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.

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.

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 16^th, 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

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.

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.

Author: Laura Friedel

Yes, though employers still must consider accommodation requests.

While employers were in a good position requiring vaccines before, the full approval of the Pfizer vaccine makes it even clearer that workplace vaccine mandates are permissible. 

However, employers still have to consider accommodation requests from employees who claim that they can’t get the vaccine for medical reasons, religious reasons, or pregnancy. Whether a refusal to be vaccinated triggers a right to accommodation, and whether allowing an employee to not be vaccinated will depend on the circumstances. Employers have a good argument that having an unvaccinated employee would cause an undue burden and/or direct threat to other employees, and that, as a result, no accommodation is required by law. However, even if making this argument, it’s still important to go through the accommodation process and consider whether there are other steps that could be taken that would allow the employee to remain unvaccinated while not causing the employer an undue burden or creating a direct threat to others. Employers should also check state and local law for relevant requirements.

LP will continue to monitor guidance related to administering the vaccine and update the answer to this question accordingly.