Sharlyn J. Lauby's Blog, page 21

Employees: How to Respond to Being Placed on Suspension

Estimated reading time: 3 minutes

I’ve been seeing a lot of social media postings from employees who are getting suspended. Suspensions are never fun – for the employee or the manager. One of the hardest parts for everyone is figuring out next steps. Often employees are placed on suspension pending the outcome of an investigation. 

I’ve written before about how employees can respond to being suspended and some of the decisions they will want to consider. So, I thought it might be a good idea to post a few articles that could help. 

What Happens During an Employee Investigation

Workplace investigations are one of the toughest responsibilities in HR. There’s an expectation that the matter will be handled in the strictest confidence. And when we do that, sometimes we’re criticized for not keeping people informed.

This is What You Should Do If You Get a Suspension

While organizations should be providing employees with information during suspensions, it’s sad to say that sometimes the employee is in shock about what’s going on and they forget to ask clarifying requests. If companies want to get to the truth, then they need to answer employee questions.

What to Do If You’re Placed on Suspension

Companies need to communicate expectations. Managers and employees need to regularly communicate about performance. HR needs to communicate policies and procedures. Follow-up communications need to happen.

How to Handle a Work Suspension

Employee suspensions are not an action that should be taken lightly. Companies need to make sure they are handling the matter properly, both from a legal perspective and from a respect standpoint.

HR Failed to Investigate an Incident

Employees need to feel they can report concerns to the organization. AND that the organization will properly investigate the situation. Not only is there a liability to ignoring an employee’s complaint, but it’s also just not the right thing to do.

Employees: When Should You Lawyer Up

There are times in your employment that you may definitely need an attorney. In this article, we share four reasons you might need the services of a lawyer.

Employee suspensions are complicated situations. Many things need to be considered, including the employee figuring out their ultimate goal. I can’t answer that question. But hopefully these articles will give employees some things to consider as they decide how they would like to move forward.  

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E-Verify: What Organizations Need to Know Today

Estimated reading time: 5 minutes

(Editor’s Note: Today’s article is brought to you by  our friends at Poster Guard® Poster Compliance Service from HRdirect , the leading labor law poster service that gets your business up to date with all required federal, state, and local labor law postings, and then keeps it that way — for an entire year. Enjoy the article!)

Under the Immigration Reform and Control Act (IRCA), all U.S. employers are required to complete Form I-9 whenever they hire someone. Basically, Form I-9 verifies two things:

The new hire’s identity. Meaning they are who they say they are. And,The new hire is eligible to work in the United States. 

In August 2023, a new Form I-9 was released and by now, employers should be using the new form. You might be asking yourself, “What does the new Form I-9 have to do with E-Verify?” Well, E-Verify is an internet-based system that compares the information on an employee’s Form I-9 with records available to the U.S. Department of Homeland Security (DHS) and the Social Security Administration (SSA). While using this technology is voluntary for most businesses, organizations with government contracts might discover that E-Verify is a contract requirement. 

In addition, some states are passing legislation requiring organizations to use E-Verify. For example, my state (Florida) passed a law requiring private employers with at least 25 employees to use it. This might not matter if you don’t have employees in Florida, but in doing some research I discovered that 27 states have some sort of E-Verify requirement. 

So, the change in Form I-9, coupled with state legislation requiring E-Verify, could be a perfect time to look at your processes. 

If you’re currently using E-Verify: 

Make sure that you’re in compliance. This includes labor law posting requirements. Organizations that use E-Verify are required to provide job applicants with access to the latest E-Verify and Right to Work posters. In addition to applicants and candidates, employees must be able to see the postings as well.  These postings must be displayed in both English and Spanish in a prominent location that is clearly visible to prospective employees and all employees, including those hired to work remotely who will have their employment eligibility confirmed with E-Verify.

If you’re not sure if your postings are current OR you would like an easier way of managing your postings, our friends at Poster Guard offer two posting services related to E-Verify and Right to Work. 

The E-Verify Poster Service provides the posters that every employer participating in the E-Verify program must display. There’s also an add-on E-Verify Posting Service for online job applicants, since they must be able to see these postings. 

It’s an electronic service that, for 12 months, is updated in real-time as regulations are changed. And it’s bilingual (English and Spanish). Like the rest of Poster Guard’s services, it comes with a 100% guarantee that the posters are compliant. 

If you’re not currently using E-Verify:

Given the new updates to Form I-9, this could be a good time to consider adding it to your process. There are two big reasons for adding E-Verify to your existing process: administration and compliance.

Administration. E-Verify allows employers to utilize I-9 software and eliminate manual data entry – saving time, money, and potentially reducing data errors. This also provides organizations with the ability to monitor document expiration dates to ensure compliance. This electronic system would make it easier to store and maintain documentation. And should the organization ever find themselves in an audit situation, they would be able to respond in an effective and efficient manner.  

Compliance. E-Verify helps employers reduce the risk of hiring workers who are unauthorized to work in the U.S. through the employment eligibility check. It includes a photo matching option that allows employers to compare the photo provided by the employee when certain documents (i.e., from List A such as a passport or resident card) are presented for verification. This allows employers to establish a rebuttable presumption that they have a system in place to prevent hiring employees who are unauthorized to work.

Whether you’re currently using E-Verify or not, there are times when labor law changes should prompt us to look at the entire process and not just one step. I think this is one of those moments. 

The recent changes to Form I-9 are an opportunity to make sure that the organization is in compliance with both Form I-9 and E-Verify. Organizations can confirm they have the most current forms and the required postings. And if there are opportunities to partner with a company like Poster Guard, this shifts the process from being reactive to proactive. 

If the company hasn’t adopted E-Verify, now is the time to have a conversation. Services like this are designed to protect employers and employees. Employers know that they’re hiring someone who is authorized to work. And employees know that the organization is following the law by hiring individuals who are authorized to work. 

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How to Talk About Your Pay at Work

Estimated reading time: 4 minutes

I’ve mentioned before that there’s a Reddit sub called anti-work. It’s not really opposed to work, but instead points out some of the unexplainable things that employers do. Like tell employees they cannot talk about their pay. Just as a FYI – under the National Labor Relations Act, employees can talk about their pay. But that’s not the point of today’s article. 

When it comes to discussing pay, especially if you’re trying to negotiate a pay increase with your employer, there are some things to consider.  

Here’s what not to do:

DON’T threaten to quit over pay … unless you’re prepared to do it. Let me start with a piece of tough love here. Please do not give your manager an ultimatum. Sometimes, even when a manager wants to increase an employee’s salary, there are factors beyond their control. An ultimatum will only hurt your relationship and won’t get you what you’re looking for.

DON’T compare your pay to other people. Even though you can talk about pay with your coworkers, it would be inappropriate to use that information for your personal gain. When it comes to compensation, there are lots of factors to consider (see below) and there’s a good chance you don’t know them all. Your pay needs to be about your work performance. Not other people.

DON’T stop being a team player. I’ve seen many employees make this mistake. They have a conversation with their manager about pay. The manager isn’t able to do anything right away. The employee stops doing the little things. This looks petty and doesn’t help your desire to get a raise.

Instead, here are some things you can do:

DO understand what factors are tied to compensation. Your pay is based upon three things: 1) the company’s ability to attract talent, 2) the company’s ability to retain talent, and 3) the company’s ability to pay. Here’s what this means:

If the company can  easily  attract top talent, they don’t need to pay more.If the company typically retains a majority of their top talent, they don’t need to pay more.If they company doesn’t do any of the above, but they don’t make enough revenue, they just can’t pay more.

DO think about pay in terms of the total package. Many companies are expanding employee benefits and perks to attract and retain talent (see above). All those items need to be included in conversations about compensation because they cost money. Employees need to think about how much they use the benefits that the company offers. 

DO plan to discuss pay with your manager. And if you work in a matrix organization where you report to multiple people, then talk with both of your managers. Chances are high that your managers regularly discuss your performance and compensation. Also be prepared to talk about other options that might be satisfactory instead of a pay increase, such as additional vacation time or attending a professional development event. 

I understand that employees are fed up about low pay, extra work, and lack of decent increases. Don’t let frustration be a factor for mishandling the pay conversation. Do the research and present a well thought out business case. 

I wish I could say that following these steps will get you the pay increase you’re looking for. But there are no guarantees. What it will show your manager is that you’ve professionally presented a compelling reason to increase your compensation. And you don’t have to say it but it will also tell them that if nothing happens, it’s possible you’ll take action. 

Managers don’t like losing excellent employees. Give them the information they need to sell your pay increase to their boss. 

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Human Resources Pros: Activities to Stay Current and Bring Value

Estimated reading time: 4 minutes

I’m seeing a lot of questions lately about how human resources professionals can stay informed and continue learning. It’s an important activity to make time for. If we want to provide value to organizations, we need to stay current. 

It’s also a great question to ask other people because they might do something that you want to try and add to your list. So, I wanted to share with you some of my favorite ways to stay informed. I hope you’ll share yours in the comments. It would be great to create a list for others in the HR community.

I’m sure one of the first things that people think of when it comes to staying current and continuous learning is attending professional events, whether that’s a local meeting or a conference. Stepping away from the daily operation can be a time for renewal and reflection. It can give us the ability to consider new possibilities when it comes to Human Resources policies, procedures, and goal setting. But I do realize that getting away can be expensive both in terms of time and money.

That’s why including online events can be helpful as well. You can listen to a podcast or webinar. There are conferences that are entirely online. Since the pandemic, I think we’re seeing more online offerings and that’s a good thing. The challenge is getting ourselves in a mindset where we can learn online without being distracted. 

Don’t forget massive open online courses (also known as MOOCs). I’ve mentioned before that I try to take at least one MOOC a year. Most of them are free and if you’d like a certificate of completion, there’s a small cost. There are two things I like about MOOCs: 1) they help me learn how to learn online, which I believe is a skill we need to work on. 2) in many, the audience is global, and it keeps me informed on a global scale. 

Another option can be just a meeting with a colleague over cup of coffee or cuppa tea. This could be part of a Human Resources mentoring or coaching session. It could also be a networking meeting. We don’t always need a big event over multiple days to learn something new and helpful. 

I’m also a big fan of books to learn and be challenged with new ideas. Let me add that sometimes the book doesn’t have to be newly released to bring value. There are classic business books that continue to deliver value. I’m sometimes amazed at the classics that I haven’t read yet and remind myself it’s not too late. Oh, and please forgive me for the shameless plug but I’ve written four books and collaborated on several others. I hope you’ll check them out.

One of the ways I try to challenge myself is by not doing the same types of activities all the time. While I love reading books, I try to push myself to do other things. That way I’m staying current both in terms of what I learned as well as how I learned it. 

Speaking of what I learned, when it comes to learning topics, obviously staying current includes human resources and business-related topics. For example, artificial intelligence is a hot topic to stay current on. But don’t discount the value of getting business lessons from non-business topics. I’m reminded of an article I wrote years ago about how much I’m able to apply to my work life from playing Pokémon Go.   

The business world is constantly changing, which means our industries and departments are changing as well. Finding ways to stay current and bring value is critical to our personal success and the success of our organizations.

Image captured by Sharlyn Lauby while exploring the Wynwood Art District in Miami, FL

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New Employee Benefits Transparency Rules: What HR Needs to Know

Estimated reading time: 6 minutes

There are lots of new compliance rules that employers need to know. We’ve talked recently about employment law postings and noncompete agreements. Did you also know that there are new rules related to employee benefits and transparency?

I recently listened to a HUB International webinar on the “2024 Compliance & Benefits Update: How the New Transparency Rules Will Impact Your Organization”. I would suggest when you have a moment, taking a listen. It talks about the new rules impacting employee benefits compliance.

After listening to the webinar, I asked our friends at HUB if they would chat with me about some of these new rules. Thankfully, they said yes. Dennis Fiszer is chief compliance officer and senior vice president for global insurance brokerage Hub International. His areas of expertise include all aspects of the Affordable Care Act (ACA), including employer reporting, hours tracking, and plan valuations for affordability and minimum essential coverage analysis. His work also centers on the Employee Retirement Income Security Act (ERISA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Family and Medical Act (FMLA), state and local leave laws, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), wellness programs, employment and labor issues, cafeteria plans, and compliance with Internal Revenue Code requirements for favorable tax treatment of benefits. Dennis received a Juris Doctorate from Boston University.

Please remember that Dennis’ comments should not be construed as legal or tax advice. If you have detailed questions, they should be addressed directly with your financial advisor, benefits broker, and/or friendly neighborhood labor and employment attorney.

Dennis, thanks so much for being here. One of the biggest benefits that organizations offer employees is related to healthcare. But the reality is that healthcare benefits are complicated. For example, there are transparency rules. Can you briefly explain the employer’s requirement for transparency when it comes to employee healthcare benefits?

[Fiszer] Transparency-related employer duties for health and welfare plans originated from the Consolidated Appropriations Act (CAA) of 2020. Surprisingly, CAA was a COVID-era relief funding measure, but it contained key provisions for transparency that hadn’t previously been able to move through Congress on their own. 

In a nutshell, employers are required to ‘transparently’ report about target zones of their employee healthcare benefits. This means they must disclose information about healthcare services, such as cost-sharing provisions, coverage limitations, prescription drug costs, and out-of-pocket expenses. 

From a public policy perspective, the new transparency rules empower employees to make better and more precisely informed decisions about their healthcare. It’s supposed to offer participants a clearer window to understanding the full extent of their benefits. Also, transparency is supposed to cast new light on waste, fraud and systemic inefficiencies that have negatively impact cost so that they can [theoretically] be removed.

Just to confirm, the transparency rules you’ve mentioned are not the same as the Corporate Transparency Act?

[Fiszer] Yes, these laws share similar names but are entirely different. The Consolidated Appropriations Act (CAA) transparency requirements center on healthcare benefits for employees. 

By contrast, the Corporate Transparency Act (CTA) addresses an organization’s operational transparency to fight financial crimes. So, among other things, CTA includes provisions to flag possible money laundering, financing of illicit groups, and other criminal activities by requiring affected businesses to disclose heightened details about their structure and ownership.

Getting back to employee benefits transparency, have there been any recent changes to transparency in coverage rules? For example, one of the things I heard in the webinar was about the “no surprises” clause. What is it and why should employers (and employees) know this exists?

[Fiszer] The No Surprises Act is a federal law that’s evolved from similar laws that have been in place at the state level in many parts of the country for pretty much the last decade. Those state laws were only partially effective because they were primarily regional and solely focused on insurance carriers. 

The federal law is supposed to more strongly protect consumers from unexpected medical bills resulting from out-of-network healthcare services. It prohibits ‘surprise’ balance billing following situations such as emergency care, where a patient receiving services holds little control over the providers they see. The process is designed to remove the patient from the billing process and shift the dispute to a baseball style arbitration process between plan and provider. 

However, even though the law’s framework has been pretty much set, specific provisions of the No Surprises Act, particularly the regulations governing how final pricing would be determined, have been the source of much legal challenge to date. So, I’m guessing that this is an area we’ll see evolving and morphing further for the foreseeable future.

Related to the “no surprises” rule, what’s a “gag clause” as it pertains to transparency in coverage?

[Fiszer] The ‘gag clause’ as part of all these new transparency requirements refers to a rule that blocks healthcare providers and facilities from imposing contractual restrictions about what can be disclosed to plan participants and sponsors. These disclosure restrictions were called ‘gag’ clauses and now the government has introduced an annual reporting requirement that forces affected entities to formally certify through an attestation process that they don’t use contracts which include or impose such gag restrictions. Theattestation process is supposed to ensure a level playing field where plan related details, especially cost details, can be more easily shared. 

Last question. It sounds like a critical piece of transparency is being a good corporate fiduciary. Can you name 2-3 things that HR departments should do to not only stay in compliance but be a good fiduciary?

[Fiszer] I agree that much of what the law requires simply comes down to operating as a diligent fiduciary. The fact is that even though we are seeing new reporting and operating rules being formally linked to transparency, I would say that the spirit of those transparency duties have always been woven into the fabric of the original ERISA law. That’s because a fundamental ERISA fiduciary obligation is to operate the benefit plan for the exclusive benefit of plan participants. So that would automatically demand that a plan sponsor not manipulate operations to ‘hide’ costs and program features from participants. 

In my view, there are a few key steps a plan sponsor should consider for a reset opportunity to energize compliance: 

Identify responsible internal parties and precisely define roles and dutiesAppoint a dedicated health and welfare committee to oversee plan functionsInternally assess for possible compliance gaps (e.g., Are annual notices being distributed? Are plan documents in good order?)Periodically review vendors and measure performance to assess capabilities so as to ensure that participants are optimally servedMaintain robust files showcasing compliance effortsActively monitor for compliance developments

I want to extend a huge thanks to Dennis for sharing his knowledge with us. Don’t forget to check out the webinar I mentioned earlier about these new transparency updates. You can also look for more information on the HUB International Insights blog. 

Employee benefit programs help organizations attract, engage, and retain the best talent. But for this to happen, benefit programs need to be transparent and easy to use. 

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Bookmark This! Labor and Employment Law Postings Edition

Estimated reading time: 4 minutes

There have been a lot of headlines lately related to labor and employment law. The Federal Trade Commission (FTC) recently announced a rule banning non-compete agreements. And the U.S. Department of Labor finalized a rule to increase the compensation thresholds for overtime eligibility under the Fair Labor Standards Act (FLSA). While there’s been talk of contesting these rules, it’s still something that human resources professionals must manage.

We will be talking more about these issues in upcoming articles so stay tuned!

Another aspect of labor and employment law that’s seen a lot of activity lately is postings. We’ve written about many of these changes, so I thought it could be helpful to have all the information in one place.

3 New Labor Law Poster Updates in the Past Year 

HR professionals have a long list of things to do – recruiting, training, benefits administration, and more. Compliance is one of those things. I’m reminded of the phrase, “Just because you can doesn’t mean you should.” Can I research all the federal, state, and local labor law changes? Yes, I can. Is that the best use of my time? Hmmm…not really. 

3 Employee Groups with Unique Labor Law Posting Requirements

It’s very easy to dismiss warnings about labor law posters with “Oh, we have all the right ones.” or “There will be headlines everywhere when our posters need to be updated.” That’s simply not true. While I’m not saying that government agencies are out to catch organizations that aren’t in compliance, it’s important to realize that in today’s fast paced business world, there’s no guarantee that labor law posting updates are going to automatically move into the trending topics section of your favorite social media platform.

Different Industries Require Different Labor Law Postings

I’d like to offer a friendly reminder that when we’re thinking about labor law postings, not every organization is the same. Some industries have specific labor law posting requirements that companies need to know. This article includes three examples of industry specific labor law postings that organizations need to keep in mind. 

Labor Law Requirements for Hybrid and Remote Workers

Remote work can save money in terms of working attire, commute expenses, and childcare expenses. It can also positively contribute to overall wellbeing. And technology tools are allowing remote workers to still communicate, collaborate, and get work done. But all this talk about remote work does raise the question, how do organizations communicate with employees when it comes to topics like labor law compliance postings. I know organizations need to be focused on getting the work done, but we also need to make sure all employees know their rights as required by federal, state, and local law.

Labor Law Postings: 4 Key Elements of an Effective Strategy

While most employers know they need to have labor law postings, I can see organizations forgetting to take the extra caution necessary when it comes to unique employee groups, different industries, and employee handouts. As HR professionals, compliance is a key part of our roles. That doesn’t mean it needs to consume most of our time. We need to have a complete compliance strategy that allows us to be proactive versus reactive. 

If your organization hasn’t done an audit of their labor law postings lately, this might be a good time to schedule one. It can confirm the posters that are in compliance and the ones that need updating. This might also be a good time to determine if monitoring labor and employment law postings is the best use of HR department time. 

Compliance is a regular component of human resources. But even when it comes to compliance, HR departments have choices on how to monitor and manage it. 

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Organizations Should Start Talking About Peak 65

Estimated reading time: 3 minutes

I recently learned a new term – Peak 65. The term is being used because this year an average of 11,000 Americans are expected to turn age 65 every day from now until year end. This represents the largest increase in retirement age Americans in history, according to an article on CBS News. 

Some people might view Peak 65 as a welcome relief, as in “Finally, those Boomers will retire!” I read an article recently in Business Insider that said Boomers are a drain on the economy, the housing market, the labor shortage, the stock market, and Social Security. Regardless of whether it’s true, having such a large percentage of the population turn of retirement age does present challenges – and opportunities – for organizations. And they need to think about how they’re going to handle them. 

It made me wonder if organizations should do the classic SWOT analysis but only in reference to Peak 65. Just as a quick refresher, a SWOT analysis is often used during strategic planning activities. 

Strengths refer to those internal dynamics that are helpful to the organization.Weaknesses also refer to internal things, except that they could be considered harmful to the organization.Opportunities are external and can be helpful.Threats are also external and considered to be harmful. 

If we apply this to Peak 65, maybe it would look something like this:

A strength could be that the company’s workforce plan includes creating a lot of part-time, remote jobs in the months and years to come. These jobs could be perfect for employees who are part of a phased retirement strategy.A weakness is that the organization has a lot of workers who might be thinking about their exit strategy (i.e., retirement) and the company has no succession plan in place. An opportunity might be that the company is developing new products and/or services that might attract new customers in an older age group. A threat could be that our competition is successfully creating a more age diverse and inclusive workforce and we’re not. This is having an impact on employee engagement and retention. 

Notice that when we talk about organizational strengths, weaknesses, opportunities, and threats, they don’t all have to be workforce related. Yes, Peak 65 has implications on the labor market. It also has an impact on the consumer market. I remember reading a book years ago (and my apologies because I don’t recall the name of it) where they talked about how younger professionals were creating products and services for an aging population.

The conversation about the aging population isn’t going away anytime soon. Organizations need to figure out how they’re going to manage it successfully. Not talking about it probably isn’t the answer.

Image captured by Sharlyn Lauby while exploring the streets of Washington, DC

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Noncompete Agreements: How the Latest Rule Impacts Your Company

Estimated reading time: 8 minutes

Just in case you missed it, the U.S. Federal Trade Commission (FTC) issued a final rule in April banning noncompete agreements nationwide. The rationale behind this Rule is to ensure that workers have the freedom to pursue new opportunities, start a new business, or create a new product / service. 

That being said, I’m sure employers have questions … lots of questions. So, I reached out to our friends at Buchanan Ingersoll & Rooney to see if they would share their knowledge with us. And thankfully, they said yes. 

Carrie Amezcua is counsel at Buchanan Ingersoll & Rooney and focuses her practice on antitrust and trade regulation counseling and transactions. She counsels clients on a variety of antitrust issues, including pricing policies, joint ventures, exclusive contracts, distribution practices, patent misuse, and state action immunity. Carrie has experience in antitrust litigation in a variety of industries and venues.

Please remember that Carrie’s comments should not be construed as legal advice or as pertaining to any specific factual situations. If you have detailed questions, they should be addressed directly with your friendly neighborhood attorney.

Carrie, thanks so much for being here. Let’s start our conversation with a definition. What is a non-compete agreement?

[Amezcua] A noncompete agreement is an agreement between the employer and employee that prohibits the employee from working for a competitor of the employer. A noncompete agreement can be in effect during the term of employment or continue after employment. 

The Federal Trade Commission (FTC) recently approved a final Rule to ban almost all post-employment non-compete agreements. Can you briefly share what the final Rule says?

[Amezcua] The FTC is solely concerned with post-employment noncompete agreements that prohibit employees from working for a competitor of the employer for a time period after the employee leaves the employer for any reason (e.g., termination, resignation).

The Rule bans all new post-employment noncompete agreements between an employer and employee, regardless of industry or type of worker (e.g., senior executive versus lower level), after the effective date.The Rule allows existing post-employment noncompete agreements to remain in effect for senior executives only. Senior executive is generally defined as employees “earning more than $151,164 annually who are in a policy-making position.”Formal recission once the Rule is effective of existing noncompete agreements is not required, however, notice to employees that post-employment noncompete agreements are no longer enforceable is required.The Rule does not apply to noncompete agreements entered into pursuant to a bona fide sell of ownership interests or assets of a business. The Rule does not apply to franchisee/franchisor contracts (though does apply to employees working for a franchisee or franchisor).The Rule will be effective 120 days after publication in the Federal Register  (estimating the effective date to be early August) .The Rule pre-empts state laws governing noncompete agreements to the extent those laws are less restrictive. If a state law restricts noncompete agreements that fall outside this Rule (e.g., physician non-compete agreements, senior executive non-compete agreements), the state law can still be enforced.

Now that the FTC has defined what companies can’t do, are there situations where a noncompete agreement is still allowed? If so, can you give us an example?

[Amezcua] As noted above, the Rule does not apply to noncompete agreements entered into pursuant to a bona fide sell of ownership interests or assets of a business. It also does not apply to franchisee/franchisor contracts.

It does not apply to existing post-employment agreements with senior executives. As a result, some companies without noncompete agreements with senior executives may evaluate whether to enter into them before the Rule becomes effective. However, uncertainties exist with the current court challenges. And it is generally advisable to have a legitimate business reason to enter into a noncompete agreement with a senior executive when you have not had them previously.

In addition, it does not apply to entities that do not fall within the jurisdiction of the FTC, in particular not for profit entities. However, the FTC has said, and has brought complaints against, tax exempt entities that seek to make a profit on behalf of their members, so tax exempt status is not enough to exclude an entity from the FTC’s jurisdiction. 

And of course, by definition, the Rule does not apply to non-compete agreements that are in effect only during the course of employment.

I know that none of us can predict the future, however, several organizations have said they will challenge this Rule. Some organizations might be wondering if they should wait until the court challenges are exhausted before addressing the matter. What are the advantages / disadvantages to this line of decision making?

[Amezcua] As you may have seen, the U.S. Chamber of Commerce filed a complaint and a motion for a preliminary injunction or stay of the Rule in federal court in Texas. Two other private plaintiffs, including another one in Texas (Ryan LLC. v. FTC) have also filed complaints against the Rule. The U.S. Chamber of Commerce had expected a decision as to whether the Rule will be stayed within 8-10 weeks. However, the Texas court just stayed the Chamber’s case pending the resolution of Ryan LLC. v. FTC because it was filed first. So, there is uncertainty on several fronts. There is uncertainty now as to the timeline of the court’s decision and uncertainty as to whether a stay will apply to only the single plaintiff, only members of the U.S. Chamber of Commerce, or would apply to any entity subject to the Rule. 

Given the uncertainty around the Rule and its status, if a company tries to make adjustments now, it could be making adjustments based on something that will change in the near future, requiring further changes. 

On the other hand, if a company changes its practice to adhere to the Rule now, the company will know it is taking a conversative approach to post-employment noncompete agreements and will increase its likelihood of being able to enforce such agreements.

Earlier in our conversation you mentioned notification. If an organization is currently using noncompete agreements, do they need to communicate with employees about the status of their agreement (prior to the final Rule taking effect)? Why or why not?

[Amezcua] At this point, they do not. The Rule is not yet effective and may be stayed entirely in 8-10 weeks. In addition, an organization should first examine its overall approach to noncompete agreements before communicating broadly. That approach is generally closely related to its protectible interests, such as its protection of confidential information and trade secrets.

It is important to note that the FTC, as well as private plaintiffs and state enforcers, do not need this Rule to challenge overbroad noncompete agreements. The FTC has challenged noncompete agreements recently without the Rule. And of course, there are always private plaintiffs bringing cases under state laws, which are all still in effect. Further, former employees often bring declaratory judgment actions to void overly broad noncompetes or ones that run contrary to certain laws, such as those in California.

Accordingly, it is a best practice for organizations to examine their use of post-employment noncompete agreements to ensure there is a legitimate business need for the noncompete agreement separate and apart from simply seeking to retain employees or keeping competitors from hiring those employees. For example, organizations need to ask whether the employee has truly proprietary or competitively sensitive information that needs to be protected and that cannot be protected any other way, including through a nondisclosure agreement.

I’m glad you brought up proprietary information. One of the reasons that organizations use noncompete agreements is to keep their secrets away from competitors. Will organizations still be able to use non-disclosure agreements to protect company information? Why or why not?

[Amezcua] Absolutely. Organizations can still use non-disclosure/confidentiality agreements, non-solicit provisions, and trade secret laws to protect their information. 

For companies with trade secrets, the Defend Trade Secrets Act is a law that allows for injunctive relief and may result in a court enjoining an employee who has misappropriated trade secrets from working for a competitor. That federal law as well as other state trade secret laws remain in effect.

Organizations can even continue to use ‘garden leave’ (keeping an individual on the payroll for a defined time period but the individual does not have access to proprietary information during that period and is performing minimal work). 

Last question. I’m sure that organizations will be looking for information about this final rule in the weeks or even months to come. Where can readers go to get more info? 

[Amezcua] Please see Buchanan’s previous webinar related to the “FTC Ban on Noncompetes”.  We will also be holding a webinar on July 10, 2024, with the latest updates. Registration information can be found on the Buchanan’s website. 

We will continue to provide updates on the Rule and the cases challenging the Rule, and you may sign up here to receive further information.

A huge thanks to Carrie for sharing her knowledge with us. If you want to keep current with the latest updates on this Rule, be sure to sign up for information on the Buchanan website. 

This is a good time for organizations to examine their practices when it comes to all the agreements – noncompetes, non-disclosures, non-solicitations, confidentiality, etc. The company wants to protect their trade secrets in a way that’s defensible. They also want to do it in a way that allows them to still attract and retain the best talent. 

Editor’s Note: The Noncompete Clause Rule was published in the Federal Register today. The effective date is September 4, 2024. You can download a copy on their website.

Image captured by Sharlyn Lauby while exploring the streets of Orlando, FL

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Grow Your Professional Career Through Networking

Estimated reading time: 4 minutes

According to the U.S. Bureau of Labor Statistics, around 70% of new opportunities are found via networking. This is why employee referral programs are a strong recruiting source. Many companies post open positions internally before going to the outside, turning to the power of their existing workforce’s networks. 

Even if you’re not looking for a new opportunity, building professional relationships through networking is still a valuable activity. Networking can help us build confidence, boost our communication skills, market ourselves or our business, and learn new things.

However, networking can often conjure up images of awkward handshakes and uncomfortable small talk. So, it’s important for us to develop our networking skills to receive its greatest value. Even if you don’t consider yourself “a natural at working the room”, there are ways you can learn to network effectively.

7 Tips for Successful Networking

Because building a professional network takes time, it’s necessary to view networking as a long-term activity. I can’t tell you how many times I’ve seen people ignore their network only to regret it later when they really need career support. Here are seven tips to keep in mind both as you’re starting to build your network and as good refreshers to maintain it. 

Maintain a positive professional attitude. People who are successful at networking have an attitude that makes others want to know and connect with them. It should go without saying but let me say it anyway – avoid making negative comments about the event you’re attending, your employer / workplace, or other people. This is likely to come across as unprofessional and drive others away. Be an active listener. Listening makes others feel heard and will leave them with a great impression of you and the conversation. That’s how you want to be remembered. In addition, actively listening can help you engage in more genuine conversations.Build trust through authenticity. Speaking of genuine conversations, take time to establish trust with people. Being authentic will help build credibility and keep you top of mind after the event. This can be done by actively listening, asking questions, finding something you may have in common, and possibly making suggestions or recommendations. Follow-up! Actions speak louder than words when it comes to networking. You need to follow through on what you say you’ll do. It helps to establish credibility. Examples include sending the link to an article you discussed or facilitating the introduction you promised to make. At the very least, make a positive impression by sending a LinkedIn connection request and/or message to your new contacts to thank them for their time or say that it was nice to meet them. Connect people with opportunities. As great as networking can be for your own professional development, it’s also an exciting opportunity to help other people with theirs. Do your best to provide value to the new people you meet by facilitating introductions, sharing advice, offering feedback, or actively seeking ways you can help them. You’ll feel great knowing you’ve helped someone, and when an opportunity comes up for them to return the favor, it’s highly likely they will.Focus on developing connections rather than transactions. There’s nothing wrong with attending a professional event with some networking goals in mind. But do try to also have some fun and enjoy your time. Networking isn’t supposed to be drudgery. Being too intentional about a goal to “meet XX people” or “make XX new contacts” can add unnecessary pressure.Have fun! This bears repeating. Not every networking opportunity will be valuable. You won’t always walk away with new LinkedIn connections, plans for coffee meetups, or on-the-spot job offers. While networking can help us get those things, it shouldn’t always be what you get out of it. When all else fails, be a good person and have fun conversations. In the end, being (genuinely) kind will only add to your integrity.

Your Network is Your “Net Worth”

Often in business we hear that what matters most is not what you know, but who you know. Your networking skills will remain a key tool to help open doors for you professionally throughout your career. You can use networking to learn more about the jobs and industry you’d like to work in, meet people who can connect you with those opportunities, and develop the communication skills, which will be vital for any future opportunity.

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How to Write an Email that Others Will Read

Estimated reading time: 4 minutes

Recently, I received a reader note asking for some resources to help someone improve their writing skills. Specifically, they wanted to help someone write better emails. As I was thinking about a reply, it occurred to me that writing emails is one of those things that we expect everyone to know how to do but there’s really no book or training manual around. 

Many years ago, I worked for a company that had an internal writing guide. It’s the only organization I’ve ever seen with one. It outlined how to communicate in writing to both internal and external audiences. So, in an effort to put together a guide for writing an effective email, I reached out to my friends and colleagues for some tips. And they shared some great responses. 

I’ve condensed some of the duplicate comments and decided to organize them by start, body, and closing. Whether you’re new to writing emails or looking for a refresher, I hope you find these helpful. 

Starting the email

Before you just start writing an email, think about what you’re trying to accomplish. This doesn’t need to take hours, but just take a moment to think about what you want. 

Email is not a substitute for human interaction. I simply cannot stress this enough. Keep in mind that people read emails on many different devices (desktop, laptop, tablet, phone). This might have an impact on how they interpret the message and how they respond. Example: it’s very difficult to write a lengthy reply using your phone.   Avoid the blast email to everyone. (And this applies equally to the “reply all” email.)Know what cc and bcc mean. The cc means carbon copy and simply is an FYI, no response is required. The bcc is blind carbon copy and ideally is used when you want to keep someone in the loop without the rest of the group knowing. That being said, there are plenty of people who do not take the time to realize they were bcc’d and give themselves away. The bcc line should be used with caution. Write a good subject line. If you are requesting an action, you might want to put it in the subject. Some people might disagree with me, but if I’m sending a time sensitive email, I put “TIME SENSITIVE” in the subject line. 

Body of the email

The goal of an email is to communicate information clearly and succinctly. 

Use the person’s name, as in “Hi Leonard”. Some people hate the “I hope this finds you well.”. You can decide if it’s necessary. If you’re requesting an action, you might want to start with that. “The purpose of this email is …” Basically, before you start writing, understand the purpose of the email. Is it to inform? Persuade?Make the email about one thing. It helps the reader stay focused. If the email is asking the reader to do 2, 3, 4 things … you might not receive everything you’re requesting. Be succinct.Subheadings and bullets can help the reader organize information. Some people said to avoid jargon, but if everyone on the email knows the jargon, then that might be fine. Hyperlinks can be a helpful way to provide additional information. Be careful about shortening urls and not showing the full web address. In today’s world of phishing, some readers will not click on a link even if you’re a trusted source. 

Closing the email

Before you hit the send button, take one last look at the email. 

Proofread it! For typos and tone. One of the disadvantages with email is that tone doesn’t really come across. This isn’t the time to try to write jokes or be sarcastic. People might misinterpret your intent. Consider asking AI to proofread it for you. Several people said that they have artificial intelligence (AI) review their emails and offer suggestions. If you’re wanting to learn more about AI, this might be a great experiment. If you mention an attachment, make sure it’s there (yes, we’ve all done it). Decide if you need to sleep on it before sending. Sometimes, we have to send messages via email because there’s no other option. If you draft an email when you’re tired or cranky, consider letting it sit for a few hours or overnight and then rereading it one last time before sending. 

I’m sure this isn’t a comprehensive list. If I missed something, be sure to add a comment. This could be a great resource for someone looking to keep their email writing skills current.

Email remains a huge communication tool in today’s work environment. Knowing how to write a good email is important. As you perfect your writing skills, your confidence and credibility will increase.

Image captured by Sharlyn Lauby while exploring the streets of San Francisco, CA

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