A federal judge this week barred the Federal Trade Commission’s (FTC) non-compete ban from moving forward. It was set to take effect in early September.
While certain leaders may have celebrated the FTC’s vote to ban non-competes across the country, home care providers were concerned over what the ban would mean for non-solicitation agreements.
Broadly, non-solicitation agreements keep home care clients from cutting out the agency and hiring their assigned caregiver directly.
In the event that a non-compete ban came to fruition, however, those non-solicitation agreements may have been rendered unenforceable in certain states.
“The rulings and the positions are going beyond just the traditional non-compete agreement into client service agreements that have direct-hire provisions or penalty provisions not allowing the client to hire the caregiver away,” Angelo Spinola, the home health, home care and hospice chair at the law firm Polsinelli, previously told Home Health Care News. “That’s a big concern with what the FTC is doing – that they’re going to take that position and apply the term non-compete very broadly. If you look at the language of the final rule, it absolutely suggests that’s going to be their enforcement position.”
U.S. District Judge Ada Brown said the FTC did not have the ability to enforce such a ban. The agency originally voted to ban non-competes in May.
“The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition, … instead of targeting specific, harmful non-competes, renders the rule arbitrary and capricious,” Brown wrote.
The FTC is considering challenging the ruling, and expressed its disappointment Wednesday. Meanwhile, the U.S. Chamber of Commerce celebrated the judge’s decision.
“This decision is a significant win in the Chamber’s fight against government micromanagement of business decisions,” U.S. Chamber of Commerce President and CEO Suzanne Clark said in a statement. “A sweeping prohibition of noncompete agreements by the FTC was an unlawful extension of power that would have put American workers, businesses, and our economy at a competitive disadvantage.”
In states like California and Connecticut – which already have strict laws against non-competes – non-solicitation agreements are already under fire.
Home care providers across the country see those agreements as a must-have for sustainable home care businesses, particularly due to the training and resources they pour into their caregiver workforces.
“I know that those are things that we responsibly have in our agreements, especially for private pay,” Care Advantage CEO Tim Hanold previously told HHCN. “That is something that could create some issues for certain, considering how much time and energy we put into our professional caregiver workforce.”
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