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Posts Tagged ‘#laborlaw’

Illinois Chips Away at Use of Non-Compete Agreements for Low-Wage Earners

Posted on: October 4th, 2016

By: Timothy Holdsworth

The political storm that has been brewing around the appropriate minimum wage amount now seems to have spread into the non-compete world.  Last month, Illinois enacted the Freedom to Work Act, which prohibits employers from entering into non-compete agreements with workers that earn $13 per hour or less.  Effective January 1, 2017, this law prohibits so called “low wage workers” from entering into agreements that restrict:

  1. Working for another employer for a specified period of time;
  2. Working in a specified geographic area; or
  3. Performing “similar” work for another employer.

Any non-compete agreements containing any of these provisions entered into after January 1, 2017 will be considered “illegal and void.”  The silver lining is that this law does not prohibit employers from entering into non-solicitation, non-disclosure, or confidentiality agreements with these employees.  Nonetheless, employers operating in Illinois should review and update their new-hire paperwork for employees earning $13 per hour or less to ensure they are not relying on non-compete agreements that they will not be able to enforce.

Feel free to contact counsel at Freeman Mathis & Gary if you have any questions or would like guidance on these issues.

NLRB Doubles Down on ‘Joint Employer’ Standard Expansion

Posted on: October 2nd, 2015

By: Tim Holdsworth

On August 27, 2015, the National Labor Relations Board discarded thirty years of precedent and handed down a new and expanded definition of joint employer. See Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015). This decision comes on the back of the National Labor Relations Office of the General Counsel’s determination last year that McDonald’s USA, LLC, could be named as a joint employer in forty-three unfair labor practice complaints against its franchises, as previously discussed here.

In the August decision, the Board found that an entity is a joint employer if (1) there is a common-law employment relationship between the employee and employer, and (2) the entity possesses sufficient control over an employee’s essential terms and conditions of employment. In determining the entity’s control the Board announced two major departures from precedent in their inquiry, although the majority characterized these changes as merely “reaffirm[ing]” the standard articulated by the Third Circuit in N.L.R.B. v. Browning-Ferris Indus. of Pennsylvania, Inc., 691 F.2d 1117, 1119 (3d Cir. 1982). First, they will no longer require a joint employer to possess and exercise authority to control employees’ terms and conditions of employment, but instead will find sufficient control if the entity merely reserves this authority. Second, they will no longer require the entity’s control to be exercised directly and immediately. Instead, the Board declared that control exercised indirectly, such as through an intermediary, can establish the requisite control.

Applying this new standard, the Board found that Browning-Ferris Industries, the owner of a recycling facility, was a joint employer with Leadpoint, its subcontractor, for workers supplied by Leadpoint that would manually sort materials, clean screens and clear jams on the sorting equipment, and clean the facility.

Although this decision only sets an NLRB standard and has not yet been endorsed by a federal court, given the uncertain scope of what constitutes “indirect control” sufficient to determine an entity is a joint employer, it clearly reaffirms the agency’s effort to dramatically expand employer liability despite decades of contrary decisions. We might also see the NLRB’s standard gain traction in federal courts, where plaintiffs are already pushing for an expansion of employer liability to franchisors under different theories.

In sum, the Agency’s decision to expand the joint employer standard may have a profound effect not just on franchisors, but on labor relations and business relationships in general.