NLRB Moves Closer to Banning Use of Noncompetes and Other Restrictive Covenant Agreements

On May 30, 2023, the National Labor Relations Board (“NLRB”) General Counsel, Jennifer Abruzzo, issued a memo titled “Non-Compete Agreements that Violate the National Labor Relations Act.” The memo details how the NLRB views non-compete agreements between employers and employees and suggests that, generally, non-compete agreements violate employees’ rights under the NLRA. Importantly, a memo is not a decision, meaning there is no decision holding that a non-compete violates the NLRA.

By way of background, Section 7 of the NLRA protects employees’ rights, and it is an unfair labor practice “to interfere with, restrain, or coerce employees in the exercise” of rights guaranteed under Section 7. The NLRA applies to employees that are represented by a union, and those that are not represented by a union.

According to the memo, non-compete agreements violate the NLRA unless they are “narrowly tailored to address special circumstances justifying the infringement on employee rights.” The memo describes the following types of protected activities that non-compete agreements allegedly suppress:

  1. Concertedly threatening to resign for better conditions: Non-compete agreements can discourage employees from collectively threatening to quit as a negotiation tool for better working conditions due to fear of limited employment opportunities and potential legal consequences.
  2. Carrying out concerted resignations for better conditions: The agreements can discourage group resignations intended to improve working conditions, as employees might fear being unable to secure new employment due to the non-compete restriction.
  3. Seeking or accepting employment with a competitor: Non-compete agreements can deter employees from pursuing employment with local competitors to improve their working conditions, as this could potentially breach the agreement.
  4. Soliciting co-workers to work for a local competitor: Employees may fear inviting co-workers to join a local competitor due to the potential legal ramifications associated with breaches of non-compete agreements.
  5. Seeking employment to engage in protected activities: Non-compete agreements can discourage employees from seeking new jobs to engage in protected activities, like union organizing, at the new workplace, as the agreements limit their mobility and potential employment opportunities.

The potential implications of this memo could be vast. It suggests that employers should exercise caution when requiring non-compete agreements and that such agreements should be narrowly tailored to specific, valid business interests. It specifies that “a desire to avoid competition from a former employee is not a legitimate business interest that could support a special circumstances defense.” The memo could also potentially open the door for legal challenges against overbroad non-compete agreements.

Employers should review their template noncompetition agreements to ensure that they do not run afoul of the NLRB’s memo and, where appropriate, update and re-issue amended agreements to current employees.

Further Update on NY Healthcare Budget

Since our alert on the status of the healthcare (and home care) budget was issued, we have received more information about the wage (not benefit) changes to home care worker compensation. We’ve also received a significant influx of questions about the minimum wage, benefit, timeline, programmatic, and other implications of what is – to our best understanding – a very rough draft of the final budget language regarding the home care worker minimum wage and wage parity provisions. Although the ink has not even been run on this language (let alone dried), here’s a high-level overview of our current understanding of the numbers and the timeline for home care worker wages.

Although the ink has not even been run on this language (let alone dried), here’s a high-level overview of our current understanding of the numbers and the timeline for home care worker wages.

CMS Releases Guidance Regarding End of COVID Staff Vaccination Requirements and Other Protocols

The Centers for Medicare & Medicaid Services (CMS) released a new regulatory memo QSO-23-13-ALL entitled Guidance for Expiration of the COVID-19 Public Health Emergency (PHE) on May 11, 2023. The memo outlines each waiver CMS put into place during COVID-19 and how the end of the PHE will affect those waivers. Additionally, the memo outlines timelines for certain regulatory requirements issued through the PHE. This memo applies to Long Term Care, Intermediate Care Facilities, and other provider types.

NLRB Decision Restores Protection for “Worker Outbursts”

In a decision that will impact employers’ ability to enforce civility and professional conduct rules in the workplace, the National Labor Relations Board (“NLRB” or the “Board”) released a decision in Lion Elastomers LLC II, 372 NLRB No. 88 (2023), that has profound implications for both employers and employees. The underlying facts involved an employee who was disciplined and dismissed after a heated exchange with managers allegedly concerning working conditions. In its decision, the NLRB determined that the employee’s conduct was protected conduct and the Company was barred by the National Labor

Relations Act from taking adverse employment action against the employee on that basis. The result of the decision is that employees engaged in workplace activism and union-related activity will have significantly greater legal protection, even when such activism involves profane, harassing, or vulgar conduct. Employers contemplating disciplinary action will need to be mindful of yet another basis of “protected activity” in their analysis.

NYC Passes Law Prohibiting Employment Discrimination on the Basis of Height or Weight

On May 11, 2023, the New York City Council adopted a bill to amend the New York City Human Rights Law to include prohibitions on discrimination based on height and weight. This bill adds “height and weight” to the list of categories protected by Title 9 of the New York City Administrative Code, specifically to prohibit discrimination in connection with employment, housing, and access to public accommodations because of a person’s actual or perceived height or weight. Today, May 26, 2023, New York City Mayor Eric Adams signed the bill into law, announcing that “[n]o one should ever be discriminated against based on their height and weight.” The Bill will be effective 180 days from now, or November 22, 2023.

Of importance to employers, the law provides for exemptions (i.e., there is no prohibition on discrimination based on height or weight) where:

  1. Preferential treatment on the basis of height or weight is required by federal, state, or local law or regulation;
  2. An individual’s height or weight could prevent them from performing the essential functions of the job with or without an accommodation; or
  3. A certain height or weight is reasonably necessary for the normal operation of the business.

The Bill charges the New York City Commission on Human Rights with identifying particular jobs or job categories that fit into the above exceptions. Employers should update their employee handbooks (yet again) to account for these new protected characteristics and review any job descriptions that may be affected by these legal changes.

Update on NY Healthcare Budget: Implications on Home Care

Sections of the health care budget seem to be slowly being released as the Legislature and the Governor work feverishly to finalize the New York State budget this week. By all accounts in Albany, the New York State budget will be finalized by the end of this week.

We have received what appears to be a close-to-final summary of the Minimum Wage Act and Wage Parity Law amendments that would take effect upon the adoption of the final budget. As relevant to our readers, this document indicates that the Budget would amend the law to provide the following:

  1. The home care worker wage parity hourly amounts of $3.22 and $4.09 would be reduced by $1.55 effective as of January 1, 2024. This would result in a New York City wage parity rate of $2.54 (instead of $4.09) and the Long Island/Westchester rate of $1.67 (instead of $3.22). If this is indeed the final budget language, we expect that this will not only reduce the wages of those workers who receive their wage parity as a wage (instead of a benefit), but that the plans will also reduce their reimbursements. It remains to be seen whether any such reduction will be by $1.55 or $1.55+overhead. Providers are advised to very carefully implement any wage reductions; the New York Labor Law governs (with strict penalties for noncompliance) the process of reducing wages or changing benefits.
  2. The $1.00 minimum wage increase that is scheduled for October 1, 2023 would be postponed to January 1, 2024. The new law would also cap the minimum wage of home care workers at the general minimum wage + $3.00.
  3. The law would be amended to allow the Department of Health greater authority to collect information from payers and providers about the wages and benefits being paid to home care workers. The owners of agencies would need to certify that the payroll records they are providing to the Department are “true,” under penalty of perjury. Failure to make such payroll records available may result in immediate suspension of the agency from Medicaid (including MLTC Medicaid), and the Department of Health will be empowered to direct MLTCs to suspend any payments to the provider.
  4. The law would be amended to allow the Department of Health greater oversight over managed care organizations, including the contracted rates of payments between such plans and the providers. The stated intent of this amendment is to provide for greater transparency and better enforcement of wage violations. This amendment could also open the door to providers making more kickback-type complaints against plans related to rate-setting between plans and providers.
  5. The Verification Organization program would be void and replaced by EVV.

We do not yet have access to the other parts of the Budget that are being discussed, such as the potential repeal or amendment of the CDPAP RFO. We will provide an update as more information becomes available.

Home Care Employers Take Note “Sweat Bill” Moves Closer to Becoming Law

The SWEAT Bill (full text available here) is yet another well-intentioned but completely unnecessary anti-business piece of legislation that has been resurrected and gained traction with the New York Legislature in the last few days. As the legislative session is wrapping up this week, employee advocacy groups are working diligently in the last few days to ensure that this bill becomes a law. Employers that are in industries that are susceptible to wage claims, such as employers in the home care industry, should contact their local elected officials immediately to object to this bill becoming law.

As we had reported previously when this law was originally introduced several years ago (and, thankfully, had stalled in the Legislature since that time), the SWEAT Bill would allow alleged “victims” of wage theft to obtain a temporary lien against their employer’s (or alleged employer’s) assets upon the filing of a “wage claim.” (The term “wage claim” is not defined in the law and, thus it is unclear if a lawsuit has to be filed in order for the law’s provisions to be triggered, or whether a complaint to the Department of Labor would suffice).  In other words, a current or former employee could file a claim against their employer (or former employer) and immediately place a lien on that employer’s personal and real property. The problematic part of this bill is that it allows an employee to secure the lien without having prove any wrongdoing or error by the employer. The lien, once filed, would be in the amount of the alleged claim (which could be a class claim), plus liquidated damages. In effect, the employee lien could prevent an employer (or alleged employer in cases of fiscal intermediaries) from conveying, selling or transferring real or personal property while the employee lien is in place. The lien could impede a business’s attempts to sell the business or secure financing.

If the SWEAT bill is passed, employees and their attorneys will have significant new leverage to elicit, through threatened litigation or claims, favorable wage and hour payouts from employers. Employers, facing the prospect of expensive litigation and a lien, would be pressured into settling even the most meritless of claims. 

The SWEAT Bill was previously vetoed by Governor Cuomo. Perhaps the same fate will follow the bill with Governor Hochul, but no employer should sit idly by given the potential ramifications of this law. We encourage all our readers to contact their lobbyists, associations or attorney and the legislative officials directly to object to this bill becoming a law.

Home Health Care

Home Care Developments – NYS Governor’s Budget

Yesterday’s publication of the Governor’s Budget kicks off what promises to be an exciting Budget season for anyone in healthcare. In no particular order, below are the Proposals contained in the Governor’s Memorandum in Support of the Health and Mental Hygiene sections of the Budget:

  • The Home Care and Personal Care Workforce Recruitment and Retention programs would be renewed and extended through March 31, 2026.
  • MLTC moratorium would be extended until March 31, 2027. 
  • During the moratorium on MLTCs, all MLTC plans would be required to meet certain stated performance standards on or before October 1, 2024. The performance standards would include a plan’s commitment to contract “with the minimum number of [LHCSAs] needed to provide the necessary [PCA] services to the greatest practicable number of enrollees and the minimum number of [FIs] needed to provide necessary [CDPAS].” 
  • The proposed bill from the Governor states that “as of January 1, 2024, no entity would be permitted to provide, directly or through contract, [FI] services without an authorization as a [FI] issued by the Commissioner. ” The bill then contains a directive to the DOH Commissioner to “issue regulations, including emergency regulations, clarifying the authorization process, standards, and time frames.” It is not clear if this directive means that a whole new authorization process will be issued by the Department, or some modification of the prior authorization process will be conducted.
  • The wage parity law for CDPAP would be eliminated and replaced with reforms that would “better target the intent of wage parity.” The Governor proposes to establish a CDPAP “supplemental premium assistance funds” to ensure that healthcare workers in CDPAP maintain access to essential health care benefits. We are reviewing the proposed bill now, but it seems that this essential health care benefit would be Statewide, for all PAs, who do not otherwise have health coverage.
  • The Public Health Law would be amended to clarify that certain types of transfers of ownership interests for home care agencies do not require prior approval of the Public Health and Health Planning Council and could simply be done upon notice to the DOH.
  • In addition, the Governor proposes to amend the Public Health Law to reduce processing times for Certificate of Need applications that are submitted for new LHCSAs.
  • To increase the number of health care workers in New York State, New York would enter into Interstate Licensure Compacts and nurse licensure compacts that would make it easier for health care professionals that are licensed in other states to practice in New York, either physically or virtually.
  • The authorization for advanced home health aides would be extended for another six years.
  • Nurse staffing agencies would be required to register and report key data about their operations, with the goal of increasing transparency into the utilization and costs of contract labor.
  • The responsibilities for oversight of certain healthcare professionals would be transferred from the Department of Education to the Department of Health.
  • New York Would automatically increase the minimum wage, consistent with the year-over-year Consumer Price Index-W for the Northeast Region. Annual increases would be capped, and increases could be paused in the event of certain economic conditions.

If you’d like to read up on any of these proposals, please review the Health Care Briefing Book and the full Budget Briefing Book. These will contain summaries of the Governor’s proposals. 

We are reviewing the 1100 pages of proposed revisions to the law (see Bill Language) that would support the Governor’s plans and proposals and will discuss the details of the proposals with any clients who may have questions.   

NY DOH Announces New Deadline for Plans and Providers to Submit Wage Parity Certifications

As we reported earlier today to our clients, the New York Department of Health (“DOH”) has announced that it has postponed the deadline for LHCSAs and FIs to submit the wage parity certification information (e.g., LS 300 and LS301 forms) from the current deadline of June 1 to October 1, 2022. The compliance deadline for MCO’s and CHHA’s receipt and review of providers’ compliance attestations will also be extended from June 1 to October 1, 2022. A link to the DOH’s announcement is not yet available, but anyone wishing a copy of the same can contact us.

The DOH’s announcement also states that “The Departments of Health and Labor are currently reviewing forms LS-300 and LS-301 to determine if amendments are required and may be providing additional guidance on the forms and audit process required to complete the forms in the coming weeks.”

This announcement provides significant relief to providers who have been struggling to find accounting firms to conduct and certify the results of audits of providers’ wage parity compliance. As the provider community knows, the DOL’s and DOH’s contemplated process for the wage parity compliance certifications has faced significant pushback from the professional accounting and auditor community. These additional months should provide much-needed time to amend the forms and the process.

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