HCAOA Submits Formal Comment on FTC Proposed Ban on Non-Compete Clauses

​Last Wednesday, HCAOA submitted a formal comment to the Federal Trade Commission (FTC) requesting the commission amend their proposed rule that, if enacted, would amount to a near-total ban on the use of non-compete clauses. 

In January, the Federal Trade Commission (FTC) announced the proposed rule. While non-compete clauses are extremely rare in home care employment agreements, home care providers often use “direct-hire” clauses in service agreements signed by the client or their responsible party. HCAOA and its legal counsel believes these “direct-hire” clauses could be misconstrued and banned under the proposed rule.
 
Under a direct-hire clause, 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 costs may include training and certification costs, the administrative cost of placement, background checks, orientation, maintenance of insurance and payroll taxes, and the like.
 
In the formal comment, HCAOA argued that the unique advantages and benefits of agency preparation and placement of caregivers with clients make direct-hire clauses necessary. However, these clauses do not infringe on the home care staff member’s choice of employer, nor do they prohibit or restrict the staff from working for the agency’s client. Rather, direct-hire clauses in client service agreements solely create a requirement in the relationship between the agency and the client.
 
HCAOA also argued that the proposed rule appears to be a solution in search of a problem—one the FTC has failed to demonstrate even exists. The proposed rule does little to suggest that the current state-based regulation and enforcement of non-compete agreements by state courts and legislatures is in any way deficient.
 
To read HCAOA’s comment in its entirety, click here.
 
For more information on the FTC’s proposed non-compete ban, read last week’s Q&A with Littler attorneys here.