Natalie Young, Author at Stibbs & Co., P.C.

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FTC Announces Issuance of Final Rule

Written by Stuart W. Lapp

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04/26/2024

The Future of Non-Compete Restrictions
On April 23, 2024 the Federal Trade Commission (FTC) announced the issuance of a Final Rule banning non-compete restrictions in employment agreements with the recognition of limited exceptions. Although many news outlets have announced the FTC’s Final Rule as an effective new ban on non-compete restrictions, employers and employees must be mindful that the FTC’s Final Rule is not effective until 120 days after the Rule is published in the Federal Register. Additionally, it must be noted that presently at least two challenges are pending in federal courts contesting the Final Rule.

What Businesses and Employees are Subject to the Final Rule: As the FTC notes in its Guide for Businesses and Small Entities Compliance Guide, its final rule banning non-compete agreements “applies to non competes with all workers, whether full-time or part-time, including employees, independent contractors, interns, externs, volunteers, apprentices, and others – but there are different requirements for senior executives as defined by the Rule.” In its present form, the Final Rule does not ban non-compete restrictions currently in place in relation to senior executives. Additionally, the FTC does not have jurisdiction over banks, savings and loan institutions, federal credit unions, common carriers, air carriers and certain non-profits. So, the Final Rule does not apply to such businesses.

What is a Non-Compete Clause: The Final Rule defines a “non-compete clause” to include any term or condition of employment that (i) prohibits a worker from; (ii) penalizes a worker for; or (iii) functions to prevent a worker from: (a) seeking or accepting work in the United States with a different person/company; or (b) operating a business in the United States after the conclusion of the employment under which a term and condition of employment included a non-compete restriction.

What does the Final Rule Ban: The Final Rule declares it to be an “unfair method of competition” for a person to: (i) enter into or attempt to enter into a non-compete clause; (ii) enforce or attempt to enforce a non-compete clause; or (iii) represent that a worker is subject to a non-compete clause. Accordingly, the Final Rule generally prohibits non-compete restrictions. Once effective, the Final Rule will even prohibit employers from entering or attempting to enter non-compete restrictions with senior executives.

What does the Final Rule Allow: The Final Rule specifically does not apply to senior executives which are defined to be workers holding a policy-making position who received total annual compensation of at least $151,164 in the preceding year. To the extent that a senior executive’s current employment terms contain non-compete restrictions, such restrictions remain enforceable under the Final Rule. However, as noted above, once effective, the Final Rule will prohibit businesses from entering or attempting to enter into non-compete restrictions with senior executives.

Additionally, the Final Rule permits non-compete restrictions to be established with the seller of a business entity if (i) the sale divests the individual’s ownership interest in the business entity or (ii) all or substantially all of the business entity’s operating assets.

The Final Rule’s ban of non-compete restrictions specifically does not apply to non-compete claims that are accrued or pending prior to the effective date.

Is Immediate Action Needed: Of importance for businesses, once effective, the Final Rule will require all employers to provide written notice to all non-senior executive employees and former employees subject to non-compete restrictions that enforcement of the non-compete restrictions is unlawful and affirmatively advise such employees that the company will not enforce any existing non-compete restrictions against employees.

This information is made available by Stibbs & Co., P.C. for informational purposes only, does not constitute legal advice, and is not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of this information does not create an attorney-client relationship between you and Stibbs & Co., P.C. This material may be considered attorney advertising in some jurisdictions. The facts and results of each case will vary, and no particular result can be guaranteed.

Stibbs & Co., P.C. attorneys are available to discuss the rule and assist with reviewing restrictive covenant agreements. You may contact Stibbs & Co., P.C. at 281-367-2222 or via email to info@stibbsco.com.

Topic: Contract Law

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Governor Abbott Issues Executive Order

Written by Stuart W. Lapp

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On Thursday July 2, 2020, Texas Governor Greg Abbott signed Executive Order GA 29 – Relating to the use of face coverings during the COVID-19 disaster. The Order is effective as of 12:01 pm on Friday, July 3, 2020 and remains in effect and in full force until modified, amended, rescinded, or superseded by further the governor.
The Order states that “Every person in Texas shall wear a face covering over the nose and mouth when inside a commercial entity or other building or space open to the public, or when in an indoor public space, wherever it is not feasible to maintain six feet of social distancing from another person not in the same household”.

The face-covering requirement does not apply to:

1. Any person younger than 10 years of age;

2. Any person with a medical condition or disability that prevents wearing a face covering;

3. Any person while the person is consuming food or drink, or is seated at a restaurant to eat or drink;

4. Any person while the person is (a) exercising outdoors or engaging in physical activity outdoors; and (b) maintaining a safe distance from other people not in the same household;

5. Any person while the person is driving alone or with passengers who are part of the same household as the driver;

6. Any person obtaining a service that requires temporary removal of the face covering for security surveillance, screening, or a need for specific access to the face, such as while visiting a bank or while obtaining a personal-care service involving the face, but only to the extent necessary for the temporary removal;

7. Any person while the person is in a swimming pool, lake, or similar body of water;

8. Any person who is voting, assisting a voter, serving as a poll watcher, or actively administering an election, but wearing a face covering is strongly encouraged;

9. Any person who is actively providing or obtaining access to religious worship, but wearing a face covering is strongly encouraged;

10. Any person while the person is giving a speech for broadcast or to an audience; or

11. Any person in a county with fewer than 20 positive COVID-19 cases whose county judge has affirmatively opted out of the face covering requirement by filing the required form, provided however, that wearing a face covering is highly recommended, and every county is strongly encourages to follow the face-covering standards.

Not excepted from the face-covering requirement is any person attending a protest or demonstration involving more than 10 people and who is not practicing safe social distancing of six feet from other people not in the same household.

The Executive Order provides for a verbal or written warning for a first-time violator of the face-covering requirement. A person’s second violation is punishable by a fine not to exceed $250, and each subsequent violation is likewise punishable by a fine not to exceed $250 per violation.

The Executive Order prohibits confinement in jail as a penalty for the violation of any face-covering order in any jurisdiction, but does allow any official with authority to enforce the Executive Order to enforce trespassing laws and remove violators at the request of a business establishment or other property owner.

These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed.

Topic: COVID-19

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Harris County Issues Order Making Masks Mandatory for Certain Businesses

Written by Haley Paul

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On Friday June 19, 2020, Harris County Judge Lina Hidalgo signed an Order Regarding Health and Safety Policy and Face Coverings. The Order is effective as of 12:01 am on Monday, June 22, 2020 and continues through 11:59 pm on Tuesday, June 30, 2020, unless extended, modified, or terminated early by further order of Judge Hidalgo or otherwise.

The Order states that “all commercial entities in Harris County providing goods or services directly to the public must develop, post, and implement a health and safety policy (“Health and Safety Policy”). The Health and Safety Policy must require, at a minimum, that all employees or visitors to the commercial entity’s business premises or other facilities wear face coverings when in an area or performing an activity which will necessarily involve close contact or proximity to co-workers or the public. The Health and Safety Policy required to be developed and implemented by this Order may also include the implementation of other mitigating measures designed to control and reduce the transmission of COVID-19”.

The Order states further that “commercial entities must post the health and safety policy required by this Executive Order in a conspicuous location sufficient to provide notice to employees and visitors of all health and safety requirements. Failure to develop and implement the Health and Safety Policy required by this Executive Order within five (5) calendar days following the Effective Date may result in a fine not to exceed $1,000 for each violation.”

The Order also requires that “all people 10 years or older shall wear a face covering over their nose and mouth when in a commercial entity or working in areas in a commercial entity that involve close proximity with others.” Face coverings may include homemade masks, scarfs, bandanas, or a handkerchief. Harris County employees are required to wear face coverings under the same circumstances as the general public. Exceptions to the face covering requirement include the following circumstances:

When exercising outside or engaging in physical activity outside;
While driving alone or with passengers who are part of the same household as the
driver;
When doing so poses a greater mental or physical health, safety, or security risk;
While pumping gas or operating outdoor equipment;
While in a building or activity that requires security surveillance or screening, for
example, banks, or;
When consuming food or drink.

Although the Order provides for imposition of a fine not to exceed $1,000 for each violation for commercial entities that fail to implement and develop the required Health and Safety Policy within five (5) calendar days of the effective date of the Order, the Order also states that “no civil or criminal penalty will be imposed on individuals for failure to wear a face covering.” [Emphasis added].

Employers are also encouraged to seek legal counsel prior to taking actions to avoid violations of federal or state employment laws including, but not limited to, Title VII of the Civil Rights Act of 1964.

Topic: COVID-19