Employment Law Updates

The Federal Trade Commission (FTC) has issued a proposed new rule that would ban noncompete agreements nationwide. In its proposal, the FTC states that noncompetes are an unfair method of competition, and thus violate the Federal Trade Commission Act. The proposed rule can be found here:

https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking

Under the proposal, employers could not ask paid or unpaid employees, independent contractors, interns, volunteers, or apprentices to sign a noncompete agreement. The rule would apply retroactively, so employers would be required to give notice to employees and former employees that existing noncompete agreements have been rescinded within 45 days of the rule's implementation. It would also apply even in situations involving high-level corporate executives or other settings in which there would clearly be a valid business reason for using a noncompete agreement.

As we have discussed in prior blogs, Virginia already has restrictions on noncompete agreements for “low wage” employees. See Va. Code § 40.1-28.7:8. Covenants not to compete prohibited as to low-wage employees; civil penalty (virginia.gov). The Virginia law, however, did not take effect until July 1, 2020 and is not retroactive, unlike this new federal proposal.

Many commentators are predicting that the rule will be struck down in court if it is finalized in its current form. Some experts believe that the FTC has exceeded its authority in proposing this new rule.

The public and employers can submit comments on the proposal within 60 days after the Federal Register publishes the proposed rule. The rule would take effect 180 days after the final version is published. Litigation is likely if the rule is finalized in its present form. We will update you with developments.

John Falcone and Luke Malloy handle employment law matters at PLDR Law. Feel free to contact us if you have questions about this matter.

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The Biden administration on Oct. 13 extended the COVID-19 public health emergency for an additional 90 days, keeping emergency measures in place through Jan. 11. The public health emergency declaration is important to group health plan sponsors because it determines the period during which group health plans and insurers must pay for Covid-19 tests and related services without charging cost-sharing. The coverage requirements apply to payment through both medical plans and pharmacy benefits. As long as the public health emergency is in place, when preventive services such as COVID-19 tests and vaccines are delivered by an out-of-network health care provider, employer plans must reimburse the provider a "reasonable amount," as determined in comparison to prevailing market rates for such services.

A new proposed rule has been issued by the U.S. Department of Labor (DOL) to clarify who qualifies as an independent contractor under the federal wage and hour law. The federal rule concerning independent contractors has been confusing in recent years because it has periodically been revised depending upon whether a Democratic or Republican presidential administration has been in power. The new proposed rule will make it more difficult to classify workers as independent contractors.

In previous blogs we have discussed several aspects of the 2020 Virginia statute (§ 40.1-28.7:8. Covenants not to compete prohibited as to low-wage employees; civil penalty (virginia.gov)) that restricts the use of noncompete agreements. We are learning that the statute is surprisingly nuanced.

In previous blogs we have discussed the 2020 Virginia statute (§ 40.1-28.7:8. Covenants not to compete prohibited as to low-wage employees; civil penalty (virginia.gov)) that restricts the use of noncompete agreements. Employers who use noncompete agreements for the limited category of employees should review annually the updates to the average weekly wage.

The EEOC has updated its guidance concerning an employer’s ability to require testing of employees for Covid-19. The Americans with Disabilities Act (ADA) allows mandatory medical examinations only if they are job-related and consistent with business necessity. The new EEOC guidance (found at U.S. EEOC) elaborates on the following question and answer posed in the guidance:

All employers must complete an I-9 form for all workers to verify their employment eligibility. The I-9 requires the employee to present certain documents to the employer in order to establish the employee’s identity and work authorization. During the pandemic, the Department of Homeland Security (DHS) waived requirements that employers inspect documents in person in workplaces that were operating remotely, and those employers have been allowed to use alternatives like videoconferencing, fax or email. The waiver is currently extended through the end of October, 2022.

We have recently received inquiries from employers about the nature of the information they can request concerning the need for intermittent leave under the Family and Medical Leave Act. The FMLA allows an employee to take intermittent leave in blocks of time or a reduced schedule for a single injury or illness. Intermittent leave can be a headache for employers to manage, and the rules are complicated.

One of our previous blogs discussed the 2020 Virginia statute (§ 40.1-28.7:8. Covenants not to compete prohibited as to low-wage employees; civil penalty (virginia.gov)) that restricted the use of noncompete agreements. A couple of little-noticed provisions in the statute deserve further comment.

As a reminder, the law provides that as of July 1, 2020, employers are prohibited from entering into, enforcing, or threatening to enforce a covenant not to compete with any “low-wage employee.” The law defines “low-wage employee” as one whose average weekly earnings are less than the average weekly wage of the Commonwealth, as determined annually by the Virginia Workers’ Compensation Commission. That amount is currently $1,195 per week. In addition, the law broadly defines the types of employees who are covered, which can include some independent contractors. It specifically excludes, however, employees “whose earnings are derived, in whole or in predominant part, from sales commissions, incentives or bonuses.” The new law is applicable to covenants not to compete that are entered into on or after July 1, 2020. It does not apply to agreements entered into prior to that date.

One of the little-noticed provisions deals with independent contractors: “’Low-wage employee’ also includes an individual who has independently contracted with another person to perform services independent of an employment relationship and who is compensated for such services by such person at an hourly rate that is less than the median hourly wage for the Commonwealth for all occupations as reported, for the preceding year, by the Bureau of Labor Statistics of the U.S. Department of Labor.”

The most recent Virginia median hourly wage is $22.69. See Virginia - May 2021 OEWS State Occupational Employment and Wage Estimates (bls.gov).  Be cautious, however, about the use of noncompete agreements with independent contractors. Those agreements should be drafted very carefully to avoid converting an independent contractor into an employee.

Another provision restricting the scope of noncompete agreements is: “A ‘covenant not to compete’ shall not restrict an employee from providing a service to a customer or client of the employer if the employee does not initiate contact with or solicit the customer or client.” That provision should be included in every new noncompete agreement form.

Employers must post either a copy of the new law or a summary approved by the Virginia Department of Labor and Industry where other state and federal laws are required to be posted. A poster on the DOLI website which also contains the average weekly wage information is found at Notice-of-the-Average-Weekly-Wage-for-2021.pdf (virginia.gov).

John Falcone and Luke Malloy handle employment law matters at PLDR Law. Feel free to contact us if you have questions about this matter.

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Yesterday, March 21, 2022, the Safety & Health Codes Board of the Virginia Department of Labor and Industry (DOLI) voted to revoke the Standard for Covid-19 prevention that has been regulating Virginia workplaces. The revocation is effective March 23, 2022. In place of the Standard, DOLI issued a new draft Guidance that reflects the current state of Covid infections. The draft Guidance can be found at DOLI-Guidance-for-Employers-to-Mitigate-the-Risk-of-COVID-19-to-Workers-03.01.2022_FINAL.pdf (virginia.gov), and will be submitted for a 30-day notice and comment period before it becomes final.

On February 18, Joe Biden extended the Covid-19 National Emergency for an additional year. This means that certain deadlines for COBRA and HIPAA such as the following continue to be extended:

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