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Reprinted from the February 10th edition of The Legal Intelligencer. (c) 2022 ALM Media Properties. Further duplication without permission is prohibited.
On January 5, 2023, the Federal Trade Commission (“FTC”) proposed rules imposing a broad restriction on non-competition agreements (“Proposed Rule”). The Proposed Rule would require employers to rescind existing non-compete agreements, and would preempt conflicting state laws. The ban marks a dramatic change not only in the law, but in the relationship between employers and their key employees.
The Proposed Rule defines “non-compete clauses” as follows: any agreement that prevents a worker from seeking or attempting to seek employment with any employer; or, any agreement that is a de facto non-compete clause. A de facto noncompete clause has the “effect of prohibiting the worker from seeking or accepting employment.” The Proposed Rule provides examples of a de facto non-compete clause: a non-disclosure agreement drafted so broadly that it effectively precludes the employee from working in their chosen field; or a contractual term that requires the employee to pay the employer or a third party its training costs if employment terminates within a specified time period, but only where the payment is not reasonably related to the actual costs incurred by the employer.
The Proposed Rule mandates that it is a prohibited unfair method of competition to enter into or “attempt to enter into” a noncompete clause with an employee, or to maintain an existing non-compete agreement, or to represent to an employee that they are subject to a noncompete without a good faith basis to believe they are.
Reprinted with permission from the October 14th edition of The Legal Intelligencer. (c) 2022 ALM Media Properties. Further duplication without permission is prohibited.
Employers eager to recapture the costs of hiring foreign citizens often use damages or repayment provisions in employment agreements. A recent case in the Southern District of New York illustrates a challenge to that strategy. The Southern District’s recent decision in Baldia v. RN Express Staffing Registry LLC to allow a complaint under the federal Trafficking Victims Protection Act (“TVPA”) to proceed, is part of a growing trend in using the TVPA to challenge such agreements.
The plaintiff in the Baldia case, Marie Alexandrine Baldia, is a citizen of the Philippines. RN Express Staffing recruited her from the Philippines and hired her as a registered nurse supervisor after sponsoring her visa to work in the United States. Baldia signed an Employment Agreement for a three-year term, that included a liquidated damages provision. Specifically, the Employment Agreement required that in the event Baldia left the employ of RN Express Staffing, “without cause”, before the end of the three-year term, she would need to repay the costs of “recruiting, training and placement”. The Employment Agreement recited that the “Company Recruitment Costs” totaled $33,320, and that the number would be reduced after her first full year of employment.
On January 1, 2021, Congress enacted the Federal Corporate Transparency Act (the “CTA”), pursuant to which a secure database will be established to assist law enforcement agencies in combatting money laundering, financing of terrorism, and other illegal activities. The objective of the CTA is to prevent bad actors from using shell companies to obscure the provenance of their ill-gotten gains.
The database will be administered by the Financial Crimes Enforcement Network (“FinCEN”), an agency of the U.S. Department of Treasury. Companies will be required to provide information relating to their beneficial owners (generally, individuals owning 25% or more) and persons who are in control (generally, individuals holding significant decision-making authority). There are exceptions, such as publicly traded companies, companies with annual gross receipts exceeding $5 million that have more than 20 full-time U.S. employees and a physical office in the United States, and companies already subject to Federal government oversight (e.g., banks).
If you work in the Pennsylvania real estate market, chances are you may have encountered the lis pendens doctrine. Lis pendens is a latin term that roughly translates to “notice of a pending legal action”. As its translation indicates, the purpose of a lis pendens is to give notice to a third-person (typically a potential buyer) that a certain parcel of real estate is subject to a pending lawsuit and that any interest a buyer acquires in that real estate will be subject to the result of the pending legal action.
In its most practical sense, a lis pendens is a written filing indexed against a parcel of real estate such that any potential buyer will be made aware that there is an ongoing dispute relating to title of the property. This effectively precludes a transfer of real property since any potential buyer would then own the property subject to the cloud on title.
In the state of Pennsylvania, there exists the concept of “open adoption.” The term itself sounds a little strange since the purpose of adoption is for the child to become part of a new family that is better able to meet the child’s needs. Why would an adoption be open? The answer is: for a variety of reasons.
One of the main reasons why the Pennsylvania legislature enacted the Act 101 Notice statute (the statute creating open adoptions) was to allow adoptees and adoptive families to have access to the adoptee’s family medical history. 23 Pa. C.S. §2503 specifically states that upon the entry of an order terminating a parent’s parental rights, the court shall advise the parent, in writing, of his/her continuing right to place and update both personal and medical history with the court and the Department of Public Welfare. Being able to obtain an adoptee’s medical history is incredibly beneficial, however, the primary issue with this statute is that it requires the biological parents to provide and update their medical information, which generally does not happen.
Reprinted with permission from the June 23rd edition of The Legal Intelligencer. (c) 2021 ALM Media Properties. Further duplication without permission is prohibited.
The United States Supreme Court narrowed the application of the Federal Arbitration Act (“FAA”) in its June 6, 2022 opinion in Southwest Airlines Co. v. Saxon, 596 U.S. ____ (2002). The case, along with the earlier case New Prime Inc. v. Oliveiri, 556 U.S. ____ (2019) , represents the narrowest narrowing of the Supreme Court’s broad holding in Epic Systems Corp. v. Lewis, 284 U.S. ____ (2018). In Southwest Airlines v. Saxon, the court answered the narrow question of whether an employee employed as a “ramp supervisor” fell within the Federal Arbitration Act’s exemption of “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce”, concluding that the workers did fall within the exemption. The case does not presage a trend towards narrowing the application of the Federal Arbitration Act, and instead demonstrates that the Court intends to encourage honoring arbitration agreements by insisting on a textual and precedential approach to the FAA.
Saxon was employed as a ramp supervisor at Southwest Airlines at Chicago Midway International Airport. At the beginning of her employment, she signed an employment agreement agreeing to arbitrate wage disputes individually. As a ramp supervisor, Saxon’s job was to train and supervise teams of ramp agents. Ramp agents are employees who physically load and unload baggage, airmail and freight. Occasionally, ramp supervisors assist ramp agents in loading and unloading cargo. Saxon filed a putative class action of ramp supervisors against Southwest, alleging violations of the Fair Labor Standards Act (“FLSA”). Southwest moved to dismiss, citing Saxon’s employment agreement which required arbitration pursuant to the FAA. Saxon argued that the ramp supervisors were exempt from the FAA pursuant to the exemption for “workers engaged in foreign or interstate commerce.” The United States District Court for the Northern District of Illinois dismissed the case, agreeing that the exemption did not apply. The United States Court of Appeals for the Seventh Circuit reversed, finding that the loading of cargo to be transported interstate is “itself commerce.” The Seventh Circuit’s holding conflicted with an earlier decision of the United States Court of Appeals of the Fifth Circuit. The Supreme Court granted certiorari and found that Saxon belong to a “class of workers engaged in foreign or interstate commerce”, and was exempt from arbitration.