The 411 on the FTC’s Proposed Noncompete Ban

On January 5th the Federal Trade Commission (FTC) issued a proposed rule that would ban noncompete agreements between employers and their workers in most circumstances. While the proposed rule will almost certainly be met with legal challenges and ultimately get resolved in the courts, let’s take a look at what you need to know now.

The proposed rule would make it illegal for an employer to enter into or attempt to enter into a noncompete with a worker.

The proposed rule covers all employers.

“Worker” is broadly defined as a natural person who works, whether paid or unpaid, for an employer and specifically includes independent contractors.

Existing noncompete agreements are covered by the ban. Employers must rescind the noncompete by the “compliance date” and are required to notify the worker of the rescission. The compliance date is 180 days after publication of the final rule in the Federal Register, which has not yet occurred.

The FTC has published model language that can be used to communicate the rescission.

The proposed rule makes no mention of non-solicitation agreements. It does, however, specifically state that a non-disclosure agreement that is so broad that it effectively precludes the worker from working in the same field is prohibited, as is an agreement to repay training costs if the worker’s employment terminates within a specified period if the required repayment is not reasonably related to the costs incurred for training.

Presumably, a narrowly tailored agreement that prohibits the solicitation of customers, the solicitation/recruiting of employees and the disclosure of trade secrets and confidential information will still be valid.

A noncompete entered into as part of a sale of business (asset or stock/ownership interest sale) is allowed provided that the individual being asked to sign the noncompete owns at least 25% of the entity being sold.

Although the proposed rule is not yet in effect and will likely be resolved in the courts, there are certain steps employers should take now.

First, if you are asking lower wage or lower level workers to sign noncompete agreements, stop. Those are most likely not enforceable under the applicable state law now, and are even less likely to survive the final outcome of the FTC’s proposed rule.

Second, ask yourself if a non-solicitation and nondisclosure agreement will give you the protection you need. If so, use that instead of a noncompete, as that will likely be enforceable.

Finally, review your existing noncompete, nonsolicit and nondisclosure agreements to see if these comply with applicable state law and if there is adequate protection in the event the noncompete is banned. If not, or if you need assistance, please contact us or call your attorney.

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New Tennessee Law Requires Employers To Provide Veterans Day as Unpaid Holiday

Veterans Day is celebrated on November 11th. In April Tennessee passed a new law that requires employers to allow employees who are veterans to take Veterans Day off as an unpaid holiday if certain conditions are met.

The law applies to all persons or entities with one or more employees. Under the law an employee is a veteran if he or she is: 1. a former member of the armed forces or; 2. a former or current member of a Reserve or a Tennessee National Guard unit that was called into active military service of the United States.

In order to qualify to take Veterans Day off as an unpaid holiday the employee must provide: 1. at least one month’s written notice of the intent to take the day off; 2. provide proof of veteran status.

If the employee meets the above requirements the employer must grant the leave unless the veteran employee’s absence, either alone or in combination with the absence of other veteran employees on that day, will impact public health or safety, or cause the employer significant economic or operational disruption, as determined by the employer in the employer’s sole discretion.

Employers can waive the notice and proof of veteran status requirements and/or treat Veterans Day as a paid holiday for qualifying employees if they choose to do so.

Veterans, enjoy the day off and thank you for your service!

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Tennessee Bans Hair Discrimination

As of July 1st Tennessee joined the states that prohibit discrimination based on an employee’s natural hairstyle. The General Assembly passed the CROWN Act- Create a Respectful and Open Workplace for Natural Hair.

The CROWN Act prohibits private employers from adopting policies or practices that restrict or ban employees from wearing ethnic hairstyles within the workplace, including braids, locs, twists, bantu knots, or other hairstyles that are part of the cultural identification of or physical characteristic of the employee’s ethnic group. Tennessee is the first state in the South to make the CROWN Act law.

Employers should review their Equal Employment Opportunity, Grooming, Dress Code and Uniform Policies and revise them as needed to ensure compliance with this new law.

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Mandatory Arbitration of Sexual Harassment Claims Will Soon Be Forbidden

On February 10th the U.S. Senate unanimously passed the so called #MeToo bill, H.R. 4445. The bill prohibits mandatory arbitration of workplace sexual harassment and sexual assault claims. The bill will become law after it is signed by President Biden. After it is signed it will take effect immediately.

Under this (soon to be) law employers can no longer require employees to arbitrate sexual harassment or sexual assault claims. Mandatory arbitration of other claims will, however, still be allowed so long as your arbitration agreement/provision complies with all state law requirements for enforceability.

Employers that utilize mandatory arbitration should take this opportunity to review those contracts and revise them accordingly.

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OSHA Vaccine Rule Is Blocked; CMS Vaccine Rule Is Not

This afternoon the Supreme Court issued two opinions pertaining to “mandatory vaccination rules” .

The Court blocked the OSHA vaccine or test mandate, which was applicable to employers with 100 or more employees. The Court voted 6-3 to stay or block the OSHA Rule.

In a 5-4 decision the Court allowed the CMS Mandatory Vaccination Rule to proceed, as it stayed two District Court decisions which had enjoined the Rule. The CMS Rule applies to facilities that receive Medicare and Medicaid Funding , their employees, and contractors who provide services to those facilities.

In Tennessee this means the Tennessee COVID Law will remain in effect, but businesses governed by the CMS Rule can apply with the Comptroller for an exemption from the Tennessee law.

Stay tuned for further developments.

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OSHA’s Mandatory Vaccination Rule Gets New Life

On Friday evening (December 17th) the Sixth Circuit Court of Appeals dissolved the stay of OSHA’s Emergency Temporary Standard (ETS) which requires employers with 100 or more employees to mandate that employees get vaccinated against Covid-19 or be subject to mandatory weekly testing. You can read my blogpost summarizing the ETS requirements here.

Later Friday night numerous states and interest groups filed emergency applications with the U.S. Supreme Court seeking a stay of the ETS, as well as petitions for certiorari, which are requests that the Supreme Court take the case for review. We do not yet know whether the Supreme Court will take the case (here is one bet that it will). Hopefully, we will know the answer to that soon. In the meantime, what should employers do?

Employers should prepare to comply with the ETS, though they now have more time to do so. In light of the Sixth Circuit ruling, and the likelihood of further court review, OSHA issued the following statement over the weekend:

To provide employers with sufficient time to come into compliance, OSHA will not issue any citations for noncompliance with any of the ETS before January 10 and will not issue citations for noncompliance with the standard’s testing requirements before February 9th, so long as an employer is exercising reasonable, good faith efforts to come into compliance with the standard. OSHA will work closely with the regulated community to provide compliance assistance.

Reasonable, good faith efforts to comply are key pending final resolution of the issue. This situation will continue to evolve. As always, check here for updates!

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Judge Blocks Vaccine Mandate For Federal Contractors in Tennessee, Kentucky and Ohio

A federal judge on Tuesday blocked the COVID-19 vaccine mandate for federal contractors from going into effect in Tennessee, Kentucky and Ohio.

A U.S. District Judge in Kentucky granted a preliminary injunction preventing the mandate, enforced against federal contractors and subcontractors through Executive Order, from taking effect In Tennessee, Kentucky and Ohio, which had collectively challenged the rule. The mandate in the Executive Order requires effectively all employees of federal contractors and subcontractors to be fully vaccinated by Jan. 4. The court reasoned that the Executive Order likely exceeded President Biden’s authority over federal procurement, and that the states had shown enough proof to meet the standard for a preliminary injunction.

Stay tuned for further updates.

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What Employers Need To Know About Tennessee’s COVID-19 Law

This month Tennessee passed sweeping legislation that restricts employers and others on the requirements they can impose and actions they can take pertaining to COVID-19. The highlights from an employment law standpoint are as follows:

1) Prohibits employers from requiring vaccination or proof of vaccination by prohibiting employers from taking adverse action against employees who refuse to disclose their vaccination status –  “a private business, government entity, school, or local education agency shall not compel or otherwise take an adverse action against a person to compel the person to provide proof of vaccination if the person objects to receiving a COVID-19 vaccine for any reason.” 

The definition of “adverse action” means to deny a person employment privileges or to “discharge, threaten or otherwise discriminate against an employee in any manner that affects the employee’s employment, including compensation, terms, conditions, locations, rights, immunities, promotions, or privileges.”

2) Prohibits governmental employers from requiring an employee to wear a face covering, “unless severe conditions exist and the requirement is in effect for no more than 14 days. ” This provision does not apply to private employers or businesses.

3) Provides that individuals who left their employment because of an employer’s vaccine requirement or who were terminated for refusing to be vaccinated are eligible for unemployment benefits.  This section entitles an otherwise qualified claimant to receive retroactive benefits if they were separated for refusing to be vaccinated.

4) Provides that the commissioner of health has the sole authority to determine quarantine guidelines for a person if the person tests positive for COVID-19.     The definition of “quarantine” includes “the limitation or restriction of a person’s freedom of movement or isolation of a person, or preventing or restricting access to the premises upon which the person or the cause or source of COVID-19 may be found, . . ..”  

This language effectively precludes employers from implementing their own guidelines to deal with individuals who test positive or are in close contact with someone who tests positive since requiring employees to stay away from work would restrict their freedom of movement and/or restrict their access to the employer’s premises. 

The Department of Health has issued a revised document titled “Releasing Cases and Contacts from Isolation and Quarantine” that can be found here – https://www.tn.gov/content/dam/tn/health/documents/cedep/novel-coronavirus/Isolation-QuarantineRelease.pdf.  Unless or until the Commissioner says otherwise, this Guidance will likely constitute the applicable “quarantine guidelines” for purposes of the bill.  It is important to note the difference in the sections of the Guidance as it relates to actions which “must” be done if a person tests positive and those which “should” be done when a person is a close contact but has not tested positive.

5) Limits potential causes of action for loss, damage, injury, or death arising from COVID-19 to situations when the claimant proves by clear and convincing evidence that the defendant proximately caused the loss, damage, injury or death by an act or omission constituting gross negligence or willful misconduct.  It also contains certain pleading requirements that must be met.

6) Creates a private cause of action for injunctive relief and to recover compensatory damages and reasonable attorneys’ fees against an alleged violator.

7)  The act takes effect immediately and, except for the section regarding liability, terminates on July 1, 2023.

The law does not apply to certain businesses, including healthcare providers who are certified by or subject to fines from the Centers for Medicare & Medicaid Services (“CMS”). So, if you are covered by the CMS Mandatory Vaccination Rule you can (and must) comply with it without violating this Tennessee law.

Additionally, federal contractors and subcontractors who have to comply with the Executive Order which requires mandatory vaccination may seek an exemption from the law by applying in writing to the Tennessee Comptroller of the Treasury. To obtain the exemption you must show that complying with the Tennessee law would result in a loss of federal funding and an exemption is necessary to conform to a federally awarded contract or subcontract.  If granted the exemption is good for one year and may be renewed for no more that one calendar year.

The legal landscape on COVID-19 is changing rapidly. As always, stay focused, plan ahead and check here for updates.

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OSHA Suspends Mandatory Vaccination Rule After 5th Circuit Issues Stay

Late Friday the 5th Circuit Court of Appeals issued a stay of the OSHA ETS, a/k/a/ the Mandatory Vaccination Rule. After that ruling OSHA announced yesterday that it would suspend “activities related to the implementation and enforcement of the ETS pending future developments in the litigation”.

Please remember that this action by OSHA does not apply to employers governed by the Executive Order for federal contractors and subcontractors, or employers governed by the CMS Rule (hospitals, ambulatory surgery centers and other CMS certified facilities).

Stay tuned for further developments.

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OSHA’s Mandatory Vaccination Rule- What Employers Need To Know

On November 4th OSHA released an Emergency Temporary Standard (ETS) to minimize the risk of COVID-19 transmission in the workplace. The ETS requires most employers that have a total of 100 or more employees to either require all employees to be fully vaccinated against COVID-19 or be subjected to weekly testing and wearing a face covering at work. The highlights are set forth below.

Who is covered? All employers with 100 or more employees. Employees at all locations count. Part-time employees count. Independent contractors do not count.

Who is not covered? 1. Federal Contractors and Subcontractors covered under the “Mandatory Vaccination Executive Order”; 2. Healthcare providers who receive Medicare and/or Medicaid and are covered by the “CMS Mandatory Vaccination Rule”.

Are some employees exempt? Yes. The ETS does not apply to employees of covered employers : 1. Who do not report to a workplace where other employees or customers are present; 2. While working from home; 3. Who work exclusively outdoors.

Do the disability and religious exemptions still apply? Yes. Those employees who are legally entitled to a reasonable accommodation because of a disability (under the ADA) or a sincerely held religious belief (under Title VII) do not have to be vaccinated. Additionally, vaccination is not required for any employee for whom a vaccine is medically contraindicated or for whom medical necessity requires a delay in vaccination. The ETS provides that if an employee has a positive test result for, or diagnosis of, COVID-19, vaccination cannot be required for 90 days.

Do employers have to publish a policy? Yes, within 30 days from when the ETS was published. So, employers must have a policy by December 4th. OSHA has issued a form policy for employers to use.

When does vaccination have to be completed? By January 4, 2022. For employees who are getting a two dose vaccine (Pfizer or Moderna) the first shot must occur on or before December 4, 2021.

What records must covered employers maintain? Employers must ensure all employees who are not exempt are fully vaccinated. As part of fulfilling that requirement employers must maintain a record of each employee’s vaccination status and preserve acceptable proof of vaccination. Acceptable proof is a vaccination card, a record of immunization or a medical record. The employer must also maintain a roster of each employee’s vaccination status. These records and roster must be maintained as confidential medical records in accordance with federal law. These records must be preserved so long as the ETS is in effect.

Does the ETS provide for paid leave? Yes. Employers must provide up to 4 hours of paid time at the regular rate of pay, including travel time, for employees to get vaccinated. Employers must also provide reasonable time and paid sick leave to recover from side effects experienced from any vaccination.

Can employers require testing instead? Yes. Employers can elect to require weekly testing for all unvaccinated employees instead of vaccination. These employees must be tested at least once every seven days and provide documentation of the test result no later than the 7th day. If the employee does not comply with these requirements the employer must keep the employee removed from the workplace.

Who pays for the test? Employees must pay for the test. But employers can choose to do so. And a “do it yourself/at home” test result is only acceptable if it is conducted in the presence of the employer.

Do unvaccinated employees have to wear masks/face coverings? Yes, whenever they are around others in the workplace. An exception exists for eating and drinking.

What about employees who test positive? Employers must require employees to immediately notify them if they test positive or are diagnosed with COVID-19. These employees must be immediately removed from the workplace until they receive a negative NAAT test result and meet the CDC return to work criteria.

Are there other notification requirements? Yes. In addition to the policy employers must provide employees with the document entitled “Key Things To Know About COVID-19 Vaccines” and advise them of their rights to be free from discrimination for reporting a work related injury or illness and free from retaliation from making a complaint.

Are there OSHA reporting and record keeping requirements? Of course. All COVID-19 fatalaties must be reported to OSHA within 8 hours. Each COVID-19 hospitalization must be reported with 24 hours. And most records must be made available to OSHA for inspection by the end of the next business day.

Does the ETS preempt state law? Ye, if the state law is contrary to or requires less than the ETS. So if the Bill recently passed by the Tennessee General Assembly actually becomes law the provisions in it which pertain to employers will be moot.

The big unknown is whether the ETS will survive legal challenges. On Saturday, November 6th, the United States Court of Appeals for the 5th Circuit, which covers Louisiana, Texas and Mississippi, issued a temporary stay preventing the ETS from taking effect. The government has until 5p.m. on Monday, November 8th, to respond. The Order did not specify whether the stay is nationwide or applies only to the states under its jurisdiction. However, there are similar legal challenges pending in other courts, including the 6th Circuit Court of Appeals, which includes Tennessee.

In the meantime employers should prepare to comply with the ETS. While it might be enjoined or withdrawn, that has not yet happened and might not happen. As always, the failure to plan is a plan to fail.

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