legal Archives - Page 19 of 94 - The National Law Forum

Justice Department has Opportunity to Revolutionize its Enforcement Efforts with Whistleblower Program

Over the past few decades, modern whistleblower award programs have radically altered the ability of numerous U.S. agencies to crack down on white-collar crime. This year, the Department of Justice (DOJ) may be joining their ranks, if it incorporates the key elements of successful whistleblower programs into the program it is developing.

On March 7, the Deputy Attorney General Lisa Monaco announced that the DOJ was launching a “90-day policy sprint” to develop “a DOJ-run whistleblower rewards program.” According to Monaco, the DOJ has taken note of the successes of the U.S.’s whistleblower award programs, such as those run by the Securities and Exchange Commission (SEC) and Internal Revenue Service (IRS), noting that they “have proven indispensable.”

Monaco understood that the SEC and IRS programs have been so successful because they “encourage individuals to report misconduct” by “rewarding whistleblowers.” But how any award program is administered is the key to whether or not the program will work. There is a nearly 50-year history of what rules need to be implemented to transform these programs into highly effective law enforcement tools. The Justice Department needs to follow these well defined rules.

The key element of all successful whistleblower award programs is very simple: If a whistleblower meets all of the requirements set forth by the government for compensation the awards must be mandatory and based on a percentage of the sanctions collected thanks to the whistleblower. A qualified whistleblower cannot be left out in the cold. Denying qualified whistleblowers compensation will destroy the trust necessary for a whistleblower program to work.

It is not the possibility of money that incentives individuals to report misconduct but the promise of money. Blowing the whistle is an immense risk and individuals are only compelled to take such a risk when there is real guarantee of an award.

This dynamic has been laid clear in recent legislative history. There is a long track record of whistleblower laws and programs failing when awards are discretionary and then becoming immensely successful once awards are made mandatory.

For example, under the 1943 version of the False Claims Act awards to whistleblowers were fully discretionary. After decades of ineffectiveness, in 1986, Congress amended the law to set a mandate that qualified whistleblowers receive awards of 15-30% of the proceeds collected by the government in the action connected with their disclosure.

The 1986 Senate Report explained why Congress was amending the law:

“The new percentages . . . create a guarantee that relators [i.e., whistleblowers] will receive at least some portion of the award if the litigation proves successful. Hearing witnesses who themselves had exposed fraud in Government contracting, expressed concern that current law fails to offer any security, financial or otherwise, to persons considering publicly exposing fraud.

“If a potential plaintiff reads the present statute and understands that in a successful case the court may arbitrarily decide to award only a tiny fraction of the proceeds to the person who brought the action, the potential plaintiff may decide it is too risky to proceed in the face of a totally unpredictable recovery.”

In the nearly four decades since awards were made mandatory, the False Claims Act has established itself as America’s premier anti-fraud law. The government has recovered over $75 billions of taxpayer money from fraudsters, the vast majority from whistleblower initiated cases based directly on the 1986 amendments making awards mandatory.

Similar transformations occurred at both the IRS and SEC where ineffective discretionary award laws were replaced by laws which mandated that qualified whistleblowers receive a set percentage of the funds collected thanks to their whistleblowing. Since these reforms, the whistleblower programs have revolutionized these agencies’ enforcement efforts, leading directly to billions of dollars in sanctions and creating a massive deterrent effect on corporate wrongdoing.

Most recently, Congress reaffirmed the importance of mandatory whistleblower awards when it reformed the anti-money laundering whistleblower law. The original version of the law, which passed in January 2021, had no set minimum amount for awards, meaning that they were fully discretionary. After the AML Whistleblower Program struggled to take off, Congress listened to the feedback from whistleblower advocates and passed the AML Whistleblower Improvement Act to mandate that qualified money laundering whistleblowers are awarded.

Monaco states that the DOJ has long had the discretionary authority to pay whistleblower awards to individuals who report information leading to civil or criminal forfeitures and has “used this authority here and there — but never as part of a targeted program.”

The most important step in turning an underutilized and ineffective whistleblower award law into an “indispensable” whistleblower award program has been made clear over the past decades. Qualified whistleblowers must be guaranteed an award based on a percentage of the sanctions collected in connection with their disclosure.

By administering its whistleblower program in a way that mandates award payments, the DOJ would go a long way towards creating a whistleblower program which revolutionizes its ability to fight crime. The Justice Department has taken the most important first step – recognizing the importance of whistleblowers in reporting frauds. It now must follow through during its “90-day sprint,” making sure reforming the management of the Asset Forfeiture Fund works in practice. Whistleblowers who risk their jobs and careers need real, enforceable justice.

A Paradigm Shift in Legal Practice: Enhancing Civil Litigation with Artificial Intelligence

A paradigm shift in legal practice is occurring now. The integration of artificial intelligence (AI) has emerged as a transformative force, particularly in civil litigation. No longer is AI the stuff of science fiction – it’s a real tangible power that is reshaping the manner in which the world functions and, along with it, the manner in which the lawyer practices. From complex document review processes to predicting case outcomes, AI technologies are revolutionizing the way legal professions approach and navigate litigation and redefining traditional legal practice.

Streamlining Document Discovery and Review

One of the most time-consuming tasks in civil litigation is discovery document analysis and review. Traditionally, legal teams spend countless hours sifting through documents to identify relevant evidence, often reviewing the same material multiple times, depending on the task at hand. However, AI-powered document review platforms can now significantly expedite this process. By leveraging natural language processing (NLP) and machine learning algorithms, there platforms can quickly analyze and categorize documents based on relevance, reducing the time and resources required for document review while ensuring thoroughness and accuracy. AI in the civil discovery process offers a multitude of benefits for the practitioner and cost saving advantages for the client, such as:

• Efficiency: AI powered document review significantly reduces required discovery, allowing legal teams to focus their efforts on higher value tasks and strategic analysis;

• Accuracy: By automating the initial document review process AI helps minimize potential human error and ensures a greater consistency and accuracy in identifying relevant documents and evidence;

• Cost-effectiveness: AI driven platforms offer a cost-effective alternative to traditional manual review methods, helping to lower overall litigation costs for clients

• Scalability: AI technology can easily scale to handle large volumes of data making it ideal for complex litigation cases with extensive document discovery requirements;

• Insight Generation: AI algorithms can uncover hidden patterns, trends, and relationships within the closed data bases that might not be apparent through manual review, providing valuable strategy and decision-making.

Predictive Analytics for Case Strategy

Predicting case outcomes is inherently challenging, often relying on legal expertise, jurisdictional experience of the lawyer and analysis of the claimed damage. However, AI-driven predictive analytics tools are changing the game by providing hyper-accurate data-driven insights into case strategies. By analyzing past case law, court rulings, and other relevant data points, these tools can forecast-model the likely outcome of a given case, allowing legal teams and clients to make more informed decisions regarding jurisdictionally specific settlement negotiations, trial strategy and resource allocation.

Enhanced Legal Research and Due Diligence

AI-powered legal research tools have become powerful tools for legal professionals involved in civil litigation. These tools utilize advanced algorithms to sift through vast repositories in a closed system of case law, statutes, regulations and legal precedent, delivering relevant information in a fraction of the time it would take through manual research methods. Additionally, AI can assist in due diligence processes by automatically flagging potential legal risks and identifying critical issues within contracts and other legal documents.

Improving case Management and Workflow Efficiency

Managing multiple cases simultaneously can be daunting for legal practitioners and could lead to inefficiencies and oversight. AI-driven case management systems offer a solution by providing centralized case-related information, deadlines and communications. These systems can automate routine tasks, such as scheduling document filing and client communication schedules, freeing up valuable time for attorneys to focus on legal substantive tasks and proactive case movement .

Ethical Considerations and Challenges

While the benefits of AI in civil litigation are undeniable, they also raise important ethical considerations and challenges. Issues such as data privacy, algorithmic bias, and the ethical use of AI in decision-making processes must be carefully addressed to ensure fairness and transparency in the legal system. Additionally, there is a growing need for ongoing education and training to equip legal professionals with the necessary skills to effectively leverage AI tools while maintain ethical standards and preserving the integrity of the legal profession.

Take Away

The integration of AI technologies in civil litigation represents a paradigm shift in legal practice, offering unprecedented opportunities to streamline processes, enhance decision-making and improve client satisfaction. By harnessing the power of AI-driven solutions, legal professionals can navigate complex civil disputes more efficiently and effectively, ultimately delivering better outcomes for clients and advancing the pursuit of just outcomes in our rapidly evolving legal landscape.

The 80/20 Rule is Here: CMS Finalizes HCBS Care Worker Payment Requirements

In May 2023, the Centers for Medicare and Medicaid Services (“CMS”) proposed a series of rule changes intended to help promote the availability of home and community-based services (“HCBS”) for Medicaid beneficiaries. Chief among these proposals was a new rule that would require HCBS agencies to spend at least 80% of their Medicaid payments for homemaker, home health aide, and personal care services on direct care worker compensation (the “80/20 Rule”). Intended to help stabilize the HCBS workforce, the proposal faced immediate backlash from HCBS providers and Medicaid agencies, who expressed concern that the 80/20 rule would harm HCBS providers by mandating specific allocations to worker compensation and bogging down providers and Medicaid agencies with burdensome reporting requirements.

After reviewing thousands of comments, CMS released an advance copy of the final rule this week. Defying stakeholder anticipation that the 80/20 Rule would be relaxed, or updated to provide more flexibility for providers, CMS finalized the 80/20 Rule largely as originally proposed, including the following key requirements:

HCBS providers must spend at least 80% of Medicaid payments on direct care worker compensation;
HCBS providers will have six years (increased from four) from the effective date of the final rule to demonstrate compliance with the 80/20 Rule;
States must begin collecting and tracking data on direct care worker compensation within four years of the effective date of the final rule; and
States are permitted to establish different standards for smaller HCBS providers and to establish hardship exemptions – in both cases based on objective and transparent criteria.

Under the broad mandate of the 80/20 Rule, there are a number of key definitions that HCBS providers must consider as they evaluate these new requirements:

Direct Care Workers

Because the 80/20 Rule was adopted largely to stabilize the HCBS workforce, a key component is whose compensation qualifies for inclusion. CMS’s proposed definition encompassed almost any person with a role in providing direct care to patients (e.g., RNs, LPNs, individuals practicing under their supervision, home health aides, etc.). Under the final 80/20 Rule, CMS clarified that “direct care workers” also include those whose role is specifically tied to clinical supervision (e.g., nurse supervisors).

Compensation

Compensation of direct care workers means:“[s]alary, wages, and other remunerations as defined by the Fair Labor Standards Act and implementing regulations; [b]enefits (such as health and dental benefits, life and disability insurance, paid leave, retirement, and tuition reimbursement); and [t]he employer share of payroll taxes for direct care workers delivering services authorized under section 1915(c) of the Act.” CMS clarified that “compensation” also includes:

Overtime pay;
All forms of paid leave (e.g., sick leave, holidays, and vacations);
Different types of retirement plans and employer contributions; and
All types of benefits: CMS intentionally used the phrase “such as” to indicate the list of benefits was non-exhaustive, and indicated technical guidance to states on this subject is forthcoming.

Excluded Costs

CMS expressed concern that HCBS providers would include training costs for direct care workers as “compensation,” and that calculating compensation in this way could result in negative outcomes, such as diminished training opportunities. To address these concerns, CMS created the concept of “excluded costs,” which are excluded from the percentage calculations under the 80/20 Rule. See § 441.302(k)(1)(iii) (“costs that are not included in the calculation of the percentage of Medicaid payments to providers that are spent on compensation for direct care workers.”). Excluded costs are limited to:

Costs of required direct care worker training;
Direct care worker travel costs (mileage, public transportation subsidy, etc.); and
Personal protective equipment costs.

Medicaid Payments

CMS largely adopted its expansive view of what qualifies as a “Medicaid Payment” for purposes of 80/20 Rule calculations. CMS clarified that the 80/20 Rule encompasses both standard and supplemental payments and applies regardless of whether HBCS services are delivered through fee-for-service or managed care delivery systems. CMS also declined to create a formal carve-out for value-based care or pay-for-performance arrangements, despite recognizing their value.

What Comes Next?

HCBS providers and state Medicaid agencies have six years to sort out their compliance with the 80/20 Rule (though data tracking and reporting begins after year three). On the provider side, this means carefully evaluating the business and economic impacts of compliance with the 80/20 Rule and monitoring CMS and state-level guidance on implementation as it develops over time. For multi-state providers, this process becomes even more complicated, as there is a high likelihood that states will choose to implement the 80/20 Rule in different, and potentially contradictory, ways.

Providers also need to work with the state agencies to address the adequacy of HCBS rates generally. CMS recognized the important role that the underlying rates play in HCBS sustainability but declined to mandate specific payment rates or methodologies. As a result, positive momentum on the rates themselves must come from state initiatives.

United States | Labor Department Posts Final H-2A Regulation

The U.S. Department of Labor announced a final H-2A regulation Friday, saying the rule was crafted to target the “vulnerability and abuses experienced by workers under the H-2A program that undermine fair labor standards for all farmworkers in the U.S.”

The H-2A program allows employers to hire temporary agricultural workers when there is a lack of “able, willing and qualified” U.S. workers. The new rule includes sections:

Adding new protections for worker self-advocacy.
Clarifying “for cause” termination.
Making foreign labor recruitment more transparent.
Ensuring timely wage changes for H-2A workers.
Improving transportation safety.
Preventing labor exploitation and human trafficking.
Ensuring employer accountability.

The final rule is scheduled to take effect on June 28; however, H-2A applications filed before Aug. 28, will be processed according to federal regulations as is in effect as of June 27. Applications submitted on or after Aug. 29, 2024, will be processed in accordance with the provisions of the new rule.

Additional Information: The 600-page rule is scheduled to be published in the Federal Register on Monday, April 29. A pre-publication version is available here.

Protect Yourself: Action Steps Following the Largest-Ever IRS Data Breach

On January 29, 2024, Charles E. Littlejohn was sentenced to five years in prison for committing one of the largest heists in the history of the federal government. Littlejohn did not steal gold or cash, but rather, confidential data held by the Internal Revenue Service (IRS) concerning the United States’ wealthiest individuals and families.

Last week, more than four years after Littlejohn committed his crime, the IRS began notifying affected taxpayers that their personal data had been compromised. If you received a notice from the IRS, it means you are a victim of the data breach and should take proactive steps to protect yourself from fraud.

IN DEPTH

Littlejohn’s crime is the largest known data theft in the history of the IRS. He pulled it off while working for the IRS in 2020, using his access to IRS computer systems to illegally copy tax returns (and documents attached to those tax returns) filed by thousands of the wealthiest individuals in the United States and entities in which they have an interest. Upon obtaining these returns, Littlejohn sent them to ProPublica, an online nonprofit newsroom, which published more than 50 stories using the data.

Under federal law, the IRS was required to notify each taxpayer affected by the data breach “as soon as practicable.” However, the IRS did not send notifications to the affected taxpayers until April 12, 2024 – more than four years after the data breach occurred, and months after Littlejohn’s sentencing hearing.

TAKE ACTION

If you received a letter from the IRS (Letter 6613-A) enclosing a copy of the criminal charges against Littlejohn, it means you were a victim of his illegal actions. To protect yourself from this unprecedented breach of the public trust, we recommend the following actions:

Consider Applying for an Identity Protection PIN. A common crime following data theft involves using a taxpayer’s social security number to file fraudulent tax returns requesting large refunds. An Identity Protection PIN (IP PIN) can help protect you from this scheme. After you obtain an IP PIN, criminals cannot file an income tax return under your name without knowing your identification number, which changes annually. Learn more and apply for an IP PIN here.
Request and Review Your Tax Transcript. The IRS maintains a transcript of all your tax-related matters, including filings, payments, refunds, extensions and official notices. Regularly reviewing your tax transcript (e.g., every six to 12 months) can reveal fraudulent activity while there is still time to take remedial action. Request a copy of your tax transcript here. If you have questions about your transcript or need help obtaining it, we are available to assist you.
Obtain Identity Protection Monitoring Services. Applying for an IP PIN and regularly reviewing your tax transcript will help protect you from tax fraud, but it will not protect you from other criminal activities, such as fraudulent loan applications. To protect yourself from these other risks, you should obtain identity protection monitoring services from a reputable provider.
Evaluate Legal Action. Data breach victims should consider taking legal action against Littlejohn, the IRS and anyone else complicit in his wrongdoing. Justifiably, most victims will not want to suffer the cost, aggravation and publicity of litigation, but for those concerned with the public tax system’s integrity, litigation is an option.

In fact, litigation against the IRS is already underway. On December 13, 2022, Kenneth Griffin, the founder and CEO of Citadel, filed a lawsuit against the IRS in the US District Court for the Southern District of Florida after discovering his personal tax information was unlawfully disclosed to ProPublica. In his complaint, Griffin alleges that the IRS willfully failed to establish adequate safeguards over confidential tax return information – notwithstanding repeated warnings from the Treasury Inspector General for Tax Administration and the US Government Accountability Office that the IRS’s existing systems were wholly inadequate. Griffin is seeking an order directing the IRS “to formulate, adopt, and implement a data security plan” to protect taxpayer information.

The future of Griffin’s lawsuit is uncertain. Recently, the judge in his case dismissed one of his two claims and cast doubt on the theories underpinning his remaining claim. It could be years before a final decision is entered.

Although Griffin is leading the charge, joining the fight would bolster his efforts and promote the goal of ensuring the public tax system’s integrity. A final order in Griffin’s case will be appealable to the US Court of Appeals for the Eleventh Circuit. A decision there will be binding on both the IRS and taxpayers who live in Alabama, Florida and Georgia. However, the IRS could also be bound by orders entered by other federal courts arising from lawsuits filed by taxpayers who live elsewhere. Because other courts may disagree with the Eleventh Circuit, taxpayers living in other states could file their own lawsuits against the IRS in case Griffin does not prevail.

Victims of the IRS data breach who are interested in taking legal action should act quickly. Under the Internal Revenue Code, a lawsuit must be filed within two years after the date the taxpayer discovered the data breach.

What the FTC’s Rule Banning Non-Competes Means for Healthcare

The FTC unveiled its long-awaited final rule banning most non-compete agreements during a live broadcast of a Commission meeting on April 23, 2024. The proposed rule, which was first announced in January 2023, underwent an extensive public comment process in which approximately 26,000 comments were received. According to the FTC, approximately 25,000 of these comments supported a total ban on non-competes. While there was some expectation that the final rule would be less aggressive than the proposed rule, that turned out not to be the case. By late summer 2024, most employers, except for non-profit organizations, will not be able to enforce or obtain non-competes in the U.S. except in extremely narrow circumstances. The new rule will take effect 120 days after it is published in the Federal Register. Assuming the rule is published this week, we can expect it to take effect by late August. That is, of course, if a court does not enjoin the rule first. Shortly after the rule was announced on April 23, the U.S. Chamber of Commerce stated its intention to sue the FTC. U.S. Chamber to Sue FTC Over Unlawful Power Grab on Noncompete Agreements Ban | U.S. Chamber of Commerce (uschamber.com) The first lawsuit challenging the new rule was filed on April 23, Ryan, LLC v. Federal Trade Commission, Case No. 3:24cv986 (N.D. Tex. Apr. 23, 2024). Among other relief, the Ryan suit seeks to have the rule vacated and set aside. There are significant legal questions concerning whether the FTC has the authority to take this action by rulemaking or whether this is best left to the legislative process. While some U.S. states have banned non-competes, many U.S. states have not banned them.

As written, the rule will have profound effects on virtually every industry, especially health care, where non-competes are common in physician and mid-level practitioner employment agreements. As several Commissioners indicated during the April 23 meeting, they are particularly concerned about non-competes in health care and believe this rule will save approximately $74-194 billion in reduced spending on physician services over the next decade.

Following is Nelson Mullins’ quick take on what health care employers need to know:

The rule does not apply to non-profits. The basis for the rule making is Section 5 of the FTC Act, which doesn’t apply to non-profits. So, a non-profit health system that has non-competes with physicians or other workers is not impacted by the rule. Be aware, though, that the FTC may be looking to test whether some non-profit health systems are really operating as true non-profits. Tax exempt status alone will not be enough. We believe, however, that given significant and quantifiable charitable benefits that most non-profit systems provide, the FTC may be hard pressed to find a good test case within the non-profit health care industry.
For all others, the rule bans all non-compete agreements for any worker, regardless of title, job function, or compensation, after the effective date. Thus, a for-profit health system or for-profit physician practice that uses non-competes will be significantly limited. The only non-competes that will be allowed to remain in force are non-competes for “Senior Executives” that were entered into before the rule becomes effective.
The rule will take effect 120 days after it is published in the Federal Register. This will likely occur this week, so we expect the effective date to be approximately August 20, 2024.
The rule rescinds existing non-competes for all workers who are not “Senior Executives.”
“Senior Executive” is a narrowly-defined term meaning:
1. a person in a policy making position; and
2. who was paid at least $151,164 in the prior year.
Existing non-competes for Senior Executives are not rescinded. New non-competes with Senior Executives entered into prior to the effective date are still allowed. However, no new non-competes with Senior Executives may be entered into after the effective date.
“Policy-making position” means: President, CEO, or equivalent, or other person who has policy making authority, i.e., decisions that control a significant aspect of a business entity. Most clinicians will not meet the definition of “Senior Executive.”
Non-senior executives who are now under a non-compete must be given notice by the effective date that their non-compete will not be, and cannot legally be, enforced. Model language for the notice is in the rule.

How Lawyers Can Effectively Leverage Their Published Articles

Writing and publishing articles or blog posts can be a powerful branding and business development tool for lawyers. Not only do they demonstrate your expertise in your practice area, but they also significantly enhance your visibility and credibility.

However, your work doesn’t end once the article is published – in fact, it’s just beginning. Here are some tips to maximize the value, reach and impact of your published work.

1. Optimize for Online Search First and foremost, ensure your article is search engine optimized (SEO). This means incorporating relevant keywords that potential clients might use to find information related to your legal expertise. SEO increases the visibility of your content on search engines like Google, making it easier for your target audience to find you.

2. Share on Social Media Utilize your personal and professional social media platforms to share your article. LinkedIn, Twitter and even Facebook are excellent venues for reaching other professionals and potential clients. Don’t just share it once; periodically repost it, especially if the topic is evergreen. Engage with comments and discussions to further boost your post’s visibility.

3. Incorporate Into Newsletters If you or your firm sends out a regular newsletter, include a link to your article. This not only provides added value to your subscribers but also keeps your existing client base engaged with your latest insights and activities. This approach can help reinforce your position as a thought leader in your field. Also, consider launching a LinkedIn newsletter. LinkedIn’s platform offers a unique opportunity to reach a professional audience directly, increasing the potential for networking and attracting new clients who are actively interested in your area of expertise.

4. Speak at Conferences and Seminars Use your article as a springboard to secure speaking engagements. Conferences, seminars and panel discussions often look for experts who can contribute interesting insights. Your article can serve as a proof of your expertise and a teaser of your presentation content, making you an attractive candidate for these events.

5. Create Multimedia Versions Expand the reach of your article by adapting it into different formats. Consider recording a podcast episode discussing the topic in depth, or creating a short-form video for LinkedIn and YouTube. These formats can attract different segments of your audience and make the content more accessible.

6. Network Through Professional Groups Share your article in professional groups and online forums in your field, as well as alumni groups (law school, undergrad school and former firms). This can lead to discussions with peers and can even attract referrals. Active participation in these groups, coupled with sharing insightful content, can significantly expand your professional network.

7. Use as a Teaching Resource Offer to guest lecture at local law schools and use your article as a teaching resource. This not only enhances your reputation as an expert but also builds relationships with the upcoming generation of lawyers who could become colleagues or refer clients in the future.

8. Repurpose Content for Blogs or Articles Break down the article into smaller blog posts or develop certain points further into new articles. This can help maintain a consistent stream of content on your website, which is good for SEO and keeps your audience engaged over time.

9. Monitor and Engage with Feedback Keep an eye on comments and feedback from your article across all platforms. Engaging with readers can provide insights into what your audience finds useful, shaping your future writing to better meet their needs. It also helps in building a loyal following.

10. Track Metrics Utilize analytics tools (web, social media and email) to track how well your article performs in terms of views, shares and engagement. This data can help you understand what works and what doesn’t, guiding your content strategy for future articles.

11. Leverage the Power of Content Repurposing Content repurposing can significantly extend the life and reach of your original article. By transforming the article into different content formats—such as infographics, webinars, slide decks or even e-books—you cater to various learning styles and preferences, reaching a broader audience. This strategy not only maximizes your content’s exposure but also enhances engagement by presenting the information in new, accessible ways. Repurposing content can help solidify your reputation as a versatile and resourceful expert in your field.

Publishing an article or blog post is just the beginning. By strategically promoting and leveraging your published works, you can enhance your visibility, establish yourself as a thought leader and attract more clients. Every article has the potential to open new doors; it’s up to you to make sure it does!

FTC Approves Non-Compete Ban

On Tuesday afternoon, April 23, the Federal Trade Commission (FTC) voted 3-2 along party lines to approve its new rule on non-competes. The new rule, which will take effect in 120 days, essentially bans non-competes for all workers, finding them “an unfair method of competition – and therefore a violation of Section 5 of the FTC Act.”

Notably, a non-complete clause is broadly defined as a “contractual term or workplace policy that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment or operating a business in the United States after the conclusion of the employment.”

The new rule applies retroactively to prior agreements, other than those for senior executives earning more than $151,164 a year in a “policy-making position.” Employers must provide notice to other workers subject to non-compete agreements that they are no longer enforceable.

Not limited to employees, the non-compete ban extends to independent contractors, externs, interns, volunteers, apprentices, and sole proprietors who provide a service to a person. It does not include non-competes entered into pursuant to a bona fide sale of a business entity or in a franchisor-franchisee relationship.

While the rule is final, expect legal challenges to follow. For example, the U.S. Chamber of Commerce, the nation’s largest business lobby, told reporters it plans to sue over the rule, claiming the FTC is not authorized to make this rule, that non-competes are not categorically unfair, and the rule is arbitrary. The Chamber’s thoughts were echoed by the opposing Republican FTC voters, who cited concerns about the FTC’s authority (as compared to the merits of such a rule).

While employers’ protectable interests are often a concern, it is important to note that this rule does not ban non-disclosure and confidentiality agreements.

“…it is an unfair method of competition – and therefore a violation of Section 5 of the FTC Act – for employers to enter into noncompetes with workers after the effective date.”

Final Rule Raises Salary Threshold to $58,656 for Employee Overtime Exemptions

The U.S. Department of Labor (DOL) has released a final rule that increases the salary threshold for the white collar overtime exemptions from the current $35,568 yearly minimum to $43,888 on July 1, 2024, and then to $58,656 on January 1, 2025. This means that, beginning January 1, 2025, most employees making less than $58,656 must receive overtime pay—time and a half their regular hourly rate—for any time worked more than 40 hours in one workweek. The changes also raise the salary requirement for what is known as the “highly compensated individual exemption” from the current $107,432 per year to $132,964 on July 1, 2024, and then to $151,164 on January 1, 2025. Notably, the DOL final rule requires automatic updates to the salary threshold every three years.

The DOL initially proposed to raise the overtime exemption to $55,068 and the salary requirement for the “highly compensated individual exemption” to $143,988. The final rule modifies those numbers and now involves incremental increases in a two-step process.

The DOL estimates that this impacts almost 4 million workers who are currently salaried. Employers must face the decision to either increase salaries for many exempt workers to the proposed minimum of $43,888 by July 1, 2024 and then $58,656 by January 1, 2025, or convert those exempt employees falling under the minimum salary to non-exempt hourly workers.

This rule will likely be challenged in the courts. However, it is uncertain whether these challenges will be successful. Therefore, businesses should take steps now to prepare:

Review current exempt employees who earn between $35,568 and $55,656 per year. You can track employees’ actual hours worked now to learn the potential impact of converting them to overtime pay.
Review current compliance. Although the proposed rule changes the salary threshold but not the other factors for an employee to be eligible for the “white collar” federal overtime exemption, the rule may cause employees to scrutinize their exempt classification. Employers should ensure that their exempt employees meet the three exception requirements: (1) paid on a salary basis; (2) paid at least the designated minimum salary; and (3) perform certain duties (which vary based on the exemption.)
Plan to give advance notice to employees and provide training to managers and those workers impacted. If converted to non-exempt status, employees will need to be trained in record keeping requirements, timekeeping procedures, overtime approval policies, and other specifics that may vary from business to business.

EPA Designates Two PFAS as Hazardous Substances

On April 19, 2024, the U.S. Environmental Protection Agency (EPA) announced that it was designating two common per- and polyfluoroalkyl substances (PFAS) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund. As expected, EPA is issuing a final rule to designate perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) as hazardous substances. The pre-publication version of the rule is available here.

Once the rule is effective, entities will be required to report releases of PFOA and PFOS into the environment that meet or exceed the reportable quantity. Reporting past releases is not required if the releases have ceased as of the effective date of the rule. EPA will have the authority to order potentially responsible parties to test, remediate, or pay for the cleanup of sites contaminated with PFOA or PFOS under CERCLA.

Massachusetts established reportable concentrations for six PFAS, including PFOA and PFOS, in 2019. The Massachusetts regulations also contain cleanup standards for PFAS contamination in soil and groundwater.

Under Maine law, these substances also are automatically deemed a Maine hazardous substance regulated under the Maine Uncontrolled Hazardous Substance Sites Law. Maine’s PFAS screening levels are available here.

Solid waste facility operators had expressed serious concerns about the prospect of PFOA and PFOS being listed as hazardous substances under CERCLA and have advocated for a narrow exemption. Landfills can be recipients of PFAS-containing waste without knowing it. Similarly, wastewater treatment plant operators feared liability and increased costs if the rule designating PFOA and PFOS as hazardous substances became final.

EPA’s announcement of the final rule came with a CERCLA enforcement discretion policy [PFAS Enforcement Discretion and Settlement Policy Under CERCLA] that makes clear that EPA will focus enforcement on parties that significantly contributed to the release of PFAS into the environment.

The policy states that the EPA does not intend to pursue certain publicly‑owned facilities such as solid waste landfills, wastewater treatment plants, airports, and local fire departments, as well as farms where biosolids are applied to the land. Firefighting foam (aqueous film-forming foam, or AFFF) is known to contain PFAS, and runoff from the use of AFFF has been known to migrate into soil and groundwater.

Tag: legal

Justice Department has Opportunity to Revolutionize its Enforcement Efforts with Whistleblower Program

Like this:

A Paradigm Shift in Legal Practice: Enhancing Civil Litigation with Artificial Intelligence