In August, Comfort Keepers was fined $500,000 and forced to remove language from its contracts restricting caregivers from accepting positions with home care clients up to one year after terminating employment.
That contract language, dubbed a non-solicitation agreement, is a widely used clause in home care contracts to protect providers’ businesses.
On its end, the Irvine, California-based Comfort Keepers is a large franchise that offers non-medical in-home support, including meal preparation, companionship and personal assistance.
The company required each client to execute a care agreement containing this language before receiving services. California Attorney General Rob Bonta concluded that this agreement violated California law by restraining worker mobility, as caregivers could not be hired by any Comfort Keepers client, not just the client to whom they were assigned to provide services.
In a statement issued to Home Health Care News, Comfort Keepers wrote, “We value Comfort Keepers caregivers, who are the heart and soul of each of our franchises and the Comfort Keepers brand. “As a service-based company, the quality of our care is rooted in the dedication and expertise of the caregivers who serve as employees. We invest significantly in their development to ensure the success of our services, the satisfaction of clients and the wellbeing of the caregivers. While this investment comes at a cost, we believe protecting the caregivers who become invaluable to our clients through their training and expertise is essential. Comfort Keepers is not seeking to limit or restrict any employee’s ability to earn a living; rather, we believe in a business’s right to protect its assets, ensuring the continued excellence of the care we provide.
Comfort Keepers maintains that direct hire provisions do not hinder workers from finding future employment. These provisions are designed to provide service-based businesses with compensation when the care recipient elects to hire a caregiver vetted, background-checked and trained by the agency in the form of a reasonable amount for the placement services it provided.
This is standard practice with service-based businesses across many industries. Furthermore, this is part of a larger and evolving issue being scrutinized by the U.S. Chamber of Commerce.”
Angelo Spinola, home health, home care and hospice chair at the Polsinelli law firm headquartered in Kansas City, Missouri, was involved in the case and told HHCN he thought the attorney general was incorrect in his position.
“They are applying a law that applies to non-compete agreements with employees to a client service agreement,” he said.
Non-compete and non-solicit agreements
In general, Spinola said that restrictive covenants are divided into confidentiality, non-compete and non-solicit agreements. These agreements are based on state laws, and certain states limit their use.
Non-solicitation agreements in home care are meant to prevent clients from hiring a caregiver directly and cutting out the agency. These agreements protect the agency’s business without restricting the caregivers’ mobility, providers believe. If the contract is violated, the agency may seek legal action and sometimes request damages.
“I can absolutely understand why [an agency] would want [an agreement] because there’s such a strong incentive to hire aids and home health care workers,” Jolie Apicella, partner at Wiggin and Dana Law Firm, told HHCN. “This is a time when staffing is already critically difficult after COVID-19. It’s never been harder to find good people who are qualified, who meet all the regulatory requirements and who you can really trust to go into people’s homes, which is the most intimate and vulnerable place. To lose those people… your whole business model would be canceled out if they’re able to be hired directly by patients and families.”
Nearly one in five workers in the United States is bound by a non-compete agreement that prevents them from finding a new job or starting a business in their field when they leave their employer. Non-competes are currently governed at the state level, and research shows that they suppress wages, reduce job mobility and stifle innovation.
California, Minnesota, North Dakota and Oklahoma have completely banned non-compete agreements. Thirty-three states plus the District of Columbia restrict their use, according to the Economic Innovation Group. Recently, the FTC unsuccessfully tried to ban non-competes nationally.
However, non-compete agreements and non-solicitation clauses are not interchangeable, and the latter should not affect a caregiver’s mobility, according to Spinola.
“The non-compete is the most restrictive covenant,” he said. “For example, the term for which a non-compete applies generally might be shorter – a year instead of two years, like a non-solicit agreement. The territory in which it applies will be limited to the territory where the business operates.”
When they can be used, non-compete agreements are generally reserved for executives who could harm the business if they left and worked for a competitor. Non-solicit agreements are more commonly used for caregivers and other individual contributors.
“Non-solicit agreements shouldn’t impact the caregiver’s ability to work wherever they want and even for whomever they want to,” Spinola said. “If a client reaches out to a caregiver and says, ‘I’d like you to work for me,’ that’s not a violation of a non-solicit agreement. If the caregiver calls the agency’s client and says, ‘I want you to get services from me instead of the agency you’re with,’ that would be a violation.”
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