On Jan. 4, 2023, the Biden Administration announced the Fall 2022 Unified Agenda of Regulatory and Deregulatory Actions. Generally, the Spring and Fall Agendas are announced late in the season; this exceptionally late announcement provided only a few days’ notice of the publication of one of the most-talked about proposals in years – the Federal Trade Commission’s Notice of Proposed Rulemaking on Non-Compete Clauses.
FTC Non-Compete NPRM
The Non-Compete NPRM was published on Jan. 9, 2023, and TechServe CEO Mark Roberts communicated this news to members last week. Roberts noted, “While most industry firms don’t use non-competes strictly defined as barring an individual from competing in the industry, non-solicitation and non-disclosure agreements are widely used to protect the investments made by companies in building their roster of clients, consultants, and teams.”
Key provisions of the NPRM would
- Ban “all employee noncompete agreements, defined as any agreement that expressly or functionally “prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.”
- Apply retroactively and requires employers to formally “rescind” existing non-compete agreements.
- Require “employers to notify existing and former employees in writing that their non-competes are no longer in effect and that they are free to “compete…at any time following your employment…”
Attorney Bill Josey at Staffing Legal News said the regulation does not address agreements that prohibit the use of confidential information, solicitation of clients and employees, and “non-dealing” agreements that prohibit doing business with an employer’s clients for some period of time. However, the regulation leaves open the possibility that such agreements could be deemed “functional” non-compete agreements if written in a manner that unduly restricts a former employee’s ability to earn a living.
TechServe’s Government Affairs Team continues to follow Administration-wide initiatives intended to increase competition in the markets. We will submit comments on the Non-Compete NPRM and we encourage members to contact us with their concerns and personal stories. The comments are due March 9, 2023.
Future NPRMs of Concern
The Fall 2022 Regulatory Agenda noted that several proposed rules of concern to TechServe members have been further delayed. The most consequential proposed rule, “Modernizing H-B Requirements and Oversight,” would amend regulations governing H-1B specialty occupation workers and F-1 students who are the beneficiaries of timely filed H-1B cap-subject petitions. The proposed rule, which is now expected in October 2023, would:
- Define “employer-employee relationship”
- Establish new requirements for site visits including regarding petitions filed by H-1B dependent employers and H-1B petitions where there is indicia of fraud
- Provide flexibility on the employment start date listed on the petition (in limited circumstances)
- Address “cap-gap” issues
- Streamline notification requirements relating to certain worksite change
NPRMs Awaiting Finalization
In addition to tracking proposed rules and commenting as appropriate, TechServe Alliance is closely following developments with NPRMs in the finalization stage. This includes DOL’s Independent Contractor Rule and the NLRB’s Joint Employer Rule. TechServe submitted comments on the IC Rule. DOL expects to finalize the IC Rule in May 2023, NLRB projects a Final Rule in August 2023. Litigation is anticipated.
Potential Future Notices of Proposed Rule Making (NPRM)
