete agreements nationally. The proposed rule reflects what is becoming a state-by-state war on the use of non-compete agreements. In California, North Dakota, the District of Columbia, and Oklahoma, non-competes are either entirely or largely unenforceable. Other states, including Maine, Maryland, New Hampshire, Rhode Island, and Washington, have banned non-compete agreements for non-exempts or lower-level earners. Connecticut does not have a blanket prohibition; court decisions have provided the legal framework for enforcement. However, Connecticut does place some restrictions on the use of non-competes based by occupation. For example, most recently, Connecticut placed restrictions on non-compete agreements applying to doctors. The proposed FTC rule is a near-total ban. The proposed rule would make it an unfair method of competition for an employer to “enter into or attempt to enter into a non-compete clause with a worker; maintain with a worker a non-compete clause; or represent to a worker that the worker is subject to a non-compete clause where the employer has no good faith basis to believe that the worker is subject to an enforceable non-compete clause.” As written, the rule applies to all employers and prohibits the use of non-competes with any worker, regardless of salary or skill. A “worker” would include paid and unpaid employees, apprentices, interns, and independent contractors. The proposed rule would also apply retroactively, requiring employers to rescind all existing non-compete provisions with workers and provide notice to the workers that the non-compete provision has been rescinded. The public has 60 days to offer comment on the proposed rule, after which a final rule could be published and then enforced some months after that. The FTC will likely face legal challenges, including on whether it even has the power to regulate noncompete agreements. The agency says the proposed rule is based on a preliminary finding that non-competes constitute an unfair method of competition and therefore are a violation of the Federal Trade Commission Act. The 1914 law gives the government power to prevent unfair methods of competition and investigate unfair or deceptive acts that affect commerce. Pregnancy to be Given Disability-Like Protection Nationally Two federal laws providing pregnancy protections will become effective in 2023 nationally. They are the Pregnant Workers Fairness Act (PWFA) and the Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP for Nursing Mothers Act). The laws were enacted on December 29, 2022, as part of the Consolidated Appropriations Act, 2023. Many of the provisions of these two laws already exist under Connecticut state law. The Pregnant Workers Fairness Act (PWFA) The PWFA requires covered employers provide accommodations for job applicants and employees who are experiencing conditions related to pregnancy or childbirth and prohibits employers from discriminating against applicants and employees because of their need for a pregnancy-related accommodation. Specifically, the act declares that it is an unlawful employment practice to: · fail to make reasonable accommodations to known limitations of such employees/applicants unless the accommodation would impose an undue hardship on an entity's business operation;
· require a qualified employee/applicant affected by such condition to accept an accommodation other than any reasonable accommodation arrived at through an interactive process;
· deny employment opportunities based on the need of the entity to make such reasonable accommodations to a qualified employee;
· require such employees to take paid or unpaid leave if another reasonable accommodation can be provided; or
· take adverse action in terms, conditions, or privileges of employment against a qualified employee/applicant requesting or using such reasonable accommodations. The legislation essentially mirrors protections for disabled workers under the Americans with Disabilities Act of 1990, but for pregnant workers and on a temporary basis. It adopts the same definition of a “reasonable accommodation” as the ADA, an arrangement that doesn’t impact the essential functions of the job. The act applies to employers with 15 or more employees and takes effect on June 23, 2023. PUMP for Nursing Mothers Act The PUMP for Nursing Mothers Act expands to the Fair Labor Standards Act to require organizations to provide time and space for breastfeeding. More specifically, the PUMP Act requires employers to provide: (1) a reasonable break time for an employee to express breast for such employee’s nursing child for 1 year after the child’s birth each time the employee has need to express milk; and ·(2) a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk. The PUMP Act also requires employers to compensate employees who take such breaks if the employee is working during the break. Although the Fair Labor Standards Act (FLSA) was amended to provide some protections for certain non-salaried nursing workers when the Patient Protection and Affordable Care Act was passed in 2010, the PUMP Act further amends the FLSA to increase those protections by including millions of salaried employees who were previously excluded from such protection. Note that the PUMP Act does not apply to employers with fewer than 50 employees if complying would cause such employers an undue hardship. The Act also contains specific exemptions for some workers in the transportation industry. Except for changes to available remedies, the amendment to the FLSA took effect on December 29, 2022. The changes to remedies will take effect on April 28, 2023. Editor’s Note: A webinar on non-compete agreements will be scheduled following the close of the public comment period and the FTC response. Clients of the firm will receive an advance announcement of the program.