Every year, legislation is enacted addressing workplace laws and regulations. Additionally, national and state government agencies renew their focus on enforcing certain employment matters. This year is no different. Here are five hot-button issues that veterinary practice owners need to know in 2023, from noncompetition agreements to the minimum wage.
1. Noncompetition Agreements
Following up on President Joe Biden’s July 9, 2021, executive order, the Federal Trade Commission published a proposed rule that would essentially ban all noncompetition agreements. When the administration issued the directive, the focus wasn’t on an across-the-board ban but rather on:
- Preventing noncompetition agreements from being applied to low-wage earners.
- Barring employers from presenting one before a person could accept a position or promotion.
Therefore, the FTC surprised observers early this year when it issued a proposed rule prohibiting almost all noncompete agreements arising from an employment relationship.
The rule would prohibit any “contractual term between an employer and a worker that 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.” Included in the definition of “worker” would be independent contractors.
The rule also would prohibit nondisclosure agreements so broadly written that they effectively keep a worker out of the same field after the conclusion of employment.
An employer would be barred from requiring workers to repay training costs if their employment ends within a certain period unless the employer can demonstrate that the repayment costs are reasonably related to the expenses incurred.
If it goes into effect, the rule will supersede any state statute, regulation, order or common law standard. Noncompete agreements would be prohibited even in states that have specific statutory schemes.
Current agreements would become void 180 days after the final publication date. Consequently, employers would have to rescind any agreements before that day. In addition, employers would have to provide a written or electronic notice to affected current or former workers informing them that:
- The noncompete agreement is no longer in effect and will not be enforced.
- The worker can seek employment with a competitor or operate a business that competes with the employer.
Until the proposed rule becomes final, noncompete clauses remain valid and enforceable, subject to state laws. Be aware that because the FTC’s proposed rule is significantly more expansive than the Biden administration’s executive order, the agency might roll back the scope of the prohibitions before their final publication.
Now is a good time for practice owners to examine any confidentiality and nonsolicitation clauses to ensure that the language provides maximum protection to the business and complies with the proposed new rule.
2. Worker Classification
Since 2016, the U.S. Department of Labor has issued proposed rules regarding the test for determining independent contractor status. An Obama administration proposed rule was rescinded and modified by the Trump administration and then rescinded and further altered by the Biden administration. The issue is hot and political because it affects taxes collected by various authorities.
The Labor Department announced at the start of the year that the final rule is scheduled for publication in May 2023. It would rescind the 2021 Independent Contractor Rule and instead use a six-factor test to determine whether someone is an employee or an independent contractor. The factors are:
- The opportunity for profit or loss depending on one’s managerial skill.
- The investments made by the worker and employer.
- The degree of permanence of the working relationship.
- The nature and degree of control.
- The extent to which the work performed is an integral part of the employer’s business.
- The skill and initiative.
Each factor is slanted toward classifying the worker as an employee.
The final rule would result in more workers being classified as employees, including some previously identified as independent contractors. Additionally, some states have adopted different tests, so practice owners should be aware of those standards and any changes to them.
3. Pay Equity and Transparency
Pay equity has been a legislative goal of the federal and state governments for years. A recent trend to assist in achieving that goal is transparency in wages and compensation. The issue isn’t just about equal pay for equal work. For example, some states require equal compensation and fringe benefits for substantially similar work.
Meanwhile, some states enacted legislation prohibiting prospective employers from inquiring about a candidate’s salary history. In addition, some states, such as New York, Connecticut, California and Washington, require employers to create and post pay and salary ranges for all advertised positions.
We expect to see the trend spread nationwide.
4. Nondisclosure Limits
On Dec. 7, 2022, President Biden signed into law the Speak Out Act, which renders pre-dispute nondisclosure and nondisparagement clauses judicially unenforceable in cases of sexual assault or sexual harassment. Previous legislation, which went into effect in February 2022, prohibited claims of sexual assault or sexual harassment from being subject to mandatory arbitration.
5. Minimum Wage
Many states have adopted minimum wage laws that require automatic increases annually or when certain conditions are met. The following states raised the minimum wage effective Jan. 1, 2023. (Note a few exceptions.)
DID YOU KNOW?
According to the Speak Out Act, 1 in 3 women has faced sexual harassment in the workplace during her career, and an estimated 87% to 94% of those who experience sexual harassment never file a formal complaint. Read the complete text of the law at bit.ly/3mQMwup.