Recently, we posted about President Biden’s COVID-19 Action Plan, “Path out of the Pandemic” (the Memo). To recap: the Memo instructs OSHA to develop and issue an Emergency Temporary Standard (ETS) to require all employers with 100+ employees to ensure their workers are vaccinated against COVID-19 or to require them to submit to
What’s all this talk about federal regulation of non-compete agreements?
On July 9, 2021, the Biden Administration issued a sweeping Executive Order called Promoting Competition in the American Economy (Order). Although it does not immediately change the current legal landscape governing non-compete agreements (or any other aspects of U.S. antitrust enforcement), the Order encourages the Federal Trade Commission (FTC) to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility”. In the wake of the Order and other calls for more rigorous enforcement of employee non-compete and similar restrictive covenants, many within the business community wonder if a federal crackdown on non-compete agreements is coming. We address this issue below, and discuss steps employers may want to consider in light of the potential changes ahead.
According to the Fact Sheet accompanying the Order, roughly half of private-sector businesses require at least some employees to sign post-employment non-compete agreements, affecting an estimated 36 to 60 million workers. On multiple occasions over the past decade-plus, there have been calls for federal agencies to investigate and curtail the use of such agreements. President Biden’s Order is the most recent, and potentially significant, development in this area. He had vowed during his campaign to “eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets.” The Order is a further step towards fulfilling his campaign promise.
According to the White House, the Order “includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.” One provision in the Order takes direct aim at non-competes:
. . . the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.
The language in the Order is not as strident as the wording in the Fact Sheet (which encourages the FTC to “ban or limit” non-compete agreements). But it certainly is expansive, targeting any “other clauses or agreements that may unfairly limit worker mobility.” We do not know if the FTC will follow the President’s lead and issue regulations addressing non-compete and similar agreements. But, at a minimum, we anticipate that employee non-compete, non-solicitation, no-rehire, and similar restrictive covenants will receive closer scrutiny by the Biden Administration, and that stricter enforcement of such agreements is very possible.
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Many NJ COVID-related Executive Orders set to expire July 4
On June 4, 2021, the New Jersey legislature passed legislation (A5820/S3866) enabling the end of the COVID-19 Public Health Emergency in place since March 9, 2020. Under the legislation, the majority of New Jersey’s COVID-19 related Executive Orders will lapse on July 4, 2021. The legislation specifically keeps fourteen Executive Orders in place until January 1, 2022 (which may be subject to further extension):
- Executive Order 106 (Eviction Moratorium)
- Executive Order 111 (Healthcare reporting)
- Executive Order 112 (COVID-19 Health Care Responders)
- Executive Order 123 (Insurance Premium Grace Periods)
- Executive Order 127 (Rulemaking Deadlines)
- Executive Order 150 (Outdoor Dining Protocols and Process to Expand Premises for Liquor License Holders)
- Executive Order 159 (Extension of Certain Statutory Deadlines)
- Executive Order 170 (Extension of Certain Statutory Deadlines)
- Executive Order 178 (Extension of Certain Statutory Deadlines)
- Executive Order 207 (Enrollment in NJ Immunization Information System)
- Executive Order 229 (Utility Shut-off Moratorium)
- Executive Order 233 (Stimulus Payments Exempt from garnishment)
- Executive Order 237 (Summer Youth Overnight and Day Camps)
- Executive Order 242 (Lifting of Restrictions)
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New Jersey issues “remain home” directive and limits on business operations
In response to the COVID-19 pandemic, on Saturday, March 21, 2020, New Jersey Governor Phil Murphy issued an executive order that takes effect at 9:00 p.m. The order prohibits social gatherings and contains a “remain home” directive absent proscribed needs, like obtaining food, seeking medical services, visiting family, attending religious services, engaging in outdoor recreation while social distancing, or reporting to or performing your job. Although the order specifically permits New Jersey residents to leave their homes for work, the order limits the operations of certain New Jersey businesses as follows:
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