A Texas court blocked the FTC’s noncompete ban, while New York enacted a law to protect freelance workers.
FTC Noncompete Ban Injunction
On August 20, 2024, the U.S. District Court for the Northern District of Texas issued a nationwide injunction blocking the Federal Trade Commission’s (FTC) final rule banning noncompete agreements. Read more here.
The rule, which was set to take effect on September 4, 2024, would have prohibited most non-compete clauses with limited exceptions for senior executives and business sales. The court ruled that the FTC lacked the authority to enforce such a ban.
As a result, the FTC’s final rule will not go into effect on September 4, 2024, and employers currently do not need to comply with its requirements.
However, employers should be aware that the FTC has indicated that it may appeal this decision. Employers should also note that numerous states also have restrictions or bans in place on noncompetes.
NYS “Freelance Isn’t Free” Act
On August 28, 2024, New York State enacted the “Freelance Isn’t Free” Act, adding Article 44-A to the General Business Law. The new law provides additional protections to freelance workers in New York State.
The law defines “freelance worker” as any natural person or organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for an amount equal to or greater than $800, either by itself or when aggregated with all contracts for services between the same hiring party and freelance worker during the immediately preceding 120 days. “Freelance worker” does not include:
- “sales representatives,” as defined in Labor Law § 191-a;
- practicing attorneys;
- licensed medical professionals; or
- “construction contractors,” as defined in the Freelance Isn’t Free Act.
The law defines “hiring party” as any person or entity (other than a federal, state, or municipal governmental agency or authority) that retains a freelance worker to provide any service. Employers who utilize freelance workers are now required to put a contract in place between themselves and the freelancer. The contract must include:
- An itemized list of services to be provided, and the value of those services.
- The rate and method of payment.
- The payment due date, which must be no later than 30 days after the completion of services.
- The date the freelance worker must provide the employer with a list of services rendered under the contract.
A copy of the contract must be provided to the freelance worker, and employers must retain their own copy for at least six years. The NYS Department of Labor has developed a model contract that employers can use to meet the Act’s requirements.
Freelance workers who believe their rights have been violated may now file a complaint with the New York State Attorney General.
Need more information?
To learn more about the noncompete clause rule, the challenges to the FTC’s noncompete ban, and how to prepare for upcoming changes, contact our Human Resources Consulting team.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.
Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.