Employment Law

Published on: September 5, 2024

Federal Judge Blocks FTC Non-Compete Ban, Leaving Agreements Enforceable

On August 20, 2024, U.S. District Judge Ada Brown of the Northern District of Texas struck down a proposed rule by the United States Federal Trade Commission (FTC) that sought to impose a nationwide ban on non-compete agreements. Ryan, LLC v. FTC, –F. Supp.3d – (N.D. Tex., Aug. 20, 2024). The decision halts what would have been a significant shift in employment law across the country had the rule taken effect.

In granting summary judgment in favor of the plaintiff-intervenor, Judge Brown found that the FTC lacked the statutory authority to implement a nationwide ban on all non-compete agreements. She further found that even if the FTC did have such authority, it failed to adequately justify its decision to impose a blanket ban. According to Judge Brown, “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.”

The proposed rule, which was scheduled to take effect on September 4, 2024, aimed to eliminate what the FTC described as an “unfair restraint” on employees nationwide. FTC Chair Lina M. Khan defended the initiative, arguing that non-compete clauses depress wages, stifle innovation, and diminish the American economy.

“Non-compete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once non-competes are banned,” Khan stated. She further emphasized that “the FTC’s final rule to ban non-competes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”

Despite Judge Brown’s ruling blocking the proposed FTC rule from taking effect, the FTC still retains the authority to challenge non-compete agreements on a case-by-case basis under federal competition law. This means that while the broad nationwide ban has been struck down, the Commission can continue to address individual cases where non-competes may violate existing antitrust regulations.

Without the new rule in place, most non-compete agreements remain enforceable, with their validity largely dependent on a court’s assessment of the reasonableness of each agreement. Generally, a court will evaluate factors such as the duration of the non-compete, its geographic scope, and the extent of the restrictions imposed on the individual in order to determine reasonableness.

According to an FTC spokesperson, the FTC is “seriously considering a potential appeal.”

Silverman Thompson provides employment counseling, including advice regarding non-competes, and regularly litigates non-compete matters in Maryland and across the country. To find out more about how our attorneys may be able to assist you here, please e-mail or call Bill Sinclair at bsinclair@silvermanthompson.com or at (410) 385-9116.

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Published on: June 4, 2024

Federal Court Grants Motion to Remand in Putative Class Action Against Johns Hopkins Involving Maryland Wage Payment and Collection Law

By William Sinclair and Meredith McKinnon

On May 23, 2024, after nearly a year of motions practice, Judge George L. Russell III of the United States District Court for the District of Maryland granted plaintiff’s motion to remand its putative class action to state court. Serving as local counsel, Silverman Thompson filed the class action in the Circuit Court for Baltimore City on January 19, 2023. The plaintiff, who has been employed as an hourly, non-exempt worker at Johns Hopkins Hospital (“Johns Hopkins”) for over thirty years, contends that Johns Hopkins has a policy of rounding employees’ hours resulting in illegal withholding of wages, failure to pay minimum wage, and failure to pay overtime wages in violation of the Maryland Wage Payment and Collection Law.

Johns Hopkins removed the matter to federal court more than seven months after receiving the complaint on the basis of federal question jurisdiction. Johns Hopkins argued that the United States District Court for the District of Maryland had jurisdiction pursuant to Section 301 of the Labor Management Relations Act, which provides the court subject matter jurisdiction over employment disputes governed by collective bargaining agreements. Plaintiff promptly filed a motion to remand maintaining that Johns Hopkins’ removal was untimely – in accordance with 28 U.S.C. § 1446, Johns Hopkins had thirty days following receipt of the complaint to file a notice of dismissal.

In its opposition, Johns Hopkins declared that its removal was timely because it first became aware on August 11, 2023, after analyzing the plaintiff’s opposition to Johns Hopkins’s motion for summary judgment, that the resolution of the claims brought against it require interpretation of a collective bargaining agreement. Consequently, Johns Hopkins argued that it filed its notice of removal twenty days after its alleged discovery and within the time limitation prescribed in 28 U.S.C. § 1446.

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Published on: October 18, 2023

Summary of Recent Changes to Maryland Employment Law

By William Sinclair

Employers must be aware of, and revise their employment-related documents to reflect, the recent changes to Maryland and federal law. One of a Company’s most powerful way to deter future litigation is by ensuring that its agreements, handbooks, and policies are legally compliant.

Companies often face claims of discrimination, harassment, and retaliation by their employees. As such, it is imperative that employers are cognizant of the Maryland legislature’s substantial expansion of anti-discrimination and harassment laws. With the passage of SB 450, the Maryland legislature adopted a less stringent standard of determining harassment, allowing employees to establish that they have been the subject of harassment based on the “totality of the circumstances.” Additionally, Maryland has imposed greater requirements for employers to reasonably accommodate not only employees’ disabilities but also an applicants’ disabilities. Finally, the Office of the Attorney General can now independently initiate investigations of federal and state civil rights violations and file a lawsuit on behalf of the employees in Maryland, making it even more essential that employers properly handle complaints of discrimination.

Although Maryland has long disfavored the use of non-competition agreements, it has recently made non-compete and conflict of interest provisions unenforceable against employees earning less than 150% of the state’s applicable minimum wage. The legislature has also taken great strides to provide paid time off for employees requiring medical leave for themselves or for those of eligible family members. The Time to Care Act created a Family and Medical Leave Insurance Program (FAMLI), pursuant to which eligible employees would receive twelve weeks of paid family and medical leave, with the possibility of 12 additional weeks of paid parental leave (for a possible of 24 weeks of paid leave). Under the FAMLI rules, contributions will be made by employees and employers with 15 or more employees, as well as self-employed individuals who opt-in to the program. Employees who work for a company with less than 15 employees will make the full contributions themselves. Contributions will commence on October 1, 2024, with benefits first becoming available as of January 1, 2026.

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