The LA Senate Passes Restrictions on Non-Competes for Primary Care Physicians; SB 165 Now Moves to the House of Representative for a Vote

Last month, we wrote about the anticipated impact of the Federal Trade Commission’s expected rule on the healthcare industry. In that post, we discussed the impacts many argued non-competes would have on the healthcare space. Specifically, while some physician groups argue the prevalence of non-competes in the healthcare industry contributes to physician shortages, other industry groups that represent rural hospitals argue they are necessary to protect the investment those small communities make in desperately needed new physicians. On April 8, 2024, the Louisiana Senate unanimously passed SB 165, a piece of legislation that seemingly takes both of these conflicting concerns into account.

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The Expected Impact of the FTC’s Expected Rule on Healthcare Industry

The Proposed Rule

Last year, the Federal Trade Commission (FTC) issued a proposed rule to ban most noncompete agreements nationwide. With very limited exceptions, the sweeping rule forbids any contractual term between an employer and a worker that has the effect of preventing the worker from accepting employment with a competitor, or operating a competitive business, after the conclusion of the worker’s employment with the employer. The proposed rule also includes an expansive definition of “worker” — including employees, independent contractors, interns, and even volunteers — and includes no exception for executive or highly compensated employees. The comment period for the rules ended April 29, 2023, and the FTC is expected to issue its final rule — which may or may not be as expansive as the proposed rule — in April 2024.

The Healthcare Industry’s Impact on the Proposed Rule

The FTC focused on healthcare and physicians when drafting its proposed rule, reportedly looking to a 2017 paper published in Management Science titled “Screening Spinouts,” which evaluated the economic effects of noncompete agreements in the healthcare industry. And according to FTC Chairperson Lina Khan, the healthcare industry has given more feedback on the proposed rule than any other sector. Of note, the American Hospital Association (AHA) has criticized the FTC’s proposed rule, highlighting the negative impact it will have on retention in for-profit hospitals, while the American Medical Association (AMA), the country’s largest physician professional organization, has adopted an official position in support of the rule.

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Jones Walker Trade Secrets Team Adds Mediation Capabilities

Jones Walker’s trade secrets, unfair competition, and non-competes team has launched its mediation services backed by years of litigation in this field and with a full understanding of the contentious nature of these disputes.

Managed properly, alternative dispute resolution (ADR) methods such as mediation can be a more efficient and cost-effective method of dispute resolution than litigation. ADR offers speed of resolution, lower expense, and greater subject matter experience than is found in overburdened court systems.

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Mediate Early and Sometimes Often

Closeup of male hand signing legal or insurance document on black desk with reflection.

Trade secret, breach of fiduciary duty, unfair trade practices, breach of restrictive covenants and retention agreements, and the many state and federal claims that come with departing employees or groups of employees often scream out for mediation. As our blog has demonstrated time and again, aggressive, and immediate action is necessary in these situations and typically once the gauntlet is thrown down, settlement is difficult. Nonetheless, this is exactly why early consideration of how to develop a business solution at the outset is so important.  

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Affects of FTC’s Proposed Changes on Mergers and Acquisitions

The Federal Trade Commission (FTC) is proposing changes to the Hart-Scott-Rodino, or HSR, filing rules for mergers and acquisitions.

Brett Beter, a partner in the Corporate Practice Group was recently interviewed by the Greater Baton Rouge Business Report about the FTC’s proposed rule changes to merger and acquisition rules.

Read more about this proposed change and the implications on certain mergers and acquisitions.

Louisiana OMV Data Breach – How Should You Respond?

On Thursday, June 15, the Louisiana Office of Motor Vehicles (OMV) experienced a data security breach resulting in the loss of the personal information of potentially millions of Louisianans due to a global cyberattack involving the exploitation by hackers of a vulnerability in MOVEit Transfer, an electronic file transfer tool developed by Progress Software. In a press release, the OMV announced that it suspects the personal data of all individuals who possess a Louisiana state-issued driver’s license, ID, or car registration may have been exposed to the criminal cyber attackers, a ransomware gang known as “Clop.”

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NLRB Issues Memo on Non-competes Violating NLRA

On May 30, 2023, Jennifer Abruzzo, the General Counsel for the National Labor Relations Board (NLRB), issued a memorandum declaring that non-compete agreements for non-supervisory employees violate the National Labor Relations Act. The memo explains that having a non-compete chills employees’ Section 7 rights when it comes to demanding better wages. The ­theory goes that employees cannot threaten to resign for better conditions because they have nowhere to go. Non-compete agreements also prohibit employees from seeking better working conditions with competitors and/or soliciting coworkers to leave with them for a local competitor.

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Federal Appellate Court Vacates Order Denying Injunction in Biotechnology Trade Secret Dispute

The United States Court of Appeals for the Fifth Circuit in New Orleans recently vacated an order from a Texas-based district court denying a preliminary injunction to Direct Biologics, LLC (“Direct Biologics”). The court ruled that Direct Biologics had presented sufficient evidence that its trade secret information in the hands of its former employee and business competitor, Vivex Biologics, Inc. (“Vivex”), could constitute irreparable harm if Direct Biologics could present evidence Vivex and the former employee would likely use that information during the pendency of the lawsuit. The court’s opinion offers guidance for employers facing confidential data breaches and hiring employees from competing firms.

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FTC Hosts Public Forum on Proposed Rule Banning Non-Compete Clauses

On February 16, the Federal Trade Commission (FTC) hosted a public forum to examine its proposed rule to ban non-compete agreements. Non-compete clauses serve to protect a business’s trade secrets and confidential information, which makes such a ban a concern for many businesses. The comment period for this proposed rule ends on April 19, so businesses should consider voicing their concerns during this time. This article summarizes the remarks made during the public forum by the FTC, a panel discussion, and comments from the public.

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FTC To Host Virtual Public Forum

As we recently reported, in January 2023, the Federal Trade Commission (FTC) announced a proposed nationwide ban on non-compete clauses. The proposed rule would restrict employers from enforcing all existing and future non-compete agreements with their employees.

The FTC announced that it will host a free and open public forum on Thursday, February 16, 2023, from 12 p.m. to 3 p.m. EST. This forum will examine the proposed rule and provide workers and business owners with an opportunity to ask questions, express concerns, and share their past experiences with non-competes.

Attendees may register to speak at the forum on the FTC’s website. Registration to speak is on a first come, first served basis. Details about the forum and registration may be found here.