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!

On April 23, 2024, the Federal Trade Commission (“FTC”) issued a Final Rule (the “Rule”) prohibiting the use of non-compete restrictive covenants (with a limited exception) throughout the United States as an unfair method of competition under the FTC Act. The Rule is set to become effective 120 days after it is published in the Federal Register, but employers will face certain compliance obligations that will apply prior to the effective date.

The Rule prohibits employers from: (1) entering into; (2) attempting to enter into; (3) enforcing; (4) attempting to enforce; or (5) representing that a worker is subject to a non-compete clause. The Rule’s definition of “worker” is broad and expands beyond employees.

The Rule contains a limited exception that applies to non-competes with “senior executives” entered into prior to the effective date of the Rule. However, the Rule’s definition of “senior executive” is narrow and limited to individuals meeting a compensation threshold and holding a “policy making position,” which is further defined under the Rule.

Employers must provide “clear and conspicuous” written notice to each worker—past or present—who is currently subject to an existing non-compete clause. This notice must be provided prior to the effective date of the Rule and must comply with certain requirements in form and method of delivery. Employers should consult with legal counsel to ensure compliant notice is provided.

The Rule will face legal challenges. The U.S. Chamber of Commerce filed suit in an effort to block the implementation of the Rule. We anticipate the legal arguments against the Rule will attack the FTC’s authority to make a rule regulating unfair methods of competition, which has never occurred before and therefore is judicially untested. The Supreme Court’s recent hints and trend of challenging agency authority through newly bolstered legal doctrines such as the nondelegation doctrine and the major questions doctrine are likely on a collision course with the FTC’s Rule.

Despite these legal challenges, employers should consider taking action now to prepare for compliance with the Rule. We recommend taking the follow steps, in consultation with legal counsel, prior to the effective date: (1) determine who qualifies as a senior executive; (2) consider entering into compliant non-competes with those who qualify as senior executives prior to the effective date; (3) potentially replace non-compete agreements with other types of restrictive covenants not prohibited by the Rule; (4) determine the non-senior executive workers who are currently subject to non-compete clauses that will need to receive the required notice; and (5) consult with legal counsel on a strategy for whether, when and how to comply with the notice requirements.

 

On April 23, 2024, the U.S. Department of Labor issued its Final Rule sharply increasing the minimum salary requirements for the Fair Labor Standards Act’s white-collar overtime exemptions.  These changes, if they ultimately take effect, will affect the overtime exemption eligibility for millions of currently exempt employees nationwide.

Background and History

The FLSA’s white-collar exemptions apply to “bona fide” executive, administrative, and professional employees and generally include both a minimum salary requirement and a duties test.  To establish that an employee is properly classified as exempt from overtime pay requirements under one of these exemptions, the employer must be able to prove that the employee is paid on a salary basis in an amount at least equal to the minimum salary requirement and meets the primary duties test for one of these exemptions.

Over the last eight years, the minimum salary requirement for these exemptions has become a legal battleground.

In 2016, the Obama Administration DOL issued new regulations that would have more than doubled the minimum weekly salary requirement for most white-collar overtime exemptions from $455 ($23,660 annually) to $913 ($47,476 annually).  A federal judge issued a nationwide preliminary injunction blocking these changes from taking effect in late 2016, and the Trump Administration DOL ultimately abandoned these regulations.

In September 2019, the Trump Administration DOL issued new regulations that increased the minimum weekly salary requirement from $455 to $684 ($35,308 annually).  Those changes took effect in January 2020.

In August 2023, the Biden Administration DOL issued a new Notice of Proposed Rulemaking, proposing its own significant increases to the minimum salary requirements.  After a notice and comment period, during which the DOL received approximately 33,000 comments, the DOL issued its Final Rule on April 23, 2024.

The New Requirements

The DOL’s new Final Rule will raise the minimum salary threshold for these exemptions to $844 per week (i.e., $43,888 annually) effective July 1, 2024.  This represents a 23% increase over the current requirements.  Then, six months later, the minimum salary requirement will rise again, this time to $1,128 per week (i.e., $58,656 annually) effective January 1, 2025.  The Final Rule also contains automatic updates (i.e., increases) every three years based on earnings data, with the first automatic update scheduled for July 1, 2027.

The Final Rule also significantly increases the minimum salary requirement for the FLSA’s highly compensated employee exemption.  However, the Pennsylvania Minimum Wage Act has no equivalent exemption, so this change is of less relevance to Pennsylvania employers.

As occurred in 2016, we expect that legal challenges will soon be filed in court in response to these new regulations.  Whether those efforts will be successful in blocking the regulations from taking effect before their effective date (as what happened in 2016) is unknown.

In the meantime, employers should identify employees currently classified as exempt under one of the white-collar exemptions who are paid a salary amount below the new minimum and consider either increasing those employees’ salaries, identifying another exemption without a minimum salary requirement that may be applicable, or converting these employees to non-exempt status for overtime pay purposes.  However, with the expected legal challenges and uncertainty they bring, employers may want to delay any responsive action driven by these new regulations until as close to July 1 as possible.