NLRB Joins Noncompete Nay-Sayers

Non-competes are in the news again. Well, maybe they never left. As we’ve previously reported, the Federal Trade Commission (FTC) has proposed a rule that would essentially ban noncompete provisions. The FTC has received more than 27,000 comments from the public regarding this issue. It’s possible those are all unreserved endorsements of the proposed rule, but we’re guessing there are some dissenting votes in that massive pile of public comment. The FTC has (understandably) reported it needs some time to sort through everything. We’ll have to wait until April 2024 to see whether the FTC has softened its position on non-competes. You can read more about the story here

Speaking of non-competes, the National Labor Relations Board (NLRB) has entered the noncompete-ban fray. On May 30, 2023, NLRB General Counsel (GC) Jennifer Abruzzo issued a memorandum declaring that overbroad non-compete agreements are unlawful because they chill employees from exercising their rights under Section 7 of the National Labor Relations Act (NLRA). Section 7 protects workers’ rights to engage in concerted activities to improve working conditions. Abruzzo asserts that non-competes interfere with Section 7 rights by making workers believe they’ll have a harder time replacing lost income if they’re discharged for exercising their Section 7 rights. Abruzzo’s memorandum is not an official statement or ruling by the NLRB. But, as the NLRB’s GC, Abruzzo sets the direction for regional offices and instructs them on the types of complaints to file against companies. Employers would be wise to pay attention when Abruzzo speaks. Still, as with the FTC’s proposed rule, we’ll have to wait and see how broadly the FTC and NLRB decide to target noncompete provisions. You can read the NLRB’s announcement of GC Abruzzo’s memo here, and you can read more on the story here.

Who’s Ready for Some FMLA Math?

On May 30, 2023, the Department of Labor (DOL) issued new guidance that impacts the way in which holidays impact FMLA calculations. The DOL explained that when a holiday falls on a week in which an employee is taking a full workweek of FMLA leave, the entire week is counted as FMLA leave. The fact that one of the days on which the employee takes FMLA leave happens to be a holiday doesn’t really play a role in the calculation—it’s counted as a normal day. However, when a holiday falls on a week in which an employee is taking less than a full workweek of FMLA leave, the holiday is not counted as FMLA leave unless the employee was scheduled and expected to work on the holiday and used FMLA leave for that day. For example, if an employee is scheduled to work Mondays through Fridays, and a holiday falls on a Friday and the employee only needs FMLA leave for Wednesday through Friday, the employee would use only 2/5 of a week of FMLA leave. The DOL’s decision is a good reminder that math matters (thanks, Mr. Bennett), and employers need to be careful in their FMLA calculations. You can read the DOL’s opinion letter here, and more on the story here

Chick-fil-A Getting Fried for DE&I Initiative

According to some polls, more than 80% of U.S. companies have diversity, equity, and inclusion (DE&I) initiatives. In 2020, Chick-fil-A joined the club (you can order a Chick-fil-A chicken club here), posting its DE&I initiative on its website. In the initiative, Chick-fil-A says that it focuses on “ensuring equal access,” “valuing differences,” and “creating a culture of belonging.” That sounds like a fairly vanilla (you can order a Chick-fil-A vanilla milkshake here) DE&I initiative, but it has led to some severe backlash from groups that have traditionally backed the restaurant. Many critics who have labeled Chick-fil-A as “woke,” said they’ll no longer support the company as customers and singled out the chain’s hiring of Erick McReynolds to head its DE&I initiative. (You can see McReynolds and his bio here.) It’s unclear why the restaurant is being grilled (you can order an egg white grill here) now, since the company’s DE&I initiative—and McReynolds—have been in place since 2020. However, it goes to show that DE&I initiatives can test any company’s resolve not to waffle (you can order Chick-fil-A’s waffle fries here) in the face of controversy. You can see Chick-fil-A’s DE&I policy here and read more on this story here.

NLRB Weighs in on Independent-Contractor Status

On June 13, 2023, the NLRB issued a decision that returned to the FedEx Home Delivery (FedEx II) standard for determining independent-contactor status under the NLRA, overruling the SuperShuttle decision. In its decision, the NLRB explained that its independent-contractor analysis would be guided by a list of common-law factors. The NLRB expressly rejected the holding of the SuperShuttle Board that entrepreneurial opportunity for gain or loss should be the “animating principle” of the independent-contractor test. In the decision, the NLRB cited the Supreme Court’s holding in NLRB v. United Insurance Co. of America, in which the Court said that the “common-law agency test” applied to distinguishing an employee from an independent contractor. The decision also referenced other Supreme Court decisions that used a “multifactor test” that incorporates (at least) 10 different factors, including extent of control, type of occupation, skill required, who supplies the tools, method of payment, among others. The NLRB’s chairman, Lauren McFerran, said that the decision “reaffirm[ed] the Board’s commitment to the core common-law principles that the Supreme Court has determined should guide the Board’s consideration of questions involving employee status,” which would “ensure that workers who seek to organize or exercise their rights under the National Labor Relations Act are not improperly excluded from its protections.” You can read the NLRB’s press release (which includes a link to the decision) here.