On Tuesday, the Federal Trade Commission (“FTC”) issued its long-awaited final rule regarding non-compete agreements. The FTC determined that non-compete agreements are an unfair method of competition and, therefore, a violation of the FTC Act. Once the rule is effective, employers may not enter new non-compete agreements with employees or enforce existing non-compete agreements against former employees, other than senior executives. The rule only applies to businesses that are subject to the FTC Act, which generally does not include non-profit corporations.

The rule has a few exceptions to the non-compete ban, which are outlined below:

  1. Senior Executives: Existing non-compete agreements with senior executives remain enforceable. However, employers may not enter new non-compete agreements with senior executives. A senior executive is a worker earning more than $151,164 annually who is in a “policy-making position.” The FTC makes clear that this exception is very narrow. The definition is meant to include high-ranking positions such as the President or Chief Executive Officer of an organization, and the FTC estimates that less than 1% of workers in the country meet this definition.
  2. Sale of a Business: The ban on non-competes does not apply to non-compete clauses that are entered as part of a sale of a business entity, a person’s ownership in a business entity, or substantially all of a business entity’s operating assets.
  3. Current Cause of Action: If you have a cause of action currently pending regarding a former employee’s violation of a non-compete agreement, you may still pursue the cause of action.

Prior to the rule’s effective date, employers must provide notice to employees (other than senior executives) who are currently bound by a non-compete provision that the employer will not be enforcing the non-compete provision. The FTC has provided a model notice available here.

The rule is set to go into effect 120 days from its publication in the Federal Register. However, it is expected that various business groups will quickly file suit to challenge the rule, which will delay the effective date.

While non-compete agreements may be in limbo, employers can still use confidentiality agreements, non-solicitation agreements, and federal and state trade secret laws to protect their interests. But do not forget to check for any state-specific restrictions regarding confidentiality and non-solicitation agreements.

The Equal Employment Opportunity Commission (“EEOC”) has finalized its regulations for the Pregnant Workers Fairness Act (“PWFA”), which went into effect last summer. After issuing a Notice of Proposed Rulemaking in August 2023, summarized here, and a notice and comment period, the EEOC published the Final Rule in the Federal Register on April 19, 2024.

As previously reported, the PWFA is modeled after the Americans with Disabilities Act (“ADA”) and requires employers to make reasonable accommodations based on known limitations related to pregnancy, childbirth, or related medical conditions. Employers are not required to grant an accommodation request if it imposes an undue hardship. The terms “reasonable accommodation” and “undue hardship” have the same meaning as under the ADA and employers should follow the same interactive process after receiving a request for an accommodation.

Below are significant points from the final regulations:

  • Lactation, miscarriage, stillbirth, episodic pregnancy-related conditions (such as morning sickness) and “having or choosing not to have an abortion” are readily apparent medical conditions related to pregnancy or childbirth for which employees can seek reasonable accommodations.
  • Reasonable accommodations can include: additional breaks to drink water, eat, or use the restroom; a stool to sit on while working; reserved parking; modification of equipment or uniforms; time off for health care appointments; temporary reassignment; temporary suspension of certain job duties; telework; or time off to recover from childbirth or a miscarriage, among others.
  • Time off is unpaid, unless employers’ policies indicate otherwise.
  • Early and frequent communication between employers and employees is encouraged in order to raise and resolve requests for reasonable accommodation in a timely manner.
  • Employers are not required to seek supporting documentation when an employee asks for a reasonable accommodation under the PWFA and should only do so when it is reasonable under the circumstances.

The regulations also provided further explanation on key issues for employers, including:

  • When an accommodation would impose an undue hardship on an employer and its business; and
  • How employers may assert defenses or exemptions (including those based on religion) to accommodation requirements if an employee files a discrimination charge.

The regulations go into effect on June 18, 2024. If you have any questions about the PWFA, please contact Katie McLaughlin or any member of Frantz Ward’s Labor & Employment Group.

Recently, the National Labor Relations Board (“NLRB”) announced a settlement it “secured” which required a company to rescind certain work rules and pay two discharged employees $297,000. Of note, the workers were not discharged for violating the alleged unlawful work rules. In addition, the workplace was not unionized and no union organizing activity had occurred.

A review of the underlying facts suggests nothing more than a typical employment dispute. A furniture seller acquired a new facility and implemented its own policies and practices. Two employees (including a Shift Manager) took issue with those policies and practices and repeatedly violated company policy through insubordinate and other behavior (e.g., using offensive and inappropriate language in customers’ presence). The company-employee friction culminated when one of the employees said the owner was “high” for implementing the new policies. As a result, the company discharged the employees.

The discharged employees subsequently filed an unfair labor practice charge. Among other things, the employees alleged they had expressed safety concerns by claiming the owner was “high.” As part of its investigation, the NLRB obtained the company’s employment policies. The Board then concluded that certain policies unlawfully prohibited employees from discussing their working conditions. Those policies included: a previously rescinded wage disclosure policy (which inadvertently had been left in the new hire packet); an IT policy regarding use of email systems and company equipment; and policy language regarding use of the company’s confidential information and intellectual property. Notably, the company did not claim the employees violated the policies nor did any discussion of the policies occur in connection with the employees’ discharge. In fact, the company had not recently disciplined or discharged any employees for violating these policies. Nonetheless, the Board pursued the perceived National Labor Relations Act violations against the company, ultimately filing a complaint and seeing the matter proceed to a hearing before the parties settled.

The Board’s aggressive approach in this matter highlights the importance of ensuring all employers maintain properly updated employee handbooks and policies. This holds true regardless of whether a workplace is unionized or whether organizing activity is underway. 

If you have questions about this matter, your employee handbook/policies, or other Labor and Employment issues, please do not hesitate to contact Andrew Cleves or another member of the Frantz Ward Data Labor and Employment Practice Group.

On April 1, 2024, a new final rule was published which significantly revises OSHA’s longstanding regulations regarding an employee’s right to choose a representative to accompany parties during an OSHA’s onsite inspection and increases the likelihood of union access to non-union workplaces.

As outlined in Section 8 of the Occupational Safety and Health Act, employees and employers have the right to choose a representative to participate during OSHA’s physical inspection of the workplace, which may result from employee complaints, emphasis programs, and situations (like serious workplace injuries) that rank high on OSHA’s list of inspection priorities. This physical inspection process, which follows the opening conference, is commonly referred to as the “walkaround.” After judicial challenge to an earlier attempt made by the Obama Administration to affect this change informally through a guidance letter, the Biden Administration recently completed OSHA’s formal rulemaking process.

Under the new final rule, employees are now permitted to bring non-employee third parties on OSHA walkarounds if these individuals are “reasonably necessary to the conduct of an effective and through physical inspection of the workplace by virtue of their knowledge, skills, or experience.”  OSHA guidance indicates that reasons for a non-employee third party representative may include language barriers or technical or practical knowledge or experience about the processes and hazards present in the workplace that the OSHA compliance officer may not have. Not surprisingly, the final rule gives the OSHA compliance officer discretion to determine whether an employee’s choice of a non-employee third party is necessary.

In addition to expecting OSHA compliance officers to be extremely deferential to employee’s choice of representative, employers should also anticipate confidentiality and trade secret disagreements, as well as attempts by community and union organizers to gain access to non-union workplaces and (vice versa) attempts by employees to introduce a union presence in their non-unionized workplaces.

Employers should contact experienced OSHA defense counsel to immediately discuss the implications of OSHA’s new rule and strategies regarding when and how to dispute qualifications of a proposed third-party employee representative and to deny access to their workplace.

Ohio employers with plans to enforce non-compete agreements may have to think again in light of a recent Ohio Appellate Court decision. In Kross Acquisition Co. v. Groundworks Ohio, 2024-Ohio-592, the Court of Appeals upheld a lower court’s refusal to enforce an agreement barring a former Kross employee from competing against Kross and soliciting its customers. The lower court reached this decision even though the employee admittedly went to work for a competitor and took on job duties and a sales territory that directly overlapped with those he had at Kross. The basis for the court’s refusal to enforce the agreement was that the agreement was overly broad because it barred the employee from working anywhere in Ohio and Kentucky, though his sales territory at Kross only covered portions of those states.

The Kross case is particularly notable because the lower court could have modified the agreement and enforced a narrower scope of restrictions. For example, the court could have enforced the agreement to the extent it barred the employee from competing against Kross in his former Kross sales territory. Though this type of rewriting agreements – or “blue penciling” – is something that Ohio courts customarily do, the lower court refused to so and simply found the agreement unenforceable as a whole. On review, the Court of Appeals agreed, finding that the bedrock case in Ohio for evaluating non-compete agreements, Raimonde v. Van Blerah, did not require blue penciling.  Rather, a court can simply void the restrictions if there are too many factors and considerations necessary to easily rewrite the agreement.

The decision is significant because it gives trial courts the leeway to simply refuse to enforce agreements they consider unreasonable, rather than rewriting them.  The case serves as a stark reminder that it is paramount, when preparing non-compete and non-solicitation restrictions, to carefully consider the legitimate business interests a company is trying to protect, and to closely marry the restrictions to those interests.   

For more information on these best practices on restrictive covenants, contact Chris Koehler or any other member of the Frantz Ward Labor & Employment Law Practice Group.

On March 5, 2024, in State ex rel. Dillon v. Indus. Comm., Slip Opinion No. 2024-Ohio-744, the Supreme Court of Ohio overruled its prior authority in State ex rel. Russell v. Indus Comm., 82 Ohio St.3d 516 (1998), which has been the law of the land since 1998, holding that the Industrial Commission of Ohio (“ICO”) can find that a claimant has reached a level of maximum medical improvement (“MMI”) and terminate temporary total disability (“TTD”) on the date in which an independent medical exam (“IME”) physician renders a finding of MMI, prior to the date of a hearing. In addition, an employer can recoup the TTD paid to the claimant between the date of the physician’s MMI finding and the date of the ICO hearing. Prior to this decision, under the Russell case, TTD was required to be paid through the date of the ICO hearing if there was conflicting medical evidence as to the claimant’s MMI status and the claimant’s treating physician continued to certify TTD.

In Dillon, the claimant sustained a work-related injury on April 2, 2019 and the Bureau of Workers’ Compensation (“BWC”) allowed the claim for a lumbar strain/sprain. The Employer filed an appeal and the issue was heard before a district hearing officer (“DHO”) of the ICO who allowed the claim for lumbar strain/sprain, denied various additional conditions and awarded the payment of TTD. The claimant appealed the denial of the additional conditions and the employer obtained an IME which was performed on August 8, 2019. The IME doctor opined that claimant had reached a level of MMI. The claimant’s appeal was addressed by a staff hearing officer (“SHO”) at a hearing on October 28, 2019, who relied upon the employer’s IME to affirm the allowance of lumbar strain/sprain, deny the additional conditions, find that claimant had reached MMI and retroactively terminate TTD effective August 8, 2019, the date of the employer’s IME. The BWC sought recoupment of the TTD paid to claimant after the August 8, 2019 MMI finding. The BWC issued an overpayment order and the claimant filed an appeal to same. The issue proceeded to the ICO where the recoupment was deemed appropriate. The claimant filed an action in the Tenth District Court of Appeals, requesting a writ of mandamus to compel the ICO to vacate the order that declared an overpayment of TTD and to issue a new order dissolving the overpayment.  In support of her argument that recoupment was not warranted, Dillon relied on the Russell case which concluded that the appropriate date on which to terminate disputed TTD is the date of the ICO hearing, and the ICO may not declare an overpayment for TTD received by the claimant before that date. The Tenth District Court of Appeals denied the claimant’s writ of mandamus finding that the recoupment was proper under R.C. 4123.511 (K). The court reasoned that as Dillon’s request was for an initial period of TTD, it was distinguishable from the Russell case as that case involved the termination of ongoing TTD.

Upon appeal, the Supreme Court of Ohio went a step further by overruling the Russell decision finding that it was contradicted by the language contained in R.C. 4123.56(A) which provides that “payment shall not be made for the period when….the employee has reached the maximum medical improvement.” The court explained that if a claimant is paid TTD after being found to have reached MMI by a physician, then the claimant has received benefits to which they are not entitled under R.C. 4123.56 (A), and those benefits may be reimbursed as an overpayment pursuant to R.C. 4123.511 (K).

This decision should have a significant impact on employers throughout the state of Ohio, as there is typically a delay between the date of an IME and the date the issue of MMI is adjudicated at an ICO hearing. Under Dillon, employers can now request that the ICO retroactively terminate the claimant’s TTD based on the date of an IME, rather than the date of an MMI hearing.

 Moreover, the ICO will need to revise its policy relating to termination of TTD as set forth in Memo D2 of the Adjudications Before the Industrial Commission and IC Resolution 98-1-04 which rely upon Russell.

 Frantz Ward will keep you apprised of all developments related to this case. If you have any questions regarding this decision, or any other workers’ compensation matter, please feel free to contact Maris McNamara or any member of Frantz Ward’s Workers’ Compensation Practice Group.

On February 27, Judge James Hendrix from the United States District Court for the Northern District of Texas ruled that the federal government cannot enforce the Pregnant Workers Fairness Act (“PWFA”) against the state of Texas as an employer.

The PWFA went into effect on June 27, 2023 and requires employers to make reasonable accommodations based on known limitations related to pregnancy, childbirth, or related medical conditions. In August 2023, the EEOC issued its proposed rule implementing the PWFA. Although the final rule was expected in December 2023, no final rule has been issued yet.

The PWFA was passed on December 23, 2022 as part of the Consolidated Appropriations Act of 2023 (the “Act”). In Tuesday’s decision, Judge Hendrix ruled that in passing the Act, Congress violated the U.S. Constitution’s Quorum Clause, which requires a majority of the members of Congress to be physically present for a vote. In order to have a quorum, 218 members of the House of Representatives must be physically present for a vote. However, on the day the Act was passed, only 205 members of the House cast their votes in person, while the rest of the members voted by proxy. Based upon this violation of the Quorum Clause, Judge Hendrix ruled that the federal government is permanently enjoined from enforcing the PWFA against the state of Texas.

The ruling is limited only to the application of the PWFA against the state of Texas. It does not apply to other aspects of the Act, to private employers in Texas or other states, or other state employers. Accordingly, despite this ruling, employers should continue to accommodate employees in accordance with the EEOC’s proposed regulations implementing the PWFA. However, it is likely that other states or entities will use this decision as precedent to seek injunctions on the PWFA in other jurisdictions.

The ruling will not go into effect until March 5th, to provide the federal government the opportunity to appeal the decision.

In a move that gave hope to many business groups, a federal judge in Texas temporarily blocked a controversial new National Labor Relations Board “joint employer” rule on February 22. The new rule, which had been set to take effect on February 26, is designed to make it easier for the NLRB to label businesses joint employers of each other’s workers. The NLRB could the use that label to hold both businesses responsible for each other’s unfair labor practices. The prospect of this has been especially worrisome to businesses that work with franchise and temporary staffing arrangements, since a franchisor could be responsible for unfair labor practices committed by a franchisee and a staffing company could be responsible for unfair labor practices committed by its client.

Under the NLRB’s new rule “two or more entities may be considered joint employers of a group of employees if each entity has an employment relationship with the employees, and if the entities share or codetermine one or more of the employees’ essential terms and conditions of employment.” The NLRB plans to apply the rule by examining whether two entities each have  authority to control one or more of the following for an employee or a group of employees:

  1. Wages, benefits, and other compensation;
  2. Hours of work and scheduling;
  3. The assignment of duties to be performed;
  4. The supervision of the performance of duties;
  5. Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
  6. The tenure of employment, including hiring and discharge; and
  7. Working conditions related to the safety and health of employees.

The judge’s ruling this week did not permanently block the new NLRB joint employer rule, and it instead simply put it on hold until March 11 while the judge considers a lawsuit filed by the US Chamber of Commerce and other business groups. That lawsuit does seek to permanently block the new rule, and its fate remains uncertain. This is the second delay for the new rule, which was originally set to take effect on December 26. 2023.

The Labor and Employment Practice Group at Frantz Ward will continue to monitor this situation closely. If you have questions about this or other labor and employment law issues, contact Brian Kelly or another member of the group.

Approximately 21 states and several municipalities have enacted laws that prohibit inquiries by employers into the salary history of applicants.  These laws are based primarily on the arguments that: 1) salary history does not accurately reflect an applicant’s qualifications and capabilities, or the market standard for similar positions; 2) relying on the salary history of an applicant when making a job offer will perpetuate any prior disadvantages the applicant experienced in the job market; and 3) considering the salary history of an applicant disproportionately affects women and people of color, and potentially others, who historically have been underpaid due to discrimination.

On March 1, 2024, a new Salary Ban Law will go into effect in Columbus, Ohio, and serves as a reminder to employers that they need to check and be aware of any salary history laws that may exist in the cities and states where they have employees.  Employers also need to be mindful of any pay equity statutes and ordinances under federal, state or local law that require an employer to reveal a relevant pay scale to external applicants.

With respect to the Columbus law, it applies to all businesses that employ 15 or more people within the City of Columbus, and only applies to applicants for new employment and not current employees seeking a transfer or promotion with the business.  Additionally, applicants may voluntarily share their salary history with an employer in Columbus and, if they do so, the employer may discuss it with the applicant.

There are several exemptions that apply to the Columbus law in addition to that for internal applicants, such as positions where compensation is set by a collective bargaining agreement, and applicants for positions with the state and federal government offices in Columbus.

Any person or labor union can file a complaint alleging a violation of the Columbus law.  Complaints will be investigated by the Columbus Community Relations Commission, which can impose fines of $1,000 for a first offense, $2,500 for a second violation, and $5,000 for a third violation within a five-year period.  The Commission also can refer a complaint to the City Prosecutor for potential criminal prosecution.

Despite the restrictions in the Columbus law, it expressly allows, as do many of the other state and local salary ban laws, for employers to inform an applicant of the salary range for the relevant position, and also to discuss with the applicant their salary expectations.

If you have questions about the Columbus Salary Ban Law, or any Pay Equity Law, or a general labor or employment question, feel free to contact Joel Hlavaty or any member of Frantz Ward’s Labor & Employment Group.

On January 1, 2024, a new Occupational Safety and Health Administration (“OSHA”) Rule took effect: the Final Rule to Improve Tracking. OSHA has long required employers to track and maintain records regarding workplace injuries and illnesses. Since 2016, OSHA has implemented (under multiple Presidential Administrations) varying rules regarding electronic submission of Forms 300, 300A and 301.

Whereas former versions of the rule included a 250 employe threshold, OSHA’s new Rule expands application of the rule to more employers in high-risk industries in an effort to increase transparency and public access.

Effective January 1, covered employers with 100 or more employees in designated “high-risk industries” are now required to electronically submit both OSHA Forms 300 and 301 on an annual basis, as well as 300A Summaries. A list of the high-risk industries subject to the new requirement can be found at OSHA’s injury reporting website.

While most data submitted on employer Forms 300A, 300, and 301 will be made available to the public, certain information will not be made available, including employee names, addresses, and medical providers.

Practically speaking, application of the new rule will give OSHA significantly more information at its disposal to not only analyze over the long-term, but also use in the short term to prepare for onsite inspections and to target employers under existing national emphasis programs.

The deadline to submit information for the 2023 calendar year is March 2, 2024. OSHA has posted FAQs and written instructions on how to submit information on the ITA on their website.

If you have any questions about your obligations under the new Rule, please contact Katie McLaughlin or any member of Frantz Ward’s Labor & Employment Group.