On September 22, 2021, the U.S. Department of Labor (“DOL”) finalized a regulation which allows for penalties up to $1,100 per violation, plus back wages owed, whenever the DOL finds tipped workers have been cheated of tips.  Previously, a Trump Administration rule, which was never finalized, only allowed fines to be imposed for “repeated and willful” violations.  The new penalty provisions apply when employers, supervisors or managers keep tips intended for tipped workers such as servers, bartenders and the like.  The removal of the “repeated and willful” language from the text of the final rule presumably provides the DOL more flexibility to determine when penalties are warranted.  The final rule also addresses circumstances when supervisors or managers are permitted to retain tips and when they can contribute tips to a tip pool.  The final rule goes into effect November 23, 2021.

On Thursday September 9, 2021, President Biden outlined a multi-pronged plan to reduce the number of unvaccinated Americans in the United States, among other COVID-related initiatives.  In addition to issuing an Executive Order implementing vaccination requirements for federal workers and requiring vaccinations for healthcare workers, President Biden also directed The Department of Labor’s Occupational Safety and Health Administration (OSHA) to develop a rule impacting private employers with more than 100 employees.  The rule will be implemented through the Emergency Temporary Standard (“ETS”), which expedites the otherwise years-long process of developing standards in the event workers are exposed to “grave danger” and the ETS is needed to protect them.  The anticipated ETS will require a “fully vaccinated” workforce or require unvaccinated workers to produce a negative test result on at least a weekly basis before coming to work.

No other specifics of the yet-to-be-implemented ETS have been shared by the Administration or OSHA, but the following are questions beleaguered and financially stretched employers hope will be addressed by OSHA in the coming weeks, particularly given current delays and restricted availability of testing across the country:

  1. Who counts towards the 100+ employee threshold? Will OSHA use the same “Controlled Group” definition as in the Families First Coronavirus Response Act (“FFCRA”)? Should only W-2 employees be counted?  Should work-from-home/remote workers be included?
  2. Will weekly testing an option be available to all employees or only those who demonstrate a valid medical or religious exemption? In other words, will the ETS allow employers to choose between mandatory vaccination vs. mandatory testing in order to retain reticent workers and maintain already precarious workforces?
  3. Will implementing the vaccine mandate be subject to mandatory bargaining under Collective Bargaining Agreements?
  4. Who will be responsible for the cost of COVID-19 testing, employers or employees?
  5. Will the federal government provide financial assistance to pay for additional testing costs?
  6. Will time spent getting weekly COVID tests (and waiting for test results before being permitted to come to work) be compensable time under the Fair Labor Standards Act?
  7. What test results will be acceptable (at-home, rapid, or PCR)?
  8. What information will employers be permitted to ask employees to determine the authenticity of test results and vaccine status?
  9. How will OSHA define “per violation” for purposes of levying citations and the associated $14,000 penalty (one per employer, one per facility, one per unvaccinated/untested employee)?
  10. Will the ETS modify OSHA’s recordkeeping requirements that employee medical records be maintained by employers for the duration of employment plus 30 years thereafter?
  11. Will the ETS be prospective or retroactive such that those already vaccinated will be required to demonstrate proof of vaccination?
  12. Will this regulation cover future vaccine boosters the Administration has stated it is prepared to begin offering a week from today on September 20, 2021?
  13. Will employers be required to provide vaccination incentives to employees under any existing incentive policies?

Although the White House has indicated more guidance will be forthcoming by September 24, 2021, the ETS is not expected for at least a few weeks, no effective date for the ETS or deadlines for vaccination have been offered.  Legal challenges are also being weighed that may delay, stay or vacate the rule once it is issued.

Frantz Ward will provide updates when the ETS is issued.  In the meantime, employers should seek counsel who are familiar with dealing with OSHA, encourage employees to become vaccinated before the ETS is issued, examine their record retention and accommodation policies, and begin to evaluate internal HRIS systems and capabilities for data collection and tracking purposes.

NLRB General Counsel Jennifer A. Abruzzo followed up her 10(j)-warning shot with another admonition, this time encouraging regions to request the “full panoply of remedies available to ensure that victims of unlawful conduct are made whole for losses suffered as a result of unfair labor practices.”

General Counsel Abruzzo began her September 8, 2021, Memorandum (GC21-06) by reminding the public that the Board has expressed “a willingness to explore a new make-whole remedy to those traditionally ordered: an award of consequential damages to make employees whole for economic losses (apart from the loss of pay or benefits) suffered as a direct and foreseeable result of an employer’s unfair labor practice.” Consequential damages, however, are not the only new remedies she hopes will be utilized in the near future. Indeed, Memorandum GC21-06 outlined extensive new potential remedies that General Counsel Abruzzo wants to explore in three major unfair labor practice areas, those being; (1) alleged wrongful terminations, (2) organizing campaigns issues, and (3) refusals to bargain. Per the General Counsel, potential remedies that Regions should seek include:

Remedies in Cases Involving Unlawful Firings:

  • Consequential damages, Front pay, Liquidated backpay;
  • Remedies previously highlighted in GC Memorandum 15-03, such as notice readings, publication of the notice in newspapers, and/or other forums, training for employees on their rights under the Act, training for supervisors and managers on compliance with the Act, Gissel bargaining orders, union access to employee contact information, reimbursement for organizing or bargaining expenses, consequential damages, instatement of qualified referred candidates, and any other remedies that may be appropriate in a particular case; and,
  • Compensation for work performed under unlawfully imposed terms, employer sponsorship of work authorizations, and any other remedies that would prevent an employer from being unjustly enriched by its unlawful treatment of undocumented workers.

Remedies in Cases Involving Organizing Campaign Issues:

  • Union access;
  • Reimbursement of organizational costs;
  • Reading of the Notice to Employees and the Explanation of Rights to employees by a principal or, in the alternative, by a Board Agent, in the presence of supervisors and managers, with union representatives being permitted to attend all such readings, or, where appropriate, video recording of the reading of the notice and the Explanation of Rights, with the recording being distributed to employees by electronic means or by mail;
  • Publication of the notice in newspapers and/or other forums (such as online publications and websites maintained by an employer, including social media websites), chosen by the Regional Director and paid for by the employer, so as to reach all current and former affected employees, as well as future potential hires;
  • Visitorial and discovery clauses to assist the Agency in monitoring compliance with the Board’s Orders;
  • Extended posting periods for notices where the unfair labor practices have been pervasive and occurred over significant periods of time;
  • Distribution of notices and the Board’s Orders to current and new supervisors and managers
  • Training of employees, including supervisors and managers, both current and new, on employees’ rights under the Act and/or compliance with the Board’s Orders;
  • Instatement of a qualified applicant of the union’s choice in the event a discharged employee is unable to return to work; and,
  • Broad cease-and-desist orders requiring violating parties to cease and desist “in any other manner” from interfering with, restraining, or coercing employees in the exercise of their Section 7 rights.

Remedies in Cases Involving Refusals to Bargain

  • Bargaining schedules;
  • Submission of periodic progress reports to the Agency on the status of bargaining;
  • 12-month insulation periods, including extensions of the certification year, from the date an employer commences compliance with its bargaining obligations pursuant to a Board’s Order, during which a union’s status as bargaining representative may not be challenged;
  • Reinstatement of unlawfully withdrawn bargaining proposals;
  • Reimbursement of collective-bargaining expenses;
  • Engagement of a mediator from the Federal Mediation and Conciliation Service (FMCS) to help facilitate good-faith bargaining between parties;
  • Training of current and/or new supervisors and managers in cases involving failures to bargain; and,
  • Broad case-and-desist orders.

While the General Counsel’s list of potential new remedies is extensive, it is not exhaustive. The General Counsel took care to indicate that she, and therefore the Board, will spare no level of creativity to provide what she considers “the most effective relief possible.” The listed potential remedies, however, show that the Board looks to become deeply involved in the labor management relationship when imposing unfair labor practice penalties. These remedies have the potential to not only financially impact employers, but also impact the level of control employers have going forward. Employers should take notice of the General Counsel’s must recent warning shot.

If you have any questions regarding the General Counsel’s memorandum, potential remedies, or issues related to labor and employment law, feel free to contact an attorney in Frantz Ward’s labor & employment group.

In July, the Department of Labor (“DOL”) announced a Notice of Proposed Rule Making to develop enforcement and implementation procedures for President Biden’s Executive Order 14026. Executive Order 14026, which was signed on April 27, 2021, requires federal contractors to pay their employees at least $15.00 per hour beginning January 30, 2022. Beginning January 1, 2023, and each year annually, the minimum wage for employees of federal contractors will increase based upon inflation. The current minimum wage for federal contractor employees is $10.95.

The minimum wage for federal contractors was last raised in January 2015 following the implementation of President Obama’s Executive Order 13658, which raised the wage to $10.10 with an annual increase based upon inflation.

The DOL’s proposed rule includes the following:

  • An anti-retaliation provision;
  • DOL procedures for addressing employee complaints, investigations, and adjudication;
  • A clause to be included in all covered contracts; and
  • A poster outlining the updated minimum wage to be posted in a conspicuous place.

The public comment period for the proposed rule closed on August 23, 2021, paving the way for finalizing the rule. The final rule is expected to be released by the DOL in November 2021. As currently written, the rule will only apply to contracts entered, renewed, or extended after January 30, 2022. Accordingly, federal contractors with current contracts may not need to implement the wage increase immediately.

Almost immediately after the FDA issued full approval of the Pfizer/BioNTech COVID-19 vaccine earlier this week, employers began rolling out mandatory vaccination policies. These policies are raising a variety of legal and practical questions for employers, including whether employers are required to compensate employees for time spent getting the vaccine.

Although the answer to this question remains unclear in some states, it is crystal clear in others. In California, for example, the Labor Commissioner issued guidance specifically requiring employers to pay employees for time spent getting a mandated test or vaccine. This guidance explained in part that, “If the employer requires an employee to obtain a COVID-19 test or vaccination . . . then the employer must pay for the time it takes for the testing or vaccination, including travel time.” https://www.dir.ca.gov/dlse/COVID19resources/FAQs-Testing-Vaccine.html

A related question is whether employers have to have to pay for the actual vaccine if they require their employees to get it. California law clearly requires employers to pay this cost, but the law in many other states remains unsettled.

State legislatures and administrative agencies will almost certainly face pressure to provide clear guidance on these and other COVID-19 vaccine issues. Until that happens, employers are wise to proceed with caution.

Sparing no time since she issued her Advice Memorandum last week, NLRB General Counsel Jennifer Abruzzo issued GC released Memorandum GC 21-05, outlining her position on the importance of 10(j) injunction proceedings.

Section 10(j) of the National Labor Relations Act authorizes the National Labor Relations Board to seek temporary injunctions in federal district courts to stop alleged unfair labor practices (including maintaining the “status quo”) while the case is being litigated before the NLRB. While 10(j) injunctions have long been understood to be a powerful tool at the General Counsel’s disposal, how often they are used has generally been dependent on the political party in power. While the General Counsel must seek authorization from the Board prior to proceeding to court to obtain a 10(j) injunction, Memorandum GC 21-05 certainly suggests the Board appears poised to utilize 10(j) injunctions more than the prior administration.

General Counsel Abruzzo’s memorandum makes clear, however, that she will not shy away from using 10(j) injunctions to “timely protect employees’ Section 7 rights.” General Counsel Abruzzo firmly believes 10(j) injunctions have led to positive results in ensuring the protection of employees’ rights. As such, she intends “to aggressively seek Section 10(j) relief where necessary to preserve the status quo and the efficacy of final Board orders.”

Employers should take notice of the General Counsel’s warning, and should not be surprised if more Board investigators mention 10(j) injunctions early in unfair labor practice investigations. Employers should also think critically about charges and allegations that may raise 10(j) concerns at the Board, and work swiftly to ensure their position does not warrant court involvement.

If you have any questions regarding the General Counsel’s memorandum, 10(j) injunctions, or issues related to labor and employment law, feel free to contact an attorney in Frantz Ward’s Labor & Employment Practice Group.

On August 12, 2021 NLRB General Counsel Jennifer A. Abruzzo issued her “Mandatory Submissions to Advice” memorandum (Memorandum GC 21-04), outlining her agenda items and priority issues for NLRB Regional Directors, Officers-in-Charge, and Resident Officers. The memorandum offers a glimpse into a number of issues the new General Counsel believes need to be re-evaluated, largely because, as she indicated in the memo, the prior Board “overrul[ed] many legal precedents which struck an appropriate balance between the rights of workers and the obligations of unions and employers.” Given the current political climate, and the position of the General Counsel, employers can expect significant NLRB policy changes in the coming years.

The memo is divided into three sections. The first section Identifying “doctrinal shifts” of the past several years. The memorandum identifies 11 precedential topics she will be focusing on, likely to the detriment of employers, those being:

  • Employer Handbook rules
  • Confidentiality provisions/Separation agreements and instructions
  • What constitutes protected concerted activity
  • Wright Line/General Counsel’s burden
  • Remedial issues
  • Union access
  • Union dues
  • Employee status
  • Board jurisdiction over religious institutions
  • Employer duty to recognize and/or bargain
  • Deferral

The second section identifies seven additional areas and initiatives the General Counsel wants to carefully examine during her tenure, including: (1) Employee status, (2) Weingarten, (3) National Mediation Board vs. NLRB jurisdiction, (4) Employer duty to recognize and/or bargain, (5) Employees’ Section 7 right to strike and/or picket, (6) Remedies and compliance, and (7) Employer interference with employees’ Section 7 rights.

The third and final section identifies a litany of other casehandling matters the General Counsel will be focusing on, ranging from cases involving injunctions, partial lockouts, and the need to harmonize the NLRA with local, state and other federal statutes.

While the General Counsel’s memorandum is extensive, it only generally outlines topics that General Counsel, and presumably the Biden administration, will be focusing on over the next several years. It is not entirely clear how the General Counsel plans to change the matters identified. It is fair to assume, however, that the General Counsel will focus on changing the identified topics in such a way to further protect employees and their right to collectively bargain. At this time we don’t know precisely what changes will be made, but it is fair to assume the Board will seek to reimplement prior-democratic era changes will be made, but it is fair to assume the Board will seek to reimplement prior-democratic era interpretations of the issues identified. Unless and until a case is actually before the NLRB, how the current law will be changed is unknown.

Based on the topics covered in the General Counsel’s memorandum, employers approaching collective bargaining should think strategically about the current state of their management’s rights clauses, and other reserved rights as outlined in their CBA. The General Counsel may very well focus on specific rights and waivers outlined in the CBA. Employers should likely proceed with trying to obtain contract language that is as specific as possible in the near future.

Employers should also be thinking more critically about what constitutes protected concerted activity, looking closely at workplace rules that may be focused on limiting certain speech or behavior at work. This exercise should also not be limited to unionized employers as non-union employees have Weingarten rights, and a proactive Board will seek to ensure that standard is maintained, and potentially even expanded. Non-union employers need to be on guard for expansive labor policies that the new General Counsel could seek to enforce, likely attempting to distance the current Board from policies implemented and utilized during the Trump administration.

If you have any questions regarding the General Counsel’s memorandum, or issues related to labor and employment law, feel free to contact an attorney in Frantz Ward’s labor & employment group.

Today OSHA updated its previously issued “Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace.”  The updates focus on: 1) helping employers protect unvaccinated workers (including those who are only partially vaccinated) or otherwise at risk (including those who are immunocompromised; and 2) implementing new guidance involving fully-vaccinated workers located in areas of substantial or high community transmission.  They also highlight high-risk industries, including manufacturing, and provide additional recommendations for those industries.

General Recommendations for all Workplaces

Noting updated evidence and information issued by the CDC on July 28, 2021, and preliminary evidence suggesting that fully vaccinated people who do become infected with the Delta variant can be infectious and can spread the virus to others, OSHA has largely adopted the CDC’s recommendations, noting specifically that “employers should “consider adopting policies that require workers to get vaccinated or to undergo regular COVID-19 testing – in addition to mask wearing and physical distancing – if they remain unvaccinated.”

Citing the OSH Act’s General Duty Clause, as well as its established standards that remain in place regarding PPE, respiratory protection, sanitation, bloodborne pathogens and access to medical and exposure records, OSHA offers the following multi-layered interventions on which employers should engage with workers and representatives and consider implementing (many of which are included in existing COVID-19 prevention programs):

  1. Facilitating employee vaccinations, including granting paid time off for employees to get vaccinated and recover from any side effects and adopting policies that require workers to get vaccinated or to undergo regular COVID-19 testing – in addition to mask wearing and physical distancing – if they remain unvaccinated.
  2. Instructing workers who are infected, unvaccinated workers who have had close contact with someone who tested positive for SARS-CoV-2, and all workers with COVID-19 symptoms to stay home from work, including ensuring that absence policies are non-punitive and eliminating or revising policies that encourage workers to come to work sick or when unvaccinated workers have been exposed to COVID-19.
  3. Implementing 6 feet of physical distancing in all communal work areas for unvaccinated and otherwise at-risk workers, including limiting the number of unvaccinated or otherwise at-risk workers in one place at any given time and using transparent shields or other solid barriers to separate workers at fixed workstations where unvaccinated or otherwise at-risk workers are not able to remain at least 6 feet away from other people.
  4. Providing workers with face coverings or surgical masks at no cost as appropriate, unless their work task requires a respirator or other PPE and while providing reasonable accommodations for workers unable to wear or who have difficulty wearing certain types of face coverings due to a disability or based on a religious accommodation under federal anti-discrimination laws.
  5. Educating and training workers on COVID-19 policies and procedures using accessible formats and in language they understand, including training management and non-management employees, contractors and visitors on policy implementation and the risks of contracting COVID-19 and the Delta variant.
  6. Suggesting or requiring that unvaccinated customers, visitors, or guests wear face coverings in public-facing workplaces such as retail establishments, and that all customers, visitors, or guests wear face coverings in public, indoor settings in areas of substantial or high transmission based on the CDC’s Integrated COVID-19 County Tracking System
  7. Maintaining and Improving Ventilation Systems, some options for which are discussed in the CDC’s Ventilation in Buildings and in the OSHA Alert: COVID-19 Guidance on Ventilation in the Workplace.
  8. Performing routine cleaning and disinfection, including following CDC cleaning and disinfection recommendations if someone who has been in the facility within 24 hours is suspected of having or confirmed to have COVID-19, as well as mandatory OSHA standards 29 CFR 1910.1200 and 1910.132, 133, and 138 for hazard communication and PPE appropriate for exposure to cleaning chemicals.
  9. Recording and reporting COVID-19 infections and deaths under OSHA’s mandatory rules in 29 CFR part 1904 for work-related cases of COVID-19 illness if: 1) the case is a confirmed case of COVID-19; 2) the case is work-related (as defined by 29 CFR 1904.5); and 3) the case involves one or more relevant recording criteria (set forth in 29 CFR 1904.7) (e.g., medical treatment, days away from work).
  10. Implementing protections from retaliation and setting up an anonymous process for workers to voice concerns about COVID-19-related hazards, being mindful of Section 11(c) of the OSH Act, which prohibits various adverse actions against employees who engage in various protected activities, and ensuring workers know whom to contact with questions or concerns about workplace safety and health (ideally using a hotline or other method for workers to voice concerns anonymously).
  11. Following other applicable mandatory OSHA standards that apply to protecting workers from infection remain in place, including PPE (29 CFR part 1910, Subpart I (e.g., 1910.132 and 133)), respiratory protection (29 CFR 1910.134), sanitation (29 CFR 1910.141), protection from bloodborne pathogens: (29 CFR 1910.1030), OSHA’s requirements for employee access to medical and exposure records (29 CFR 1910.1020), and OSHA’s mandatory Emergency Temporary standard for many healthcare workplaces.

Additional Recommendations for High-Risk Workplaces, Including Manufacturing Settings

In addition to those general recommendations described above, OSHA also provides in its updates certain best practices for higher-risk workplaces – which include manufacturing; meat, seafood, and poultry processing; high-volume retail and grocery; and agricultural processing settings – to protect unvaccinated and otherwise at-risk workers.

In all workplaces with heightened risk due to workplace environmental factors where there are unvaccinated or otherwise at-risk workers in the workplace, OSHA recommends that employers:

  • Stagger break times in these generally high-population workplaces, or provide temporary break areas and restrooms to avoid groups of unvaccinated or otherwise at-risk workers congregating during breaks. Such workers should maintain at least 6 feet of distance from others at all times, including on breaks.
  • Stagger workers’ arrival and departure times to avoid congregations of unvaccinated or otherwise at-risk workers in parking areas, locker rooms, and near time clocks.
  • Provide visual cues (e.g., floor markings, signs) as a reminder to maintain physical distancing.
  • Require unvaccinated or otherwise at-risk workers, and also fully vaccinated workers in areas of substantial or high community transmission, to wear masks whenever possible, encourage and consider requiring customers and other visitors to do the same.
  • Implement strategies (tailored to your workplace) to improve ventilation that protects workers as outlined in CDC’s Ventilation in Buildings and in the OSHA Alert: COVID-19 Guidance on Ventilation in the Workplace, and ASHRAE Guidance for Building Operations and Industrial Settings During the COVID-19 Pandemic.

In meat, poultry, and seafood processing settings; manufacturing facilities; and assembly line operations (including in agriculture) involving unvaccinated and otherwise at-risk workers, OSHA recommends that employers:

  • Ensure adequate ventilation in the facility, or if feasible, move work outdoors.
  • Space such workers out, ideally at least 6 feet apart, and ensure that such workers are not working directly across from one another. Barriers are not a replacement for worker use of face coverings and physical distancing.
  • If barriers are used where physical distancing cannot be maintained, they should be made of a solid, impermeable material, like plastic or acrylic, that can be easily cleaned or replaced. Barriers should block face-to-face pathways and should not flap or otherwise move out of position when they are being used.
  • Barriers do not replace the need for physical distancing – at least six feet of separation should be maintained between unvaccinated and otherwise at-risk individuals whenever possible.

It is important to note that while OSHA specifically qualifies its updates as “advisory in nature and informational in content,” employers should anticipate that OSHA inquiries will include questions regarding some or all of the foregoing recommendations on a going forward basis.

As anticipated and reported in a prior blog discussing action items on President Biden’s agenda, and as foreshadowed by the Notice of Proposed Rulemaking issued by the U.S. Department of Labor (DOL) in March, 2021, the DOL on July 30, 2021 withdrew the prior Joint Employer Final Rule that was published during the Trump administration, and which had been in effect since January, 2020. The Recission of the Final Rule takes effect on September 28, 2021.

Under the Final Rule published during the Trump administration, the decision of whether an employee was jointly employed by two or more employers was determined by analyzing the extent to which an alleged employer was involved in the following four employment actions:
1) the hiring and firing of the employee
2) the supervision and control of the employee’s work schedule or conditions of employment
3) the determination of the employee’s rate of pay and the employee’s method of payment
4) the maintenance of the employee’s employment records.

The Trump Final Rule also focused on whether there was actual, rather than theoretical, control over the above factors. This Final Rule had been successfully challenged by a number of states, with the S.D. N.Y. vacating the Final Rule in September, 2020, on the basis that it conflicted with the Fair Labor Standards Act (FLSA) and violated the Administrative Procedures Act. The court also stated that it was arbitrary and capricious since the Final Rule did not adequately explain the change from prior DOL interpretations. State Of New York et al v. Scalia, No. 1:2020cv01689 (S.D.N.Y. 2020). While the DOL appealed the decision of the S.D.N.Y., it noted in its appeal that its then proposed rulemaking would likely moot the appeal.

With the recission of the Trump Final Rule, the DOL is not proposing a new rule or guidance, but rather reverting to the rules in place under the FLSA and court decisions prior to January, 2020, namely whether there is joint employment depends upon a number of factors under an “economic realities” test, such as the nature of the work being performed, whether the workers are integral to a company’s business, and whether the companies could potentially control the worker’s working conditions.

Non-compete agreements have recently become a popular focus of the federal and state governments. Several weeks ago, President Biden issued an Executive Order, “Promoting Competition in the American Economy” which asked the Federal Trade Commission (“FTC”) to exercise the FTC’s statutory rulemaking authority to curtail the unfair use of non-compete agreements and other clauses or agreements that may unfairly limit worker mobility.

Like the federal government, states have taken up similar initiatives with the goal of limiting an employer’s use of non-compete and/or non-solicitation agreements. For example, the Illinois General Assembly recently passed an amendment to the Illinois Freedom to Work Act which would require employers to drastically alter their non-compete and non-solicitation agreements, and their use of the same. The amendment is expected to be signed into law by the Governor and will become effective January 1, 2022.

Among other things, the amendment would:

  • Require non-competes and non-solicitation agreements to be supported by “adequate consideration” as defined by the law;
  • Define “adequate consideration” as either: (i) two years of continuous employment, or (ii) employment of the individual by the employer for “a period of employment plus additional professional or financial benefits or merely professional or financial benefits that are adequate by themselves.”
  • Require employers to (i) advise the employee in writing to consult with an attorney before entering into a non-compete or non-solicitation agreement, and (ii) provide the employee with a copy of that agreement at least 14 calendar days before the employee begins employment or provide the employee at least 14 calendar days to review the agreement.
  • Prohibit non-competes with employees who have actual or expected “earnings” of $75,000 per year or less.
  • Prohibit non-solicitation agreements with employees who have actual or expected “earnings” of $45,000 per year or less.

The amendment would only apply to non-compete and/or non-solicitation agreements entered into after its effective date – so January 1, 2022. The amendment virtually guarantees that employers who operate in Illinois must re-write their non-compete and non-solicitation agreements. Employers should have those agreements prepared by January 1, 2022.

President Biden’s executive order, and the passage of this amendment by the Illinois state legislature, show that governing bodies are focused on limiting the use of non-compete agreements. Employers should monitor developments in non-compete law and can expect for the law, at least in the short term, to continue to change. Employers should review their non-compete, non-solicitation, and confidentiality agreements to ensure that each is not broader than necessary to protect legitimate business interests. And, employers should refine these agreements so that they protect those interests that are truly important to the business.