Author: Christine A. Amalfe

Litigation Update: Northern District of Texas Judge Blocks FTC’s Non-Compete Ban

As we recently reported, on July 3, 2024, the Northern District of Texas issued a preliminary injunction in Ryan LLC v. Federal Trade Commission, staying the effective date of the Federal Trade Commission’s (FTC) rule banning non-competes (the “Rule”) and enjoining the FTC from enforcing the Rule. That injunction, however, was only applicable to the plaintiffs and intervenors in the case and did not address the FTC’s broader enforcement of the Rule.

Litigation Update: The Latest on Efforts to Block FTC’s Non-Compete Ban

As we recently reported on April 23, 2024, the Federal Trade Commission (FTC) issued a final rule banning virtually all future and most existing non-compete clauses. The rule was immediately challenged by a global tax services firm and the United States Chamber of Commerce in the Northern District of Texas, and, soon thereafter, others within the business community took action by filing suit in additional federal courts. This post provides an update on the various ongoing legal challenges unfolding across the country. Ryan LLC v. Federal Trade Commission (N.D. Tex. 2024) On April 24, 2024, Ryan LLC, along with a group of intervenors led by the Chamber of Commerce, challenged the non-compete rule arguing that the rule exceeds the FTC’s statutory authority under the Administrative Procedures Act. On May 10, 2024, the Chamber of Commerce filed a motion to stay the September 4, 2024, effective date of the rule and for a preliminary injunction preventing enforcement of the rule, which would have the effect of halting the rule from going into effect until the underlying lawsuit is resolved. The Northern District of Texas court granted the motion, finding that the plaintiffs were likely to prevail on the merits. But the court’s decision came with an important caveat: The court’s order granting the preliminary injunction and halting...

Federal Trade Commission Issues Final Rule Banning Non-Compete Agreements, Prompting Immediate Litigation Blocking Enforcement. What Does It Mean For Your Business?

On April 23, 2024, the Federal Trade Commission (FTC) issued a final rule banning all future and most existing non-compete clauses, with few narrow exceptions for senior executives.  The rule, however, was immediately met with legal challenges, casting doubt on its future. The FTC has taken the position that entering into a non-compete agreement is an “unfair method of competition” within the meaning of the Federal Trade Commission Act, therefore rendering non-competes unlawful as a general matter. The FTC reasons that a non-compete ban was necessary to address conduct harming fair competition in the labor market, reducing wages, stifling innovation, and hindering business formation and entrepreneurship. Further, the FTC argues that the current state law approach, which assesses the enforceability of non-competes on a case-by-case basis, has not sufficiently addressed the competition concerns cited by the FTC. On the other hand, opponents of the FTC’s non-compete ban argue that the rule exceeds the commission’s statutory and constitutional authority and that non-competes are crucial in guarding an employer’s trade secrets, intellectual property, and significant investments in employee training and development. Key components of the final rule are: It is an “unfair method of competition” for any worker and an employer to enter into, or attempt to enter into, a non-compete clause, to enforce a non-compete clause,...

Governor Cuomo Takes Action in Response to the Coronavirus Pandemic

New York now has the highest number of confirmed COVID-19 cases in the United States, and, unfortunately, the number continues to increase on a daily basis. In efforts to contain the spread of the virus and support those employees who have been impacted, Governor Cuomo and the legislature have acted swiftly to enact responsive laws. Relief for Employees on Orders of Quarantine or Isolation On March 18, 2020, Governor Cuomo signed into law Senate Bill S809/ Assembly Bill A10153, which provides job protection and paid leave for New York employees subject to mandatory or precautionary orders of quarantine or isolation issued by the State of New York, the Department of Health, local board of health, or any governmental entity duly authorized to issue such orders due to COVID-19. The law is effective immediately and provides sick leave to affected employees as follows: Employers with ten or fewer employees as of January 1, 2020 and a net income less than $1 million must provide affected employees with unpaid sick leave, along with job protection for the duration of the quarantine or isolation order and must provide those employees with access to Paid Family Leave and disability benefits (short-term disability) for the period of quarantine or isolation including wage replacement for their salaries up to $150,000. Employers...

Workplace Planning for Coronavirus Concerns

As coronavirus continues to spread in the United States, employers continue to inquire how they can safeguard employees’ health and well-being while ensuring the ability to maintain essential business operations. Our advice remains the same: The best way to prevent infection is to avoid exposure. Working from home for as many employees as possible is now the new normal for most businesses. In addition, employers large and small should take the time now to assess their policies and processes, addressing specific operational and human resources plans and issues in light of the current and evolving circumstances, as well as anticipated plans as a result of the pending Families First Coronavirus Response Act. On March 14, 2020, in response to the COVID-19 pandemic, the U.S. House of Representatives passed the “Families First Coronavirus Response Act,” (H.R. 6201), which provides for a limited period of paid sick leave and expands the Family Medical Leave Act to provide an extended period of unpaid or partially paid leave for a public health emergency. The bill is now before the Senate, where it is expected to pass sometime this week. The bill contains several provisions that will impact employers with fewer than 500 employees. Employers should not make any changes to their policies and procedures until the bill is finalized...

2019 Rings in Further Protections for Delaware and Philadelphia Employees

Before 2018 wrapped up, the year of the #MeToo movement, the Delaware and Philadelphia legislatures worked to ensure the passage of employee-friendly legislation. While Delaware’s new law focuses on sexual harassment,  Philadelphia has turned its focus on the work schedules for those employed in service industries. Delaware, like many other states in 2018, passed legislation to strengthen workplace harassment laws. The legislation was signed into law in August 2018, and went into effect on January 1, 2019. Delaware’s Discrimination in Employment Act has now been amended to include provisions specifically dedicated to sexual harassment that apply to employers with at least four employees in the state. It should be noted that Delaware’s law includes unpaid interns, applicants, joint employees and apprentices within its definition of employee. In addition to defining sexual harassment, the law provides that employers will be liable for sexual harassment if: (1) A supervisor’s sexual harassment results in a negative employment action of an employee; (2) The employer knew or should have known of a non-supervisory employee’s sexual harassment of an employee and failed to take appropriate corrective measures; or (3) A negative employment action is taken against an employee in retaliation for the employee filing a discrimination charge, participating in an investigation of sexual harassment, or testifying in any proceeding or...

Legislation to Invalidate Certain Non-Compete Agreements Introduced in New Jersey

Earlier this month, a new bill, A3970, was introduced in the New Jersey State Assembly by Assemblymen Peter J. Barnes, III, Joseph V. Egan, and Wayne P. Deangelo limiting the enforcement of certain provisions in employment contracts if the individual is eligible for unemployment compensation. It is unclear if the bill will ultimately pass, and be signed into law by the Governor, but there appears to be support within the state Assembly and Senate. The bill provides that if an unemployed individual is found to be eligible to receive unemployment compensation benefits, that individual shall not be bound by any covenant, contract, or agreement not to compete, not to disclose, or not to solicit. The bill only applies to agreements entered into AFTER the date of enactment.