BREAKING NEWS: U.S. District Judge Sets Aside FTC Non-Compete Ban

​Today, U.S. District Judge Ada E. Brown set aside the FTC’s sweeping ban on non-compete agreements, concluding that the rule was “arbitrary and capricious” and that the FTC lacked the statutory authority to issue the rule in the first place. (read Judge Brown’s decision here)

HCAOA vigorously opposed the rule during both the administrative rulemaking phase (read our comments here) and in this case, when it filed an amicus brief urging that the rule be set aside. (read that brief here.)
 
While non-compete clauses are rare in-home care employment agreements, what is more common are “direct-hire” clauses. Under these clauses, an individual or institution who chooses to directly hire an agency caregiver, rather than contract for their services through the agency, may be required to pay to the agency a sum (a “direct-hire payment”). Direct-hire payments are designed to enable an agency to recoup the costs that they have invested in the staff member. These were also banned under the FTC’s rule.
 
“We are pleased that the Court determined that the FTC's rule was unreasonably overbroad,” said HCAOA CEO Jason Lee. "The Court's ruling protects the important relationship between an agency, the care professional, and the client. This decision preserves the existing rules that encourage the client to work with the agency to protect both the client and the care professional by enforcing provisions that protect no direct hire agreements."  
 
Judge Brown had temporarily blocked the rule in July while considering a bid by the U.S. Chamber of Commerce, the country's largest business lobby, and tax service firm Ryan, to strike it down. The FTC was set to begin enforcing the rule on September 4, 2024.
 
HCAOA will continue to strongly advocate on behalf of home care agencies in our state capitals and our nation’s capitol.