FTC Proposes New Rule to Ban Non-Competes

On January 5, 2023, the Federal Trade Commission (FTC) proposed a new rule restricting the use of non-compete agreements as an “unfair method of competition” in violation of Section 5 of the FTC Act. The proposed rule would (i) ban employers from entering into non-compete agreements with workers and (ii) require employers to rescind existing non-competes. As defined in the proposed rule, “non-compete agreements” would include any clauses or agreements between an employer and worker that prevent the person from working for a competitor or starting a competing business after their employment ends.  

Notably, the proposed rule covers non-competes between employers and “workers,” which would include not only employees, but also independent contractors, interns, volunteers, apprentices, and sole proprietors.  However, as drafted, the proposed rule does not appear to prohibit agreements that limit post-employment solicitation of or acceptance of business from the company’s clients or customers, so long as the provision doesn’t have the same result as a traditional non-compete.

It’s also important to note that, the proposed rule would not apply to non-competes in connection with the sale of a business if the person restricted by the non-compete is a substantial owner of the business (at least 25% ownership interest) at the time the non-compete is executed. The rule also would not apply to franchise relationships.

In her dissenting statement to the proposed rule, FTC Commissioner Christine Wilson raised potential challenges to the rule, including: (i) a lack of authority for the FTC to enact the rule, (ii) questions regarding whether the FTC has Congressional authorization to enact the rule, and (iii) questions about whether the rule is an impermissible delegation of legislative authority.

The FTC is currently seeking public comment on the rule through March 10, 2023. 

We will continue to monitor the rule and provide updates as they become available. If you have questions about the proposed rule, non-competes or other employment matter, do not hesitate to reach out to LP’s Employment & Executive Compensation Group.

New Unpaid Leave Requirements Under Illinois Family Bereavement Leave Act Went into Effect January 1, 2023

The new Illinois Family Bereavement Leave Act took effect on January 1, 2023. The new requirements apply to employers who are covered by the federal Family and Medical Leave Act. Under the law, employees are entitled to 10 days of unpaid bereavement leave to: 

  • Attend the funeral, make arrangements for, or grieve the death of a “covered family member” (a step/child, spouse, domestic partner, sibling, step/parent, parent-in-law, grandchild or grandparent) 
  • Be absent from work due to fertility-related issues such as a miscarriage, unsuccessful round of assisted reproduction, failed adoption or surrogacy, or stillbirth 

Employees are entitled to up to a total of six weeks of unpaid bereavement leave in the event of two deaths of a covered family member in a twelve-month period.

For additional information regarding state and local employment law updates, we share this video on local and state law updates.

If you have questions, please reach out to a member of LP’s Employment & Executive Compensation Group.

Lessons and Reminders for Employers from Elon Musk’s Employment-Related Actions at Twitter

Since taking control of Twitter at the end of October, Elon Musk has been making news headlines for all the wrong reasons. Shortly after the acquisition was complete, he fired nearly half of Twitter’s workforce – before hiring some of these employees back a few days later. He fired employees who criticized him (even those who did so privately)—including firing employees by tweet—and eliminated contractors.

On November 16th, he sent an early-morning email to all Twitter employees with the subject line “A Fork in the Road.” In the email, Musk gave Twitter employees an ultimatum: continue working “extremely hard core” or be let go with three months of severance.

“In an increasingly competitive world, we will need to be extremely hard core,” he wrote. “This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade.”

Since taking control of Twitter, Musk’s employment decisions have occupied prime real estate in the media and faced harsh criticism from former employees, business leaders, and industry experts. 

We know that our clients and readers are unlikely to take actions as drastic as Musk. Still, the Twitter chaos has sparked conversations about the legality and rationality of Musk’s employment decisions at Twitter. 

What employers should know about making employment termination decisions and announcing layoffs

  1. Employers must comply with WARN Act notice requirements when laying off large groups of employees. The federal WARN Act requires employers to notify the workforce of a mass layoff, a temporary shutdown, or a closure of all or part of a business. Employers that fail to provide adequate notice could be on the hook for damages of back pay and benefits-related compensation per employee for each day the company violated the WARN Act (up to 60 days). Many states, including Illinois, also have laws similar to the WARN Act.
  2. Have difficult conversations, including terminations and layoffs, on a one-on-one basis. Even if you can’t be in the same room as the person physically due to a remote workplace, the employee’s manager should have a personal conversation with the employee over video conference.
  3. Review employment contracts before making termination decisions. If the employee has an employment contract in place, you’ll want to understand the terms of that agreement before making any employment decisions or discussing termination.
  4. Don’t name-call. The reasons for termination can be communicated, whether company downsizing or poor performance, but avoid name-calling or using insults to criticize (current or former) employees.
  5. Discuss layoffs and other employment separations with employment counsel before making decisions. An employment attorney can help guide you through the termination process so that it goes as smoothly as possible and you minimize the risk of any potential legal action from a disgruntled ex-employee.

If you have any questions regarding remote workplace issues, please reach out. A member of our Employment & Executive Compensation Group would be happy to speak with you.

Additional Information:

How to Effectively and Compassionately Handle Dismissals and Layoffs in a Remote Workplace

3 Reminders for Employers After an Employee Is Awarded $450,000 for His Unwanted Birthday Party

Chicago Employers: New Sexual Harassment Policy and Training Requirements Take Effect July 1

The Chicago City Council recently amended the city’s sexual harassment laws to add anti-harassment policy and training requirements. And they haven’t given employers much time to comply. The below requirements take effect on July 1, 2022. These requirements apply to all employers who maintain a business facility in Chicago or are subject to Chicago licensing requirements. 

It is essential that employers prepare now to meet these new requirements by revising their policies and getting prepared to train all employees.  Our Labor and Employment attorneys are here to help with both.

Policy Requirements

All employers must have a written policy on sexual harassment, including at a minimum: 

  • A statement that sexual harassment is illegal in Chicago
  • The definition of sexual harassment 
  • A description of the new training requirements
  • Examples of prohibited conduct that constitute sexual harassment
  • Details on how an individual can report an allegation of sexual harassment
  • A description of legal services, including governmental, available to employees who may be victims of sexual harassment
  • A statement that retaliation for reporting sexual harassment is illegal in Chicago

The written policy must be available in the employee’s primary language during their first week of employment. Employers must also display an anti-harassment poster.

Training Requirements

All employers must provide the following training annually:

  • 1 hour of sexual harassment prevention training for all employees 
  • 2 hours of sexual harassment prevention training for supervisors/managers
  • 1 hour of bystander training for all employees

The Illinois State training template is sufficient for the sexual harassment prevention training for all employees.  The City of Chicago will provide training modules for the additional hour of supervisor training and for the bystander training will be made available to employers below by July 1, 2022. 

Statute of Limitations and Penalties

The Amendment also increased the time limit for filing a harassment claim from 300 days to 365 days. Penalties for violations increased from $500 – $1,000 per violation to $5,000 – $10,000 per violation. 

If you need a new anti-harassment policy, need your policy reviewed, or would like to schedule a training, please reach out. A member of our Labor & Employment Group would be happy to speak with you.

Supreme Court Halts OSHA Vaccine/Testing Mandate, But Permits Healthcare Industry Requirement

Author: Laura Friedel

This afternoon, the U.S. Supreme Court blocked the OSHA Emergency Temporary Standard (“ETS”) that would have required all employers with 100+ employees to mandate vaccination or testing, while allowing the Department of Health and Human Services’ vaccine mandate for those touching healthcare facilities to go into effect. In striking down the OSHA requirement, the Court found that OSHA had exceeded its authority by implementing a requirement that was not specific to workplace safety.

Here are the key takeaways for employers:

  • The OSHA ETS is blocked, so there is no requirement for employers to implement a vaccination/testing requirement (other than in specific industries). 
  • Employers that want to implement a vaccine and/or testing requirement may do so, subject to legal requirements (including both accommodation obligations and state limitations on vaccine/testing mandates).
  • In states that prohibit or limit vaccine/testing requirements, employers will have to comply with those prohibitions/limitations and won’t be able to rely on the OSHA ETS as a reason to implement.
  • Employers that touch healthcare facilities need to comply with the Department of Health and Human Services vaccine mandate.
  • It’s possible that state or local government authorities may take steps to implement mandates – it remains to be seen which do so, and whether they are upheld.

NYC’s Latest Expansion of its Vaccine Mandate – What You Need to Know

Author: Laura Friedel

On December 6, 2021, NYC mayor Bill DeBlasio announced that all private-sector workers in the city will be subject to the vaccine mandate, effective December 27. The following day, however, Judge Frank P. Nervo in the Supreme Court of New York suspended the mandate pending a hearing scheduled for December 14, 2021. If upheld, the mandate requires two vaccine doses, unless a person received Johnson & Johnson’s single-dose vaccine, and will impact 184,000 businesses.

Mayor DeBlasio’s action closely followed action in Florida where a new standard technically permits vaccine mandates, but only if employees are permitted to opt out by submitting an exemption statement on one of five grounds (medical, religious, COVID-19 immunity, compliance with regular testing at the employer’s cost, of agreement to comply with reasonable PPE requirements). The new NYC and Florida requirements are just the latest in a string of state and local regulations around vaccine mandates (some requiring, some prohibiting, and some finding a place in the middle).

Earlier this year, an OSHA Emergency Temporary Standard (ETS) was issued. The ETS would require vaccination or weekly testing for employees of employers with 100 or more employees, but this requirement is in flux while courts hash out arguments regarding its enforceability. On November 12, 2021, the U.S. Court of Appeals for the Fifth Circuit granted a motion to stay the ETS, and the U.S. Court of Appeals for the Sixth Circuit now has jurisdiction over the ETS legal challenges. The Department of Labor has filed a motion to lift the stay entered by the Fifth Circuit, but in the meantime, OSHA has suspended implementation and enforcement of the ETS.

With the ETS in limbo and local jurisdictions implementing their own vaccine mandate requirements, businesses around the country are wondering what this means for them. The following are three recommendations to keep in mind:

  1. Consider local rules and regulations regarding vaccine mandates. In large part, your obligations will depend on where your employees are located and whether you are a government contractor or in the health care industry. If the ETS becomes effective, it will preempt state and local requirements that don’t go as far to require vaccines (such as in Florida), but until then, state and local requirements limiting employers’ right to require vaccines will prevail.
  2. Make a decision internally as to whether, if the ETS becomes effective, you will offer testing as an option for all or only for those who can’t get vaccinated for medical, religious, or similar reasons. Also, think about how you plan to conduct testing (such as requiring employees to get tested on own and turn in proof or testing employees on-site).
  3. Remind employees that management is following the situation and urge employees to get vaccinated now. Businesses can send a letter to their employees letting them know that the company is monitoring the new rules, including state and local requirements and the OSHA ETS, and that you will be following any rules that are enacted in your jurisdiction. As such, employees are strongly encouraged to get vaccinated now so that they are in compliance if/when it becomes effective. Additionally, if testing only will be offered to those employees with a bona fide need for an exception, you should let them know that they need to request an accommodation by a specific date so that the company has enough time to review the requests.

If you have any other questions regarding COVID-related mandates or other COVID-related issues, a member of our Labor & Employment Group would be happy to speak with you.

How to Effectively and Compassionately Handle Dismissals and Layoffs in a Remote Workplace

Author: Laura Friedel

Earlier this week, Better.com CEO Vishal Garg made news headlines for firing 900 employees over a Zoom call – in the midst of the holiday season. The termination was effective immediately.

We know that our clients and readers are unlikely to take such drastic action, but how does a business or manager lay off employees effectively and compassionately while operating in a remote workplace?

  1. Always have difficult conversations, including terminations and layoffs, on a one-on-one basis. Even if you can’t be in the same room as the person physically, the employee’s manager should have a personal conversation with the employee over video conference. 
  2. Make sure that the news is shared individually, not to a large group.
  3. Consider timing. If there are other major events going on in the employee’s life, such as a wedding or major holiday, you may want to reconsider the timing of the termination. 
  4. Don’t name-call. The reasons for termination can be communicated, whether it is company downsizing or poor performance, but avoid name-calling.
  5. Have a second person (ideally a representative from HR) present for the meeting in case there’s later a question about what was said. 
  6. Look at any applicable employment contracts or other relevant legal documents. If the employee has an employment contract in place, you’ll want to understand the terms of that agreement before making any employment decisions or having the conversation about dismissal.
  7. Keep your emotions in check. Employment terminations are a challenging situation for anyone, but it’s important to not focus on your own feelings when having the conversation with the employee.
  8. Discuss lay-offs and other employment separations with labor and employment counsel before making decisions. An employment attorney can help guide you through the termination process so that it goes as smoothly as possible and you minimize the risk of any potential legal action from a disgruntled ex-employee.

If you have any questions regarding remote workplace issues, please reach out. A member of our Labor & Employment Group would be happy to speak with you.

Reminder: Illinois Employers Must Complete Annual Anti-Harassment Training Requirement By End of the Year

Author: Becky Canary-King

Illinois’ Workplace Transparency Act requires that all employees complete sexual harassment prevention training on an annual basis. The law applies to all employees working in the state, including short-time, part-time, and remote employees. LP offers a remote training program that is compliant with state requirements for employees and managers. Alternatively, employers can conduct the training on their own using IDHR’s Training Program.

If you would like more information about LP’s program or would like to schedule a session, please contact: EmploymentLaw@lplegal.com.

OSHA Releases COVID-19 Vaccination Rule For Private Employers – What You Need to Know

Author: Becky Canary-King

The Biden administration has finally released its long-awaited emergency temporary standard (“ETS”) on mandatory vaccination requirements in the workplace. As anticipated, the ETS requires that employers with 100 or more employees either establish a mandatory vaccination policy or a vaccination/testing policy.

It’s important to note that the ETS is going to be challenged in court – so while employers should certainly get started in preparing for the new requirements, their future is uncertain. 

In the meantime, here are answers to the key questions that employers need to know:

Are employers required to mandate vaccines?

No. Under the ETS, employers with 100 or more employees must either establish a mandatory vaccination policy or establish a policy under which employees must choose either to be fully vaccinated or provide proof of regular testing and wear a face mask in the workplace.  The vaccination/testing policy must be implemented by January 4, 2022.

How do employers determine whether they are covered?

The ETS covers all private employers with 100 or more employees. To determine the number of employees, employers must include all employees across all of their U.S. locations, regardless of employees’ vaccination status or where they perform their work. Part-time employees count towards the company total, but independent contractors do not. 

We anticipate questions regarding whether related companies’ will be considered the same or separate for purposes of counting to 100 employees, but we have not yet received specific guidance on this question.  In the meantime, we will need to look at the facts and circumstances and tests under other employment laws (such as the FMLA) to determine whether affiliated companies’ headcounts need to be aggregated.

Which employees are covered?

The ETS generally covers all employees of covered employers except those who (1) do not report to a workplace where other individuals such as coworkers or customers are present, (2) work from home, or (3) work exclusively outdoors. These employees still count toward the 100-employee threshold, though.

What is required for a mandatory vaccination policy?

A mandatory vaccination policy must require vaccination of all covered employees, including vaccination of all new employees as soon as practicable, other than those employees for whom a vaccine is medically contraindicated or who are legally entitled to a reasonable accommodation under federal law.

What is required for employees who get vaccinated?

The ETS requires employers to support vaccination by providing employees four hours’ paid time off at the employee’s regular rate of pay to receive the vaccine (covering both travel time and the actual time receiving the vaccine). Employers must also provide reasonable time and paid sick leave to recover from side effects following each vaccination dose. This requirement is effective immediately.

Are employers required to pay for testing?

The ETS does not require an employer to pay for the costs associated with testing. However, payment for testing may be required by other laws, regulations, or collective bargaining agreements.

When is the deadline to comply?

Covered employers have until January 4, 2022 to ensure their covered employees are fully vaccinated or submit to weekly testing. Beginning December 5, 2021, covered employers must ensure that unvaccinated employees wear masks in the workplace.

If you have any other questions regarding OSHA COVID requirements or other COVID-related issues, a member of our Labor & Employment Group would be happy to speak with you.

Changes Coming to the Illinois Health Care Right of Conscience Act to Close COVID loophole… in June 2022

Author: Becky Canary-King

The Illinois legislature has approved an amendment to the Health Care Right of Conscience Act (“HCRC”) which would limit employees’ ability to use the law to avoid workplace vaccination mandates.

HCRC, which was enacted in 1977, prohibits discrimination against individuals for their “conscientious refusal” to receive “any particular form of health care services contrary to his or her conscience.” The Act also makes it unlawful for employers to impose any burdens in terms or conditions of employment on, or to otherwise discriminate against, any applicant for the applicant’s refusal to receive any form of health care services contrary to his or her conscience.

The original intent of the bill was to allow health care providers to refuse to provide contraceptives or abortion services if it violated their conscience. However, some individuals have argued that the broad language of HCRC provides a shield for employees to avoid COVID-19 testing and vaccination mandates.

The Amendment would add language stating that it is not a violation of the Act to institute and enforce COVID-19 requirements in the workplace and other institutions. The proposal does not interfere with employees’ right to receive reasonable accommodations for their sincerely held religious beliefs.

Governor J.B. Pritzker is expected to sign the amendment, which would go into effect in June 2022.