Non competes

[RickyScott]

Seem done?

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[fiji128]

https://www.wsj.com/politics/policy/ftc-bans-noncompete-clauses-that-restrict-job-switching-984d2187?mod=breakingnews

 

[fiji128]

WASHINGTON—The Federal Trade Commission on Tuesday banned employers from using noncompete contracts to prevent most workers from joining rival firms, achieving a policy goal that is popular with labor but faces an imminent court challenge from business groups.

The measure, approved 3-to-2 along party lines, marks the first time in over 50 years that FTC officials have issued a regulation to mandate an economywide change in how companies compete. The commission has historically operated like a law enforcement agency, investigating and suing individual companies over practices or deals deemed to violate the law.

The rule prohibits companies from enforcing existing noncompete agreements on anyone other than senior executives. It also bans employers from imposing new noncompete contracts on senior executives in the future.
The rule restores rights to Americans that corporations have taken by imposing noncompete clauses in the workplace, FTC Chair Lina Khan said Tuesday. “Robbing people of their economic liberty also robs them of all sorts of other freedoms,” she said.

The Biden administration pushed for a regulatory assault on noncompetes in 2021, when the White House issued a blueprint for stricter enforcement of the antitrust laws. The rule is the capstone of a larger set of moves at the FTC that have elevated the interests of workers in antitrust enforcement.

Noncompete clauses violate a 110-year-old law that prohibits unfair methods of competition, the FTC says. The restrictions hamper competition for labor, the agency says, and result in lower pay and benefits for workers.

The practice has grown more prevalent in the U.S. economy and now affects nearly one in five American workers. Even lower-wage workers such as restaurant employees and hair stylists, who lack access to intellectual property or trade secrets, have been subject to them.

Sales staff, engineers, doctors and salon workers are among the most common types of workers affected by litigation of noncompete clauses, according to research published by Cornell University professor Matt Marx in 2022.

 

[Chartreuse Wombat]

https://www.wsj.com/politics/policy/ftc-bans-noncompete-clauses-that-restrict-job-switching-984d2187?mod=breakingnews

Guaranteed court challenge...not sure how this Court will rule

 

[MidwestRadOnc]

No carve out for physicians? I thought the hospital lobby was trying to get a carve out with some emotional appeal to protecting public health by needing to keep doctors locked down or some bs.

 

[RickyScott]

Guaranteed court challenge...not sure how this Court will rule

has Astro ever issued a statement on noncomepetes like the ama?

 

[MidwestRadOnc]

has Astro the mouthpiece for rad onc at large academic healthcare systems ever issued a statement on noncomepetes like the ama?

FTFY

 

[RickyScott]

FTFY

Employees- the actual academics at large academic institutions are badly impacted by non competes, but Astro doesn’t represent them either.

 

[HolySmokes]

Guaranteed court challenge...not sure how this Court will rule

Definitely will be challenged. Anyone have an educated guess on the timeline before resolution?

 

[Gfunk6]

Definitely will be challenged. Anyone have an educated guess on the timeline before resolution?

Hard to say. The rule will be enforced in four months without an appeal. It will likely go to the Supreme Court. 99% chance they will kick it back to the States.

But from the WSJ article:

Nonprofit healthcare employers also are exempt from the rule’s reach.

As such you can probably forget about it.

 

[HolySmokes]

I knew it was too good to be true

Edit: Actually, reading the rule I think there is a glimmer of hope here even for those of us employed by non profit hospitals

"For instance, the Commission has exercised jurisdiction in a section 5 enforcement action over a physician hospital organization because the organization engaged in business on behalf of for-profit physician members. That organization, which consisted of over 100 private physicians and one non-profit hospital, claimed tax-exempt status as a nonprofit."

"Second, the Commission disagrees with commenters’ contention that all hospitals and healthcare entities claiming tax-exempt status as nonprofits necessarily fall outside the Commission’s jurisdiction and, thus, the final rule’s purview"

"the Commission notes many workers at hospitals, including those that claims tax-exempt status as a nonprofit or government-owned hospital, contract with or otherwise work for a for profit entity, such as a staffing agency or physician group. Although some of these individuals may work at an excluded hospital, the final rule applies to their employer—the staffing agency or for-profit physician group—because it is covered by the final rule."

It certainly comes across as them doing their best to provide justification for this to be adopted in nearly all settings.

 

[MidwestRadOnc]

"non-profit"

Abusing your employees is ok as long as you don't have shareholders.

Sad they got the carveout, but I am not surprised.

 

[medgator]

"non-profit"

Abusing your employees is ok as long as you don't have shareholders.

Sad they got the carveout, but I am not surprised.

As Nonprofit Hospitals Reap Big Tax Breaks, States Scrutinize Their Required Charity Spending - KFF Health News

Nonprofit hospitals avoid paying taxes if they provide community benefits such as charity care. More states are examining that trade-off, scrutinizing the extent of hospitals’ spending on their communities.

kffhealthnews.org

Hopefully we start to see the tides turn

 

[MidwestRadOnc]

The ftc doesn’t have jurisdiction over non profits so this isn’t surprising, so maybe it’s not a specific carve out and hopefully we will something at the federal level perhaps through the irs to reign in abuse by non profits.

 

[temujim]

The ftc doesn’t have jurisdiction over non profits so this isn’t surprising, so maybe it’s not a specific carve out and hopefully we will something at the federal level perhaps through the irs to reign in abuse by non profits.

The AHA isn't happy. Ultimately this will be tested in multiple lawsuits before it all shakes out.

 

[NotMattSpraker]

The AHA isn't happy. Ultimately this will be tested in multiple lawsuits before it all shakes out.

These last several years where they have been able to leverage non-compete agreements to improve their real world experience must have been like... what is it Sameer says... nirvana?

I wonder if Rad Onc's self proclaimed premier physician organization will hire another hospital lobby executive again.

 

[medgator]

Hard to say. The rule will be enforced in four months without an appeal. It will likely go to the Supreme Court. 99% chance they will kick it back to the States.

But from the WSJ article:



As such you can probably forget about it.

I don't think it will be that cut and dry

https://x.com/JeffreyLDavis44/status/1782864621512093833

 

[MidwestRadOnc]

If you read the entire thing it appears this is (kind of) addressed.

Pages 51-54 are pertinent

https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf

 

[A_DeMichele]

screw all of you, nonprofit healthcare employers

 

[Chartreuse Wombat]

Hospitals slam FTC's noncompete ban

Hospital groups, including the American Hospital Association and Federation of American Hospitals, the slam the Federal Trade Commission's ban on noncompetes.

www.beckershospitalreview.com

 

[Mandelin Rain]

The lawyers will get rich (they don't allow non-competes as a profession, BTW).

 

[medgator]

Sounds like equity PP partners will be exempt as well.

 

[BobbyHeenan]

Will be curious to see how all this shakes out. Lot's of variables.

I think overall it's a net win for docs but there may be pockets of second and third order effects where in some situations it may not be helpful.

I think it will exacerbate this phenomenon in rad onc where employed rad oncs that are busy will be pushed to take on another doc because admins for whatever reason would prefer more docs, each less busy, than less docs but each one busy. We've discussed this phenomenon before on here.

Not necessarily rad onc related, but I also wonder whether it will drop starting salaries in some situations. In theory, someone wouldn't want to "invest" in starting a new doc up and getting their practice rolling quickly then having them leave. Seems like it would be a slower build to eliminate early sunk cost potential.

 

[MidwestRadOnc]

Sounds like equity PP partners will be exempt as well.

On what planet would an equity PP partner immediately jump to be a W2 employee at the hospital across the street because his non-compete was no longer chaining him to the burden of managing technical reimbursement? In a pro-only group, the hospital could always cut your PSA contract if you don't do what they say and employee directly. There's a med onc group in VA that just blew up this way. This is a completely bizarre take.

 

[medgator]

On what planet would an equity PP partner immediately jump to be a W2 employee at the hospital across the street because his non-compete was no longer chaining him to the burden of managing technical reimbursement?

Probably more common with the surgeons I would imagine when the hospital is willing to pay up to get their surgical program off the ground.

Have heard of instances of specialists getting peeled away from groups with smaller ancillaries like a lab or a couple scanners etc.

At least someone thought to think of this issue. HOPPS has been killing the Medicare physician fee schedule forever. Money talks and will make docs walk

 

[Gfunk6]

The reality is a lot of hospitals and academic systems will still put the non-compete verbiage into all of their employment contracts even if it is unenforcable. The fact that it is there will discourage many physicians from leaving and joining a competitor. Even for frivolous lawsuits in this country, you need to spend tens of thousands of dollars to litigate. Obviously your employer will have exceptionally deep pockets to make the process as long and painful as possible even if you win in the end.

Don't hold your breath.

 

[MidwestRadOnc]

Probably more common with the surgeons I would imagine when the hospital is willing to pay up to get their surgical program off the ground.

Have heard of instances of specialists getting peeled away from groups with smaller ancillaries like a lab or a couple scanners etc.

At least someone thought to think of this issue. HOPPS has been killing the Medicare physician fee schedule forever. Money talks and will make docs walk

You're right. I've seen this with surgical subspecialties that are the most profitable for the systems: ortho, cardiothoracic, neuro, facial plastics. Hospitals seem willing to roll out the red carpet and golden handcuff these docs with sky high W2 pay to secure the service line. Rad onc has always been a totally different feel though... like, ughh, do we really have to pay a rad onc this much? Our lawyers say we can't offer X over MGMA median because of Stark Law, and there are 5 other candidates we are considering so you've got 24 hours to take it or leave it...

 

[DoctwoB]

The reality is a lot of hospitals and academic systems will still put the non-compete verbiage into all of their employment contracts even if it is unenforcable. The fact that it is there will discourage many physicians from leaving and joining a competitor. Even for frivolous lawsuits in this country, you need to spend tens of thousands of dollars to litigate. Obviously your employer will have exceptionally deep pockets to make the process as long and painful as possible even if you win in the end.

Don't hold your breath.

It will take a while for this to sort itself out in terms of what it means in practice, but i would expect this to not be the case. It will be a violation of FTC rules to include the clause, not just to enforce it. That may be punishable by fine. A hospital also doesn't want to find itself in a position where every contract with every employee is potentially reviewable for damages.

Frivolous lawsuits can be financially punished, which is what knowing pursuit of unenforceable/illegal contract terms would be. In California where non-competes are banned, you do not see them in a contract, full-stop.

 

[DoctwoB]

On what planet would an equity PP partner immediately jump to be a W2 employee at the hospital across the street because his non-compete was no longer chaining him to the burden of managing technical reimbursement? In a pro-only group, the hospital could always cut your PSA contract if you don't do what they say and employee directly. There's a med onc group in VA that just blew up this way. This is a completely bizarre take.

Also there remain plenty of ways to encourage employees to stay without a non-compete to cover your sunk costs of onboarding/recruiting.

Signing bonus that is really a loan that is forgivable over a period of time and has to be paid back with interest on leaving early. Ditto for student loan repayment. Vesting equity. Retention bonuses. etc, etc.

Also, and this is crazy, one could consider treating their employees well so they don't want to leave. It is not harder to recruit doctors then in demand professionals in any field. There is a reason Google et. al famously provide ridiculous amenities on campus. It's not out of the goodness of their heart, it is an employee retention tool that clearly they have done the math on and feel it is favorable to do this rather then just pay everyone more and use the money as retention (though they do that to a degree as well). Hospitals have gone the opposite way, cutting doctor's lounges etc, lunches, etc because they can.

Non-competes for employee physicians have been abused to suppress the physician labor market for decades. I am very hopeful this will put an end to that.

 

[NotMattSpraker]

Also, and this is crazy, one could consider treating their employees well so they don't want to leave. It is not harder to recruit doctors then in demand professionals in any field.

How dare you. You are a misanthrope, what do you know. Id write more but I am so busy, Im always interviewing because SDN makes it so no one likes me. What did I ever do to you!?!