On Tuesday, August 20, 2024, a federal judge in Texas set aside the Federal Trade Commission (“FTC”) Rule banning the use of noncompete agreements in employment, which was set to take effect on September 4, 2024. The judge held that the FTC exceeded its statutory authority in making the Rule, and that the Rule violated the Administrative Procedures Act because it was arbitrary and capricious.

As we explained in our prior post, the Rule would have rendered most noncompete agreements unenforceable, and imposed specific notice requirements on employers for employees with existing noncompetes. For now, the Rule is effectively blocked nationwide, pending a potential appeal by the FTC. At this time, employers can continue to utilize and seek enforcement of their otherwise enforceable noncompetes without regard for the FTC’s Rule.

Regardless of the viability of the FTC Rule, noncompetes continue to face heavy scrutiny from lawmakers and some courts across the country. For example, last month, Pennsylvania imposed new limitations on noncompetes for health care practitioners. Last year, two separate bills that would impose significant limitations on the enforceability of noncompetes were re-introduced by both Republican and Democratic lawmakers in the U.S. Senate and House of Representatives. Now that the FTC Rule has been struck down, these bills could be revisited.

Employers who utilize noncompetes should stay informed on the latest developments in the ever-changing noncompete landscape. We will continue to monitor and provide updates on developments with the FTC’s likely appeal of the court’s decision to set aside the Rule on noncompetes.

With a presidential election just around the corner, employers can expect to see an uptick in political discussions in the workplace, if they haven’t already. The days when coworkers typically refrained from discussing politics and religion have passed. However, what is permitted and required of employers with respect to politics in the workplace these days can be a minefield.

 

Employee Political Discourse

 

As an initial matter, in most cases, federal law does not protect employees’ political speech or views from the actions of private employers. The First Amendment to the United States Constitution only protects speech from government action. While public employers need to be mindful of the First Amendment, it does not have any impact on private employers and their relationships with their employees.

However, numerous states and localities prohibit discrimination based on political views, speech, and affiliation. Employers should familiarize themselves with any applicable laws that may exist within any jurisdiction where their employees are located. This may be increasingly challenging given the popularity of remote work. Additionally, government contractors may be subject to additional restrictions on taking action against employees for political speech or views.

Under the National Labor Relations Act (“NLRA”), employers are prohibited from taking action against employees for engaging in protected concerted activity, which includes communications about wages, hours, and terms or conditions of employment. Depending on the content and context of an employee’s political discourse, the National Labor Relations Board could construe political discourse as protected concerted activity. For example, labor unions and paid family leave are issues that have been discussed by the presidential campaigns during this cycle. If an employee expressed support for a candidate based on the candidate’s views on these issues, responsive action by the employer could implicate a potential violation of the NLRA.

As a side note, it has long been a best practice for employers to have clear, NLRA-compliant policies in place outlining the framework for permissible and impermissible solicitation and distribution by employees in the workplace.

Employment action in response to political discourse involving a trait protected by federal, state, or local anti-discrimination laws such as race, sex, disability, national origin, and religion, could be construed as illegal discrimination. Administrative agencies or courts could view the political discourse as serving as a proxy for the protected trait, which would bring the situation within the scope of anti-discrimination laws.

Taking action against employees for political speech on social media invites more complications. Many states and localities have social media privacy laws which restrict employers’ access to their employees’ social media accounts, and therefore limit the action that employers can take with respect to the employees’ posts. Further, employees’ social media activity can still implicate the anti-discrimination and protected concerted activity issues addressed above. Employers should have detailed social media policies in place, especially if they may take action based on an employee’s social media posts.

Additionally, employers should consider the impact that banning political discourse might have on employee morale and workplace culture. On the one hand, political discourse can be distracting and create division. On the other hand, a complete ban on political expression could result in resentment from employees, particular since individuals often feel a strong personal connection to political issues. Further, some political issues may be directly or indirectly relevant to the employer’s business or to the work performed by the employee, which makes it more difficult to both justify and enforce a complete ban.

 

Employer Political Discourse

 

Employers are generally not restricted from expressing their political opinions in the workplace. However, before engaging in political speech, employers and supervisors should consider the unintended effects that their words may have on employees. Depending on the content and effect of an employer’s or supervisor’s political speech, the employer or supervisor runs the risk of violating the NLRA’s protection against concerted activity as well as federal and state laws which prohibit voter intimidation and can carry significant criminal penalties.

 

Recommendations

 

Employers should clearly communicate their expectations to employees regarding workplace conduct generally, and should uniformly enforce their carefully drafted policies. Now would be a good time to issue reminders regarding professionalism and harassment policy requirements.  Employers should also consider discouraging supervisors from having political discussions with subordinates to reduce the risk of discrimination, NLRA, and voter intimidation claims.

Ultimately, before engaging in political speech or taking action based on the political speech or views of an employee, employers should consult legal counsel to avoid any unexpected pitfalls. If you have questions about how to handle a situation involving political discourse in your workplace, please contact a member of the McNees Labor & Employment Group.

 

 

On July 17, 2024, Pennsylvania passed a new law concerning noncompete agreements within the healthcare industry, which is known as the Fair Contracting for Health Care Practitioners Act (the “Act”). The Act will take effect on January 1, 2025, and brings significant changes impacting how noncompete agreements can be used and enforced within healthcare industry.

The Act prohibits the use of employment-related noncompete agreements that are: (1) more than one year in length ; and (2) entered into after the effective date (i.e., January 1, 2025). This prohibition applies to specific healthcare professionals, particularly those in direct patient care roles, including licensed medical doctors, osteopathic doctors, registered nurse anesthetists, registered nurse practitioners, and physician assistants (referred to as “Heather Care Practitioners”).

Although the Act still allows employers to enter into noncompete agreements that are one year or less in length, it prohibits enforcement of those noncompete agreements if the Health Care Practitioner was dismissed by the employer. However, the Act does not appear to impact noncompete agreements entered into prior to January 1, 2025.

The Act defines a “noncompete covenant” as “an agreement that is entered into between an employer and a Health Care Practitioner in this Commonwealth which has the effect of impeding the ability of the Health Care Practitioner to continue treating patients or accepting new patients[.]” We expect courts will be asked to decide whether a non-solicitation agreement might fit into this broad definition. The Act’s language could be interpreted either to apply only to noncompetes entered into in Pennsylvania, or, alternatively, to Health Care Practitioners in Pennsylvania.

Furthermore, the Act does not apply to noncompete agreements related to the sale of an ownership interest or the sale of all or substantially all of the assets of a health care practice, if the Health Care Practitioner has an ownership interest in the practice, or in connection with a Health Care Practitioner receiving an ownership interest in the practice. It does not appear that the one-year limited time duration mentioned above applies to these types of noncompete agreements.

The Act does allow an employer to recover from a Health Care Practitioner, reasonable expenses “related to the relocation, training, and establishment of a patient base,” only if the Health Care Practitioner left employment on his or her own volition and was not terminated or dismissed by the employer.

Additionally, the Act requires healthcare employers to issue patient notifications within ninety days after a covered Health Care Practitioner leaves the organization. This notice must inform patients how they may transfer their health records to a new Health Care Practitioner other than the employer and that they may be assigned to a new practitioner within the employer. The notice is required for all patients with an ongoing relationship with the practitioner of two or more years and seen by the departing practitioner within the past year.

Pennsylvania employers in the healthcare industry should review the noncompete agreements they currently use with Health Care Practitioners and modify their terms as needed to prepare for compliance with the Act. Upon the departure of practitioners with noncompetes covered by the Act, employers will need to ensure compliance with the Act’s new restrictions on enforcement and specific requirements for providing notice to certain patients. In the coming years, employers should also work with their legal counsel to monitor how Pennsylvania courts refine some of the issues that the Act leaves open to interpretation, such as the question of whether the Act applies to non-solicitation restrictions.

A jury will consider a former teacher’s (Mr. Moorehead) First Amendment claim against his former employer, a Pennsylvania School District (the “District”).  The claim arose from Mr. Moorehead’s attendance at the “Stop the Steal” rally on January 6, 2021, and his subsequent separation from employment with the District.

 

Mr. Moorehead traveled down to Washington D.C. to attend President Trump’s “Stop the Steal” rally on January 6, 2021, and he posted several Facebook posts on his personal account about his attendance. The Facebook posts showed Mr. Moorehead at the rally, him waiting in line for a hotdog, and two political memes related to the January 6th events. Mr. Moorehead’s Facebook posts soon caught the attention of the District, and Mr. Moorehead was eventually identified as a District teacher in social media posts on the District’s Facebook pages. He was then advised by the District to not report to work “because of yesterday,” and he was eventually suspended by the District due to his involvement in the January 6 rally.

 

Following an investigation that lasted several months, the District offered Mr. Moorehead a new position, but required that he complete cultural competency training regarding black and Hispanic U.S. History. Mr. Moorehead refused the District’s offer and claimed that the District had constructively discharged him by falsely connecting him to the January 6th Capitol riots. In response, the District terminated Mr. Moorehead’s employment, citing his “willful neglect of duties” for failing to return to work as the basis for his termination.

 

Mr. Moorehead filed a lawsuit against the District, claiming that they violated his First Amendment rights when they defamed and constructively discharged him in retaliation for his attendance at a political rally and his political affiliation. The District filed a motion for summary judgment in an attempt to end the case before it could proceed to trial. U.S. District Judge John M. Gallagher of the Eastern District of Pennsylvania reviewed the case and determined that Mr. Moorehead’s First Amendment claims should proceed to trial.

 

The Court noted that “[a] public employee’s right to speak about matters of public concern must not be allowed to halt the operations of, say, a public school. On the other hand, the degree of disruption required will vary depending on the speech at issue.” The Court analyzed whether Mr. Moorehead’s speech was properly considered protected speech under the First Amendment. The Court held that the activity in question was protected speech because it was speech concerning one’s preference for President.  The Court also concluded that Mr. Moorehead had not participated in the riots, and that the Facebook posts “were made on his personal Facebook page, which was not public. His Facebook page did not affiliate him with [the District].”

 

The Court went on to hold that a reasonable jury could conclude that Mr. Moorehead’s protected speech was a substantial factor in his suspension and ultimate termination, as the defendants had published a statement that incorrectly placed Mr. Moorehead at the Capitol riots, refused to correct the statement, and coordinated with outside groups to encourage statements against Mr. Moorehead based on that same false statement. Additionally, the Court allowed Mr. Moorehead’s claim of political affiliation discrimination to survive. The case is now scheduled to proceed before a trial, and a jury will decide whether or not the District violated Mr. Moorehead’s First Amendment rights.

 

The timing of this case is certainly relevant as we enter into the 2024 election cycle. It is a sure thing that political discourse will only increase as we approach November, and the issue of protected political speech will definitely be a hot topic for employers.  With that increased discourse, all employers need to be ready to strike a balance between allowing their employees to express their political ideologies while still maintaining order in their daily operations. If you have any questions about how to best handle employee political speech issues, please reach out to any member of the McNees Labor & Employment team!

In April, we wrote about the U.S. Department of Labor’s new regulations set to take effect on July 1, 2024.  These new regulations significantly increase the minimum salary required for employers to meet the Fair Labor Standards Act’s white-collar overtime exemptions.

A number of legal challenges were filed seeking to block the new regulations from taking effect.  Late on Friday, June 28, 2024, a federal court in Texas issued a narrow injunction blocking enforcement of these new requirements, but only against the State of Texas and only in Texas’s capacity as an employer.  Although the State of Texas sought a nationwide injunction (similar to what was issued in 2016 in response to significant increases to the minimum salary requirement issued by the Obama Administration’s DOL), the court elected to issue a narrow injunction that covered only the State of Texas as an employer.

This decision has no immediate impact on private employers or employers in Pennsylvania.  That means that the new minimum salary requirement of $844 per week for these FLSA overtime exemptions has taken effect for all employers other than the State of Texas, with another significant jump to $1,128 per week set to take effect on January 1, 2025.

Additional legal challenges remain pending, and the ultimate fate of the DOL’s regulations remains unknown.  However, for the time being, non-Texas employers must meet the new increased minimum salary requirements to treat employees as exempt from the FLSA’s overtime pay requirements under most of the white-collar exemptions.

On June 24, 2024, a federal judge in Texas issued a nationwide injunction to block parts of the Department of Labor’s recent regulations updating Davis-Bacon prevailing wage requirements on federally funded construction projects.  The preliminary injunction prevents the DOL from enforcing three provisions of the updated regulations while the litigation proceeds.

Although the preliminary injunction is only temporary, the court’s decision to issue the injunction is based on the court’s conclusion that the plaintiffs are likely to succeed in demonstrating that these challenged aspects of the regulations are invalid.

By way of background, the DOL’s “Updating the Davis-Bacon and Related Acts Regulations” were issued last August and went into effect in October.  The new regulations impose significant new obligations on federal contractors and subcontractors under Davis-Bacon, including expanded coverage for material delivery truck drivers, especially those employed by a material supplier that is also engaged in construction activities on the project.  Shortly after DOL issued the updates, trade groups in Texas sued the DOL seeking to invalidate three of the major provisions of the updated regulations.

The provisions of the regulations that have been enjoined by the court are as follows:

  • The provision limiting the “material supplier” exemption to entities whose sole obligation under a covered contract is supplying materials.  In other words, if a company is supplying materials for the contract, and also engaging in construction activities at the site of the work, that company’s material delivery drivers would be entitled to prevailing wage for the time spent on the site of work, even though drivers delivering materials to work sites where the company does not also engage in construction activities would be subject to the material supplier exemption and, therefore, not entitled to prevailing wage.
  • The provision expanding Davis-Bacon coverage to truck drivers employed by contractors or subcontractors whose work includes “onsite activities essential or incidental to offsite transportation” (i.e., loading and unloading) unless such time is de minimis.
  • The provision that Davis-Bacon requirements will be considered to be part of every covered contract simply by operation of law, regardless of whether the contracting agency includes such provisions in the contract.

The provisions of the updated regulations listed above are not enforceable by DOL at this time.  Because these provisions are not enforceable, the pre-August 2023 rules relating to coverage of truck drivers on Davis-Bacon projects and the material supplier exemption will govern until a final resolution on the merits of the case is reached.  Additionally, during this time, Davis-Bacon requirements will not apply to contracts where the Davis-Bacon requirements have been omitted from the agency contract.

For any questions about prevailing wage coverage for truck drivers or how this nationwide injunction impacts your company’s prevailing wage obligations under Davis-Bacon, contact Andrew Levy, Langdon Ramsburg, or Austin Wolfe.

 

The Supreme Court of the United States recently unanimously ruled against the National Labor Relations Board (“NLRB”) in Starbucks Corp. v. McKinney. The decision reversed the NLRB’s attempt to change the standard for evaluating the right to injunctive relief, and requires courts to analyze four factors before issuing a preliminary injunction to restrict an employer’s actions in pending cases involving labor disputes. The four-factor test is consistent with the test used by courts in the context of other types of requests for temporary injunctive relief.

Often, the NLRB will seek injunctive relief in highly contentious labor disputes and in many cases, the injunction seeks to reinstate a discharged employee.  Courts must weigh the following four factors before granting an NLRB request for injunctive relief under Section 10(j) of the National Labor Relations Act (NLRA): (1) whether the NLRB is likely to succeed on the merits of the underlying case; (2) whether the NLRB’s would be likely to suffer irreparable harm without an injunction; (3) the balance of interests between the NLRB and the employer or union; and (4) the public interest.

Some courts had been applying more lenient standards, including a rule favored by the NLRB that employed a two-factor test assessing whether there is “reasonable cause” that the employer violated the NLRA and whether an injunction would be “just and proper.” The Supreme Court case followed Starbucks’ appeal of a Sixth Circuit decision that utilized the two-factor test. Ultimately, the decision establishes a national, uniform standard for 10(j) injunction cases.

The NLRB argued that the Supreme Court should at least apply a more deferential approach to the “success on the merits” factor, but the majority comprised of eight justices rejected that approach, with only Justice Ketanji Brown Jackson favoring a more relaxed first factor. All nine justices supported the four-factor test.

The decision is the latest development in the ever-shifting landscape of legal standards in labor law. If you have questions about how this decision may impact your business, please contact a member of the McNees Labor & Employment Group.

EEO-1 reports were due on June 4, 2024.  If you have not yet filed your report, you should do so as soon as possible.  The EEOC has provided a late filing deadline of July 9, 2024 to file your 2023 reports.  After that date, the opportunity to file will be lost.  Failure to file your EEO-1 report can result in litigation with the federal government, as some unlucky employers have recently learned.  The EEOC issued a statement on May 29, 2024 reminding employees of the important role EEO-1 reports play in enforcing Title VII.  The EEOC also announced that it is suing 15 employers across the country for failing to file their 2021 and 2022 EEO-1 reports.

As a reminder, all employers with 100 or more employees must file an annual EEO-1 report.  In addition, all federal contractors who have 50 or more employees and a prime contract or first-tier subcontract with a value of $50,000 or more are required to file an EEO-1 report.  Institutions that serve as a depository of government funds in any amount or institutions that are financial institutions which are issuing and paying agents for US savings bonds and notes must also file an EEO-1 report.

Don’t get caught up in federal litigation.  Again, the late filing deadline for the EEO-1 report is July 9. Don’t miss it!

On May 1, 2024, the Pennsylvania Commonwealth Court vacated an arbitration award involving the Pennsylvania State System of Higher Education Officers Association (“Association”) and a former University police officer who was fired due to offensive social media posts. In 2021, several anonymous University students (known as the “Activists”) submitted screenshots of the Police Officer’s social media posts, which contained offensive comments regarding Muslims, the LGBTQ community, and racial minorities, to a website and Instagram account that is monitored by the University. Following this, the University received complaints from students and faculty members, as well as a petition signed by several thousand individuals demanding the University remove the Police Officer from his position. In response, the University launched an investigation and, ultimately, terminated the Police Officer for his social media posts.

 

Following his termination, the Association filed a grievance claiming that the termination was without just cause and in violation of the collective bargaining agreement. The matter proceeded before an arbitrator, who sustained the grievance and ordered that the Police Officer be reinstated with full back pay, as well as future benefits and seniority lost due to the termination. The arbitrator’s decision was based on the fact the University lacked a social media policy that could have provided notice to the Police Officer that his social media posts were inappropriate and could result in discipline.

 

The Pennsylvania State System of Higher Education appealed the arbitrator’s decision to the Pennsylvania Commonwealth Court, claiming that the arbitrator’s award violated well-defined public policy. The public policy defense is a limited exception to the typically broad deference granted to arbitration awards in Pennsylvania.  In a split decision, the panel majority sided with the State System of Higher Education, finding that the arbitrator’s award violated the well-defined and dominant public policy against discrimination, which is grounded in federal and state law. The Court rejected the arbitrator’s reasoning regarding the University’s lack of social media policy, as the Police Officer was neither cited for nor terminated based on a specific violation of the University Police Department’s disciplinary policy. The Court further reasoned that regardless of whether the University maintains a social media policy, there still exists a dominant and well-defined public policy prohibiting discrimination, which is amplified in the realm of law enforcement. The Court held that because the Police Officer’s social media posts were clearly discriminatory, and lack of discipline would suggest tolerance of discrimination, which is in violation of public policy, the arbitrator’s award must be vacated.

 

In the lone dissenting opinion, Judge Wallace agreed with the majority’s decision that the University’s lack of a social media policy should not have prevented the Police Officer’s termination; however, she noted that Court was quick to replace the arbitrator’s judgment with its own. Judge Wallace further noted that she believes the award should have been vacated and remanded back to the arbitrator so that the Police Officer could receive a proper punishment.

 

The Court’s decision is another good example of the public policy exception to arbitrable deference. What does this mean for employers? The idea that courts are scrutinizing arbitration awards more thoroughly may provide employers facing terrible arbitration awards with another bite at the apple if the employer can articulate “well-defined public policy” that may be implicated.  If you have any questions about this decision or how a public policy challenge may help you, please contact a member of the McNees Labor & Employment Group.

The McNees Labor & Employment team will host its 33rd Annual Labor and Employment Seminar next month. The seminar will cover a variety of topics  focused on pressing and novel issues in labor and employment law.

The Seminar will be presented virtually on May 16, 2004. The in-person event will be held on May 17, 2024 at Elizabethtown College.

Those wishing to attend shoulder click here to register. We hope to see you there!