On April 23, 2024, the Federal Trade Commission (“FTC”) announced the Final Rule on non-compete agreements, which was to go into effect on September 4, 2024. In essence, the Rule was intended to discourage to a significant extent the use of non-compete agreements. However, on August 20, 2024, a federal judge from the U.S. District Court for the Northern District of Texas banned the FTC Final Rule nationwide. District Court Judge Ada Brown ruled that the Non-Compete Final Rule was “unreasonably overbroad without a reasonable explanation.” Hence, the non-compete ban will not go into effect on September 4, 2024.
According to the FTC website, it is considering challenging the U.S. District Court’s ruling by filing an appeal in the Fifth Circuit Court of Appeals and possibly taking this all the way to the U.S. Supreme Court. This process could take years to run its course.
What impact does this have for employers in Ohio? Currently, non-compete agreements are enforceable in Ohio. Under Ohio law, a non-compete agreement is enforceable if it is reasonable. To be considered reasonable, the agreement cannot impose undue hardship on the employee. Employers need to consider the scope of the agreement, the geographic area where the employee cannot compete, and the duration of the non-compete agreement. Additionally, employers must consider their protected interests when drafting the agreement. Finally, the language in the agreement should be clear and concise, avoiding overly broad restrictions, and including a severability clause. This will ensure that if one part of the agreement is unenforceable, the remaining agreement will still be in effect.
Please contact a member of our Labor and Employment Section for more information.
EEOC Updates Workplace Harassment Guidance
On April 29, 2024, the Equal Employment Opportunity Commission (EEOC) published its final updated guidance on the issue of workplace harassment. This update is significant and is the first official update in nearly 25 years on the topic of harassment in the workplace. This update took effect immediately. The new updated guidance supersedes prior memoranda and policy statements released by the Commission. The guidance provides a legal analysis of harassment in the workplace as well as employer liability relating to claims of harassment. In addition to the guidance itself, the EEOC issued a summary of the key provisions, a fact sheet for small businesses, and Frequently Asked Questions (FAQs) on workplace harassment. Please refer to the EEOC website for more details.
By way of background, the genesis of workplace harassment law is found in Title VII of the Civil Rights Act of 1964. This law and later associated laws protect covered employees from workplace harassment that is based on a protected characteristic. Protected characteristics are race, religion, sex (including sexual orientation; gender identity; and pregnancy, childbirth, or related medical conditions), national origin, disability, age (40 or older), and genetic information (including family medical history).
Noteworthy new guidance for protected classes
Race
The law under Title VII prohibits discrimination based on race. Racial discrimination is defined as harassment based on race as well as racial characteristics and traits that are linked to race. For example, making comments or criticizing a black employee’s hair as “untamed” or “unprofessional” when they are wearing their hair in a protective hairstyle, such as locs, is considered race-based harassment.
Sexual orientation and gender identity
Following the decision in Bostock v. Clayton County, the EEOC has made it clear that sexual orientation and gender identity are protected characteristics under Title VII. Examples of harassment based on these protected characteristics could be misgendering an employee, denying access to a bathroom or other sex-segregated facilities consistent with an employee’s gender identity, or “outing” an employee’s sexual orientation or gender identity without permission.
Pregnancy, childbirth and pregnancy related conditions
The EEOC’s new guidance prohibits harassment based on pregnancy, childbirth or related medical conditions. Examples of harassment based on these characteristics includes insulting or making fun of someone for their use/lack of contraceptive use or choice to obtain/not obtain an abortion. Additionally, the guidance protects individuals from harassment based on pregnancy related conditions such as lactation or morning-sickness.
Intersectional and intraclass harassment
Intersectional harassment occurs when an employee is harassed based on multiple protected characteristics. One example would be an employee who was harassed based on their age and sexual orientation. Intraclass harassment occurs when an employee is harassed by an individual within the same protected class based on characteristics of the protected class. For example, Intraclass harassment would occur when a female employee makes a comment to another female employee stating, “women should stay at home with their children.” This is harassment despite both individuals being a part of the same protected class.
The EEOC guidance issued on April 29, 2024, significantly expands the definition of harassment and the resultant employer liability. This is not a comprehensive list of all the changes the EEOC made when it published the final guidance. The importance of prompt investigation of complaints of harassment is critical. The new guidance also outlines appropriate remedial action that should be taken by employers. Therefore, employers should review the new EEOC guidance to ensure their policies comply with EEOC standards.
Please contact a member of our Labor and Employment practice with questions or concerns.
The United States Justice Department Submitted Proposed Regulation to Move Marijuana from Schedule I to Schedule III under the Narcotics Substance Control Act
On May 16, 2024, the Justice Department announced that the Attorney General submitted a notice of proposed rulemaking to the Federal Register. This proposal initiated a formal rulemaking process on the issue of moving marijuana from a Schedule I to a Schedule III drug under the Controlled Substance Act (CSA). Marijuana has been classified as a Schedule I drug since Congress enacted the CSA in 1970. In October of 2022, the Biden Administration asked the Secretary of Health and Human Services (HH) and the Attorney General to perform a scientific review of the marijuana law. The HHS’s recommendation in August of 2023 was to reduce the classification of marijuana from Schedule I to Schedule III under the CSA. In January of 2023, the HHS determined that marijuana is eligible for less strict classification under federal drug laws. The matter was reviewed by the Justice Department’s Office of Legal Counsel on pertinent rulemaking questions. Thereafter, on May 16, 2024, the Attorney General exercised his authority to initiate the rulemaking process to transfer marijuana to a Schedule III drug.
In July, however, the House Appropriations Committee blocked spending of federal funds on the issue of rescheduling of marijuana from Schedule I to Schedule III under the CSA. The move by the House Appropriations Committee hinders research on the medical benefits of Marijuana and maintains its current legal status. Therefore, the movement by the Justice Department to initiate the formal rulemaking process and reschedule marijuana to the less restrictive Schedule III category is in limbo.
In sharp contrast to the stringent federal control of marijuana, nearly all states have changed their laws to permit the use of marijuana for medical purposes. In addition, twenty-four states and the District of Columbia have passed laws removing certain statement criminal prohibitions on the recreational use of marijuana by adults. As the Supreme Court has recognized, states cannot legalize marijuana because states are pre-empted from changing federal law under the Supremacy Clause of the United States Constitution. This clause dictates that federal law takes precedence over conflicting state laws. If marijuana is a Schedule I controlled substance under the CSA, all unauthorized activities involving marijuana are federal crimes anywhere in the United States, including in states that have purported to legalize medical or recreational marijuana.
The current chaotic state of the law regarding marijuana has created a patchwork of legal land mines for employers doing business in multiple states. To further complicate matters, several cities have enacted their own marijuana laws. Employers, therefore, must be aware of the varying and ever-changing legal landscape of marijuana laws when they craft and implement their workplace policies.
Please contact a member of our Labor and Employment practice with questions regarding marijuana and workplace policies. We will continue to monitor the state and federal laws on marijuana to ensure compliance by our clients.