A one-size-fits-all approach shouldn’t be the goal for a proposed noncompete clause rule by the US Federal Trade Commission, according to senior living industry advocates.
LeadingAge and the American Health Care Association / National Center for Assisted Living submitted comments to the FTC on a proposed rule that would prohibit employers from entering into noncompetition agreements with employees. The proposed rule also would require employers to rescind any existing noncompete agreements.
In his comments, LeadingAge Vice President of Legal Affairs Jonathan Lips asked the FTC to include language expressly exempting nonprofit organizations in any final rule, confirming what is noted in the preamble and clarifying the issue.
Lips also suggested that the agency limit the scope of the proposed rule, which as written would apply uniformly to all workers.
“The issues and circumstances surrounding a non-compete between an employer and a senior executive, for example, may be very different than one with another category of employee who does not have the same ability to bargain with the employer,” Lips wrote. “We recommend that the commission take a more tailored approach to regulating noncompete agreements if it proceeds to promulgate a final rule.”
LeadingAge also argued that unilateral invalidation of all existing noncompetes would “disrupt huge numbers of contracts that were appropriately negotiated and lawfully created.”
Separation agreements contrary to proposed rule
AHCA / NCAL argued that a final rule should address separation payments that staffing agencies charge their workers who subsequently choose to work for a senior living community or skilled nursing facility.
“We believe that this fee runs directly contrary to the spirit of your proposed rulemaking,” AHCA / NCAL Associate Vice President of Constituency Services and Workforce Dana Ritchie wrote in her comments to the FTC.
Ritchie encouraged the FTC to offer clear examples of conduct that are “so broad in scope that they serve as de facto noncompete clauses” to address this situation. She argued that language could include separation payments charged to workers or new employers that would serve as “anti-competitive obstacles to new employment.”
“Demands for separation payments can significantly deter workers from seeking or gaining new employment, and can also serve to coerce workers into remaining in their current jobs just as much as per se non-compete clauses,” Ritchie wrote.
