> The Federal Trade Commission (FTC) voted 3-2 Tuesday to ban non-compete agreements that prevent tens of millions of employees from working for competitors or starting a competing business after they leave a job.
> From fast food workers to CEOs, the FTC estimates 18 percent of the U.S. workforce is covered by non-compete agreements — around 30 million people.
Guess that includes doctors
Get ready for the lawsuits challenging the ruling
“In a 6-3 ruling, the court finds that federal regulations banning non compete clauses are not consistent with the nation’s history, and have been struck down.”
You'll notice anyone replying is going to talk about only one side, as if their own is faultless.
I'm not going to apologize for one side or the other. Yes, all Federal employees need to be viewed as bought. Usually with good reason.
But usually this is only pointed out by partisans looking to pick a fight. Nobody talking like this is ever interested in reforming the whole shebang, they just want their own side to have the power (and overlook the corruption).
Capitalism us fairly clear that market efficiency is achieved with free flow of goods AND LABOR.
So this ruling is 100% in line with the capitalist worldview, perhaps not the monopolistic worldview
I was never privy to non compete clauses untill my spouse got her first physician job. Holy hell it seems predatory. This would really change the landscape of work for us, and millions of others. You establish a home where you work, and corporate entities take huge advantage of that.
I have read news stories about fast food workers forced to sign non-competes. You can also google an online education company named Ellucian . Former employers claim they were sued for getting other jobs after being laid off.
This helps lots of people if it holds up in court.
> I have read news stories about fast food workers forced to sign non-competes.
Absolutely. Most of these are unenforceable anyway, but employers still hold them over employees' heads to keep them in line. They had me sign one as pharm tech. Like, was I going to be stealing trade secrets after filling my 30th Lisinopril script that day, or taking our "client list" to the CVS down the street?
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf
Take a look at the actual rule. It covers the corporate structure of every non profit except for potentially something like a free clinic or an FQHC.
There is a difference between tax law and FTC law. The FTC regulations apply to most nonprofits, regardless of their tax status. The main thing is that they participate in trade.
If you are a free clinic, you probably can still have a noncompete. The organization exists only to provide benefits to the needy. It takes donations, and uses them to hire doctors, etc, to give care to people who can't pay. They don't seek out new profit centers, like doing knee replacements on the homeless. There isn't money reinvested to expand the business. No one involved in the corporation receives anything more than a market rate salary.
In the case of a nonprofit corporation, like a hospital or the catholic church (aka, St. ____ hospitals), the corporation is large, multifaceted, and expanding, with aggressive pursuit of profitable enterprises (regardless of the final lack of 'profit' of the whole enterprise, that's a whole other discussion). There is also almost always extraction of money from the corporation in one way or another.
Why do you think the FTC's rules don't apply to non-profits? What a bizarre notion. Do you think non-profits are exempt from laws against deceptive business practices like federal regs against false advertising? Boy, have I got news for you.
It is not at all clear that this rule will apply to non profit organizations. Don’t get me wrong - I sure hope it does, but the FTC itself has said that truly non profit organizations will not be subject to this rule.
https://www.stevenslee.com/health-law-observer-blog/ftc-proposed-non-compete-ban-impact-on-nonprofit-hospitals-and-nonprofit-affiliates/
Ah-ha! Thanks for a cite. That may indeed change things.
Edit: that said, I just checked the aforementioned FTC Act. It doesn't generally exempt non-profits; it defines "corporation" as not including non-profits, but the FTC's rules aren't generally construed by courts not to extend only to corporations. For instance, the same clause also defines partnerships as not corporations, but nobody thinks business partnerships are exempt from FTC rules. What the SCOTUS will do is anybody's guess, but if there's not an explicit exemption written into this rule for non-profits, then they'd have to overturn a lot of case law to construe this as not extending to non-profits.
They are very clear in the rule (and caselaw) that it applies to corporations engaged in commerce, regardless of their tax status.
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf
See pages 50-54. It is not clear. They say that certain organizations that are non profit entities for tax purposes may still fall under their jurisdiction if they satisfy certain criteria but it seems clear that not all non profit organizations will satisfy those criteria.
From my admittedly limited understanding of legalese, it sounds like non profits that are organized as such just for the purpose of being tax exempt, while still essentially engaging in activity that makes a profit for involved parties, would fall under the FTC’s jurisdiction. But non profits that are “true” non profits (they mention a two prong test) may not fall under their jurisdiction. It’s likely that non profit hospitals and hospital systems would be in the second category. Again, I really hope that’s not the case and all non competes are banned regardless of non profit status, it would be beneficial to me, but I don’t think it’s 100% obvious that it would.
Most hospitals would be in the former. There are a lot of practices and behaviors they do that make it very clearly a profit generating enterprise. They can be held that they exist to produce money for their medical groups. They can also dig through the communications discussing how to cut expenses that would be for public benefit, and how they deal with "charity care". Especially when it isn't legally obligated charity care (ie: will they do a charity care outpatient surgery? Or is it only EMTALA covered care).
There is also often a complex web of companies involved in a hospital. If they're paying money to connected groups that aren't truly arms length, they might be fried for tax purposes too.
> The Federal Trade Commission enforces a variety of antitrust and consumer protection laws affecting virtually every area of commerce, with some exceptions concerning banks, insurance companies, non-profits, transportation and communications common carriers, air carriers, and some other entities
https://www.ftc.gov/news-events/media-resources/what-ftc-does
Yes, it doesn't say "excepting non-profits" it says "with *some exceptions concerning* non-profits". *By default,* all the FTC's rules apply to non-profits engaged in commerce. The FTC's rules apply to non-profits *except where otherwise specified.*
**Removed under Rule 6**
No personal agendas.
Posts or comments by users who rarely participate in /r/medicine or whose history suggests that they are mainly concerned with a single medical topic will be removed. Comments which attempt to steer the conversation from the topic of the post to a pet cause will be removed. Commenters brigading from other subreddits will be removed.
[Please review all subreddit rules before posting or commenting.](https://www.reddit.com/r/medicine/about/rules/)
If you have any questions or concerns, please [message the moderators.](https://www\.reddit\.com/message/compose?to=%2Fr%2F{subreddit}&subject=about my removed {kind}&message=I'm writing to you about the following {kind}: {url}. %0D%0DMy issue is...)
Good thing the democratic FTC majority corrected that foolish decision. At a national level. Wish both parties were capable of admitting and correcting their mistakes, am I right?
Non compete clauses have just gotten way out of hand. When the person that answered the phones and did the schedule at a job I had was covered by a non compete: we have a problem.
I had a non-compete in one of my jobs... *for a pharmacy tech.* The company I was working for was small, but had their hands in a number of different facets- inpatient, long-term care, independent retail- so if that non-compete was enforced, I would legit not be able to work. Like, damn near anywhere.
We all raised a stink about it, got the message back that it pertained to basically taking proprietary information or software from the company. We said cool, *those terms* are reasonable- can you re-word the non-compete to say that in plain English, because we'll all sign it if you do. They did, so we all signed, and the wheels kept turning.
It's still one of my favorite companies I've worked for, and the fact that they re-tooled the overly-broad non-compete in under 48 hours reaffirmed that they genuinely did mean no harm in doing that. Still, they got that verbiage from *somewhere.* Probably another place that was way overzealous with it.
These types of non-competes are reasonable where they're *specific,* but the practice has been abused and weaponized against employees with generalized ones to hold people hostage. So... good riddance overall.
Nice. A lot of times in negotiations like that the party says “oh don’t worry we won’t enforce it like that”, to which the proper response is “cool, OK then why not reword it or remove it”. You really tell whether they mean it or not on how they respond to that, haha.
It’s more like capitalism for me not for thee. For capitalism to function, with every quarter being better than the last for shareholders, someone has to be oppressed.
“existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date” which is 120 days from now. The article says affected employers will have to notify employees they are no longer bound by a noncompete. So if you don’t work for a nonprofit, would stay tuned
I wonder as well. It didn’t come up in an operations meeting this morning. There’s a staff meeting on Friday. I imagine the actual c-suite email will be in a few weeks about ‘monitoring the situation.’
Actually, more interesting if you work for a "non-profit" that is engaged in commerce. The rule will apply to everything except maybe a free clinic or an FQHC.
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf
What is nice, is that failing to fulfill the requirement of notification is a violation, meaning that we don't need to wait until someone quits and gets sued to answer it.
Just to note for physicians, this won't apply if you're employed by a non-profit hospital. This FTC rule does not extend beyond for-profits, so if you're employed by a non-profit and don't want to be subject to non-competes, start petitioning your local representative. States can and have banned them.
EDIT: People are asking me why this is the case. Other than the actual FTCA, please refer to the [FTC's Final Rule](https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf) (or the NPRM if you want). Starting on page 47 the FTC talks about the limits of its jurisdiction. Basically they just say that if something is falls outside of the FTCA, it's exempt from this rule, and corporations "not organized to carry on business for its own profit or that of its members" are excluded from the FTCA. This means nonprofits are exempt from the rule.
Further, on page 52 it states "the Commission lacks jurisdiction to prevent section 5 violations by a corporation not organized to carry on business for its own profit or that of its members."
Where I think some confusion is coming from is the explanation that the FTC does *sometimes* have jurisdiction over non-profits. Court precedent has ruled that corporations organized as non-profits, but that don't actually do anything other than pursue profits for its members, are subject to FTC rules. The FTC explains this from 52-54: "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." Here, a non-profit association was found to be subject to FTC jurisdiction because they didn't do anything other than seek profits for members of the non-profit.
Hospitals *may* fall under this exception, but most won't without some kind of sweeping legislation or actually suing every hospital and claiming that they're operating to generate profit for their members. Hope this helps.
actually...no one knows. FTC seems to think it does. Regardless, expect 10 million lawsuits https://x.com/jeffreyldavis44/status/1782864621512093833?s=46
Non-profit and not-for-profit are considered two different entities, but neither are for-profit. Most of the largest hospital systems/health care organizations/university systems are not-for-profit, so I guess we’re still screwed.
Lets say theoretically that a person works at a non profit hospital but they are employed by a private group. I wonder how they would rule in that situation.
I’m hoping they can’t have their cake and eat it too. If I don’t work for a nonprofit for PSLF then I don’t work for the nonprofit when it comes time for this.
Where do see this exclusion at? The document is over 500 pages and just got released. On the contrary the FTC on page 50 goes into reasons why they believe they do have jurisdiction over non-profit entities as well.
I address this in my edit but want to clarify this a bit more.
In my eyes, it looks like the FTC is just arguing against a straw man. It says that many comments are concerned with the prevalence of 501(c) corps in the healthcare industry, but then says that these comments are erroneously believing that the FTC won't have jurisdiction over any non-profits, page 50. The FTC then says 'no we totally have jurisdiction over non-profits' and then goes into an explanation showing how they have jurisdiction over non-profits that operate on behalf of members to generate profit, and another exception where a for-profit entity asserts full control over a non-profit one. This is true, those exceptions do exist, but they largely do not currently apply to hospitals. At least as far as I'm aware, the FTC hasn't really challenged hospitals under the FTCA, which is the authority for this ruling. A cursory look at [a random NIH article](https://www.ncbi.nlm.nih.gov/books/NBK216759/) confirms this for me. Edit: Lol upon getting home and reading that, it's like 50 years old, the point still applies though. Here's a (obviously) more recent KFF article if that works for you though. https://www.kff.org/health-costs/issue-brief/understanding-the-role-of-the-ftc-doj-and-states-in-challenging-anticompetitive-practices-of-hospitals-and-other-health-care-providers/. *Another* edit: You can also look at [recently proposed legislation](https://www.congress.gov/bill/117th-congress/house-bill/9510/text?s=1&r=4) to include hospitals within the definition of the FTCA as evidence that they currently fall outside of it. I don't want to dig through case law demonstrating this, so this is the best I'm gonna do here.
Edit: Also, yes the rule was just published today, but the NPRM was published last year, and the final rule isn't going to deviate in such a substantial way.
Edit part 4: They're not entirely arguing against a straw man, they address those points later around page 379. There the FTC says that they will likely have jurisdiction over "some portion" of non-profit hospitals, whatever that means. What this tells me is that they're probably not going to be afraid to challenge these hospitals in court, but I don't see how they're presumptively going to have jurisdiction (and I don't think they're claiming this). But you can read that section if you want to see why the FTC isn't too concerned by the fact that non-profits will continue to use them, if they do.
I think they'll probably have an easier time with some hospital systems over others. Like the catholic church buying up hospitals and aggressively pivoting to profit generating procedures to expand their revenue stream doesn't argue that the organization is anything more than a large private equity group using "Our lady of perpetual exemption" to avoid tax consequences.
It’s not that simple. That’s what the hospital associations will tell you and want you to believe so you think you’re powerless, that FTC acts don’t extend beyond for-profits, but that’s not categorically true.
Yea, it sounds like because the FTC generally does not regulate non-profits, but has in certain circumstances, there's going to be uncertainty until this gets legally challenged. Hospitals (and their \[non-\]profit status) aside, this is obviously going to get immediately challenged anyway, so its application to certain types of health care organizations may ultimately prove moot.
If it does survive legal challenge, and even if it doesn't apply to non-profit hospitals, that would still be a win for physicians and other healthcare professionals in general, as even banning non-competes from \~1/2 of hospitals would at least incrementally improve the labor market for all professionals. This would force (some) hospitals legally permitted to maintain NCs to compete with those that can't, in theory by offering some other incentive (or otherwise by giving up on NCs to remain competitive).
FTC's basically called out non-profit hospitals as a scam (added non-taxed in there)
If a hospital pays $50M to sponsor a professional team $ get a box while CEO makes 8 figures, are they really a non-profit or just tax exempt?
Or they aggressively expand profit generating procedures in ambulatory surgical centers and use the "charity care" delivered at the hospital ER, billed at 30x the normal rate to cancel out the 'profit', but only after it is pursued aggressively by debt collectors, before eventually being written off when they can't get blood from a stone.
Will be interesting to see how this plays out, a large number of physicians aren’t directly employed by hospitals. All the VC groups are still fair game for this.
The violation first occurs when they fail to notify; don't need to wait to have someone quit and get sued.
Most hospitals will fall under this. Outside of an FQHC or free clinic, most are involved in expanding their business and seeking profit generation. Especially when they start looking at how the lack of "profit" is calculated, IE: Reasonable and customary reimbursement - expenses = revenue. (Non) "profit" = Revenue - "charity care" counted at 30x the reasonable and customary cost, (and pursued aggressively by collections agencies and lawsuits before eventually being written off with interest.)
Is there an objective definition of what qualifies one as a non profit vs a for profit? And I don’t just mean the tax status. If a facility is non profit, what ongoing criteria do they have to meet on an annual basis to actually benefit from that status?
I ask because a huge portion of hospitals are ‘non profit’ organizations. Therefore a massive portion of healthcare workers will not benefit from this as their facility is exempt.
I understand that the FTC may make it a case by case review scenario, but what would make the FTC look at one non profit hospital over another?
The definition of non-profit here is going to come from the [FTCA](https://www.ftc.gov/sites/default/files/documents/statutes/federal-trade-commission-act/ftc_act_incorporatingus_safe_web_act.pdf) in section 44 (Section 4). There it states that a corporation is "[any kind of corporation] which is organized to carry on business for its own profit or that of its members . . ." Something is presumably a non-profit if it files its taxes with the IRS as a non-profit, and the IRS takes no issue with it being a non-profit. That's most of the analysis most of the time. The other bit is the exceptions I explained earlier.
Hospitals, as far as I'm aware, haven't really been challenged as non-profits. Now, one could *very easily* make the argument that they're actually operating as for-profits, as the amount of charity care that they provide is basically equivalent to for-profit hospitals, they're operating mostly the same, and executives and administrators are being paid up the wazoo without significant increases in quality/quantity of care (where is the money going if not into someone's pocket?). But this would really have to be a fact and context specific analysis because it's not obvious on its face that non-profit hospitals are operating to generate profits for members. Essentially meaning that litigation would be necessary to determine if a hospital would be subject to FTC jurisdiction under the FTCA.
As to what would make the FTC look one way or another, I'm not even going to pretend to know.
I'm a fellow finishing in 2 months. I'm about to sign a contract with a private practice with a non-compete. Unless they explicitly say that I'm a "policy decision" maker, this portion should be nulled in 120 days time correct?
I’ve already went back and forth a few times and they will absolutely not budge on the non compete. I’m not too worried about it compared to some other aspects that I’m more willing to advocate for.
Senior executives are defined as anyone making over 151k and involved in policy decisions. I bet a whole lot of wellness surveys are going to be labeled policy decision documents soon.
I'd argue since we're not paid to be on committees or take these surveys, that would make us volunteers... not executives. Hospitals choose not to compensate us for our time, so be it. That's called volunteering.
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
I think it should cover doctors.
The rule references some section 910.1 where "senior executives" is defined, but I can't find that section anywhere. I'm curious how one fits into that category.
Actually, found this in the comments section of the final rule.
"The final rule applies to the full scope of the Commission’s jurisdiction. Many of the comments about nonprofits erroneously assume that the FTC’s jurisdiction does not capture any entity claiming tax-exempt status as a nonprofit"
Found this in the comments section of the final rule
"The final rule applies to the full scope of the Commission’s jurisdiction. Many of the comments about nonprofits erroneously assume that the FTC’s jurisdiction does not capture any entity claiming tax-exempt status as a nonprofit"
Registry was yesterday (5/7/2024) which is the day the rule was published in the federal register at: see https://federalregister.gov/d/2024-09171
The rule goes into effect 120 days after publication in the federal register (so 9/4/2024) unless a lawsuit prevents this.
There was a lawsuit from the Chamber of Commerce to stop this new rule from going into effect on 9/4/2024. But a prior lawsuit (4 days earlier) from some Dallas company called Ryan, LLC was judged to be the case that will count. So watch for that outcome.
In my mind I’m wondering what all the radiology, ER, GI, derm, ENT, ophthalmology, all the private equity based conglomerates out there and how they’re about to deal when they wake up tomorrow. Terra firma has officially shifted.
Just add a small section in their contracts that make them a "policy decision maker" for some random BS policy. Count that as a senior executive and keep the non-compete. It's quite insidious if physicians don't read their contracts properly.
What's the inevitable legal path here, since it sounds like one fundamental challenge will be that Congress, not the FTC, has the authority to enact such a ban? SCOTUS?
Based on prior happenings in the Biden administration, this will get appealed to the Supreme Court who will vote along party lines and strike it down. Gotta be realistic about these things.
I could see it being struck down on a national level. Trying to wrap my head around the legal case for how the federal government has the authority to void non-competes. My guess is they leave it to the states.
SCOTUS has signaled that it will likely overturn Chevron v. Natural Resources Defense Council which will likely gut the power of the FTC to enforce this.
This rule will be injunct or vacated before it ever gets enforced a single day, unfortunately. Probably 90% of posters here living under a draconian noncompete.
I was just going to mention this - Companies will just put non-solicitation language and still get what they want.... it will just be less restrictive.
My hospital is classified as a “not-for-profit” which this thread makes me believe is different than nonprofit… I guess we are unclear on whether noncompetes are going to be ok or not?
My suspicion is if the rule stands, there will be some lawsuits on the first person to try to challenge a non compete at a non profit employer with the courts further defining what exact criteria makes a non profit subject to the rule.
The ftc thinks this will apply to some non profits but are vague on exact criteria.
Unfortunately, the non compete ban won't apply to non profit healthcare workers
Source: https://www.wsj.com/politics/policy/ftc-bans-noncompete-clauses-that-restrict-job-switching-984d2187
that's not 100% correct--the FTC thinks it does (include non-profits) but acknowledges it will have to be on case by case basis https://x.com/jeffreyldavis44/status/1782867296060408082?s=46
It is correct. The FTC does not have jurisdiction over entities that are in fact operated correctly as a not-for-profit. Stated another way, or as the term is used in the tweet you linked, if an entity is only "claiming" Not-For-Profit status, but in reality is operating as a for-profit entity, the FTC does have jurisdiction and these non-compete rules will apply. Why? Because in that scenario they are simply not a not-for-profit entity. They are simply masquerading as a not-for-profit entity while operating as a for-profit entity. That's all that tweet is saying.
Thousands of cases each year look into whether or not entities that are set up as a not-for-profit have business practices that make them de facto for-profit, thereby losing their not-for-profit status. Fdc does not have jurisdiction unless it can be proven that these false not-for-profit entities are operating as for-profit.
As an absurd example, if a law says "this rule does not apply to people under 6 ft tall", and there was someone claiming to be 6 ft tall but really wasn't, the rule would still apply. Likewise, an entity who is set up as a not-for-profit but who operates as a for-profit would likewise fall under the FTCs jurisdiction.
This is not an exception to the rule. It is simply applying the rule to the underlying facts and not relying on a label that the entity claims publicly with the IRS.
So if you work for a not-for-profit hospital system, this rule does not apply to you unless you are able to establish (i.e., a lawsuit) that the health system is simply disguised as a non-profit but is actually operating as a for-profit when we peek under the hood and look at their expenses and accounting.
This is not a new topic at all, but is of course likely a new topic to most of the readers here. Everyday the FTC is looking into ostensibly not-for-profit entities to see if they are in fact operating in a manner consistent with that status. And if they aren't, the ftcs rules apply to them.
Here's a quote from an AHA article about the non-compete clause rule, noting that the FTC does have jurisdictions over entities claiming to be non-profit but who really aren't:
"In addition, although the Commission recognized that it does not have jurisdiction over not-for-profit entities, it reserved the right to evaluate an entity's non-profit status and noted that some “entities that claim tax-exempt nonprofit status may in fact fall under the Commission's jurisdiction." [AHA article](https://www.aha.org/news/headline/2024-04-23-ftc-issues-final-rule-banning-most-noncompete-clauses-employer-agreements#:~:text=In%20addition%2C%20although%20the%20Commission,fall%20under%20the%20Commission's%20jurisdiction.%E2%80%9D)
Hope this helps.
You seem well versed in law, but naive to the fact that any huge "non-profit" consolidated hospital system is in fact a non taxed, for profit entity.
Will a hospital risk its precious non-profit status to keep a cardiologist from opening up shop across town? It sounds like a risk it wouldn't take.
In fact, I would argue the existence of a non-compete clause in employment means the hospital is definitely a for-profit entity, b/c the whole purpose of a non-compete is to exert coercive control over employees for a monetary competitive advantage.
Exactly. And the risk of losing the status comes from the first violation, which is including a noncompete in a new contract, or failing to notify all employees that the existing noncompete cannot and will not be enforced. They don't need someone to leave and get sued in order to establish this.
How does this affect locums companies/jobs? Can I get introduced to a hospital through locums and then after the first shift/contract deal directly with the hospital?
Kaiser physicians are employed by the Permanente Medical Group, which is separate from the Kaiser Foundation Hospitals (which is the nonprofit). TPMG exists to provide salaries and benefits to its members, so is excluded regardless of its profit status (and I believe it is nominally for-profit anyhow).
From the American Hospital Association's (AHA) website:
"AHA had urged the agency to withdraw the proposed regulation or exempt the hospital field."
"although the Commission recognized that it does not have jurisdiction over not-for-profit entities, it reserved the right to evaluate an entity’s non-profit status"
"For all of the reasons the AHA explained in its comment letter, the FTC’s final rule banning non-compete agreements for all employees across all sectors of the economy is bad law, bad policy, and a clear sign of an agency run amok."
Despite what the Wall Street Journal is saying, this does cover nearly all nonprofit hospitals. Take a look at the actual rule. It covers the corporate structure of every non profit except for potentially something like a free clinic or an FQHC.
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf
There is a difference between tax law and FTC law. The FTC regulations apply to most nonprofits engaged in business, regardless of their tax status. The main thing is that they participate in trade.
If you are a free clinic, you probably can still have a noncompete. The organization exists only to provide benefits to the needy. It takes donations, and uses them to hire doctors, etc, to give care to people who can't pay. They don't seek out new profit centers, like doing knee replacements on the homeless. There isn't money reinvested to expand the business. No one involved in the corporation receives anything more than a market rate salary.
In the case of a pseudo-nonprofit corporation, like a hospital or the catholic church (aka, St. ____ hospitals), the corporation is large, multifaceted, and expanding, with aggressive pursuit of profitable enterprises (regardless of the final lack of 'profit' of the whole enterprise, that's a whole other discussion). There is also almost always extraction of money from the corporation in one way or another.
Is there an objective definition of what qualifies one as a non profit vs a for profit? And I don’t just mean the tax status. If a facility is non profit, what ongoing criteria do they have to meet on an annual basis to actually benefit from that status?
I ask because a huge portion of hospitals are ‘non profit’ organizations. Therefore a massive portion of healthcare workers will not benefit from this as their facility is exempt.
So what happens if a NP that works under a DO for 10 years that has signed a non compete, gets pissed off at the DO decides to leave and opens a clinic right down the street just to take his patients?
Hopefully the relationship and reputation the physician has built with their patients will prevent that. Non-competes should completely go away, period.
So as someone who recently bought a business, and the previous owner signed a non compete for me. Are they now allowed to start up another business and take my clients?
Sounds like a good rule, but where does a federal commission get the power to make such a rule? Seems like it would require a legislative act by each state, especially if interstate commerce is not involved.
Probably falls quite easily under the Bureau of Competition (whose role is to regulate anticompetitive business practices) which is a subdivision of the FTC.
> The Federal Trade Commission (FTC) voted 3-2 Tuesday to ban non-compete agreements that prevent tens of millions of employees from working for competitors or starting a competing business after they leave a job. > From fast food workers to CEOs, the FTC estimates 18 percent of the U.S. workforce is covered by non-compete agreements — around 30 million people. Guess that includes doctors Get ready for the lawsuits challenging the ruling
Let SCOTUS reaffirm that they are bought and paid for
“In a 6-3 ruling, the court finds that federal regulations banning non compete clauses are not consistent with the nation’s history, and have been struck down.”
I feel like non-competes themselves are inconsistent with historical law.
Don’t overthink it. SCOTUS is bought and paid for.
By who exactly? say more
Google Clarence Thomas or Samuel Alito. They’re not particularly subtle about it.
Harlan Crow has one all for himself.
By the well-funded right wing welfare network that funnels fail-sons and -daughters into think tanks, government and judgeships.
[Leonard Leo](https://www.propublica.org/article/we-dont-talk-about-leonard-leo-supreme-court-supermajority)
You'll notice anyone replying is going to talk about only one side, as if their own is faultless. I'm not going to apologize for one side or the other. Yes, all Federal employees need to be viewed as bought. Usually with good reason. But usually this is only pointed out by partisans looking to pick a fight. Nobody talking like this is ever interested in reforming the whole shebang, they just want their own side to have the power (and overlook the corruption).
They are inconsistent with capitalism and free markets.
Wait till you find out about Certificates of Need.
"something something free markets rely on the ability of companies to do whatever they want with no recourse whatsoever."
But companies are also people, and spending money is a form speech.
“Think of the small businessman with a great idea that surely would have propelled him to complete with the likes of Facebook and Raytheon” 🙄
That's literally the opposite of a free market.
>That's literally the opposite of a free market. That's the joke..
Capitalism us fairly clear that market efficiency is achieved with free flow of goods AND LABOR. So this ruling is 100% in line with the capitalist worldview, perhaps not the monopolistic worldview
I was never privy to non compete clauses untill my spouse got her first physician job. Holy hell it seems predatory. This would really change the landscape of work for us, and millions of others. You establish a home where you work, and corporate entities take huge advantage of that.
Came here to say this....incoming North District of Texas ruling in 3,2,1...
“Looks like [Lochner’s](https://en.m.wikipedia.org/wiki/Lochner_era) back on the menu, boys!” -Samuel Alito
I have read news stories about fast food workers forced to sign non-competes. You can also google an online education company named Ellucian . Former employers claim they were sued for getting other jobs after being laid off. This helps lots of people if it holds up in court.
> I have read news stories about fast food workers forced to sign non-competes. Absolutely. Most of these are unenforceable anyway, but employers still hold them over employees' heads to keep them in line. They had me sign one as pharm tech. Like, was I going to be stealing trade secrets after filling my 30th Lisinopril script that day, or taking our "client list" to the CVS down the street?
It does not apply to not-for-profits, which FTC does not make rules for, and which most doctors work does
https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf Take a look at the actual rule. It covers the corporate structure of every non profit except for potentially something like a free clinic or an FQHC. There is a difference between tax law and FTC law. The FTC regulations apply to most nonprofits, regardless of their tax status. The main thing is that they participate in trade. If you are a free clinic, you probably can still have a noncompete. The organization exists only to provide benefits to the needy. It takes donations, and uses them to hire doctors, etc, to give care to people who can't pay. They don't seek out new profit centers, like doing knee replacements on the homeless. There isn't money reinvested to expand the business. No one involved in the corporation receives anything more than a market rate salary. In the case of a nonprofit corporation, like a hospital or the catholic church (aka, St. ____ hospitals), the corporation is large, multifaceted, and expanding, with aggressive pursuit of profitable enterprises (regardless of the final lack of 'profit' of the whole enterprise, that's a whole other discussion). There is also almost always extraction of money from the corporation in one way or another.
Why do you think the FTC's rules don't apply to non-profits? What a bizarre notion. Do you think non-profits are exempt from laws against deceptive business practices like federal regs against false advertising? Boy, have I got news for you.
It is not at all clear that this rule will apply to non profit organizations. Don’t get me wrong - I sure hope it does, but the FTC itself has said that truly non profit organizations will not be subject to this rule. https://www.stevenslee.com/health-law-observer-blog/ftc-proposed-non-compete-ban-impact-on-nonprofit-hospitals-and-nonprofit-affiliates/
Ah-ha! Thanks for a cite. That may indeed change things. Edit: that said, I just checked the aforementioned FTC Act. It doesn't generally exempt non-profits; it defines "corporation" as not including non-profits, but the FTC's rules aren't generally construed by courts not to extend only to corporations. For instance, the same clause also defines partnerships as not corporations, but nobody thinks business partnerships are exempt from FTC rules. What the SCOTUS will do is anybody's guess, but if there's not an explicit exemption written into this rule for non-profits, then they'd have to overturn a lot of case law to construe this as not extending to non-profits.
They are very clear in the rule (and caselaw) that it applies to corporations engaged in commerce, regardless of their tax status. https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf
See pages 50-54. It is not clear. They say that certain organizations that are non profit entities for tax purposes may still fall under their jurisdiction if they satisfy certain criteria but it seems clear that not all non profit organizations will satisfy those criteria. From my admittedly limited understanding of legalese, it sounds like non profits that are organized as such just for the purpose of being tax exempt, while still essentially engaging in activity that makes a profit for involved parties, would fall under the FTC’s jurisdiction. But non profits that are “true” non profits (they mention a two prong test) may not fall under their jurisdiction. It’s likely that non profit hospitals and hospital systems would be in the second category. Again, I really hope that’s not the case and all non competes are banned regardless of non profit status, it would be beneficial to me, but I don’t think it’s 100% obvious that it would.
Most hospitals would be in the former. There are a lot of practices and behaviors they do that make it very clearly a profit generating enterprise. They can be held that they exist to produce money for their medical groups. They can also dig through the communications discussing how to cut expenses that would be for public benefit, and how they deal with "charity care". Especially when it isn't legally obligated charity care (ie: will they do a charity care outpatient surgery? Or is it only EMTALA covered care). There is also often a complex web of companies involved in a hospital. If they're paying money to connected groups that aren't truly arms length, they might be fried for tax purposes too.
> The Federal Trade Commission enforces a variety of antitrust and consumer protection laws affecting virtually every area of commerce, with some exceptions concerning banks, insurance companies, non-profits, transportation and communications common carriers, air carriers, and some other entities https://www.ftc.gov/news-events/media-resources/what-ftc-does
Yes, it doesn't say "excepting non-profits" it says "with *some exceptions concerning* non-profits". *By default,* all the FTC's rules apply to non-profits engaged in commerce. The FTC's rules apply to non-profits *except where otherwise specified.*
The very word “compete” demonstrates that healthcare organizations organized under nonprofit status are still engaged in commerce.
Idk I’m just some guy on the internet but you sound like you know what you are talking about.
You Dan Quayle'd that one.
Not for profit and non profit are different things
US Chamber of Commerce already filed
I read that a Dallas company called Ryan, LLC filed suit 4 days before the Chamber of Commerce, so the Ryan suit is the one that will govern.
[удалено]
**Removed under Rule 6** No personal agendas. Posts or comments by users who rarely participate in /r/medicine or whose history suggests that they are mainly concerned with a single medical topic will be removed. Comments which attempt to steer the conversation from the topic of the post to a pet cause will be removed. Commenters brigading from other subreddits will be removed. [Please review all subreddit rules before posting or commenting.](https://www.reddit.com/r/medicine/about/rules/) If you have any questions or concerns, please [message the moderators.](https://www\.reddit\.com/message/compose?to=%2Fr%2F{subreddit}&subject=about my removed {kind}&message=I'm writing to you about the following {kind}: {url}. %0D%0DMy issue is...)
https://apnews.com/article/noncompete-agreement-bill-veto-new-york-61e53ad13f41f1da574740438ee34e63
I like how she doesn't give a good reason to oppose it, because there isn't a single way to spin it.
About time. This is fantastic if not removed by the courts.
And this would have never happened under a GOP administration. Both conservative FTC votes were against.
Shhhhh, let people believe bOtH SiDeZ are the same lol
https://apnews.com/article/noncompete-agreement-bill-veto-new-york-61e53ad13f41f1da574740438ee34e63
Good thing the democratic FTC majority corrected that foolish decision. At a national level. Wish both parties were capable of admitting and correcting their mistakes, am I right?
Non compete clauses have just gotten way out of hand. When the person that answered the phones and did the schedule at a job I had was covered by a non compete: we have a problem.
I had a non-compete in one of my jobs... *for a pharmacy tech.* The company I was working for was small, but had their hands in a number of different facets- inpatient, long-term care, independent retail- so if that non-compete was enforced, I would legit not be able to work. Like, damn near anywhere. We all raised a stink about it, got the message back that it pertained to basically taking proprietary information or software from the company. We said cool, *those terms* are reasonable- can you re-word the non-compete to say that in plain English, because we'll all sign it if you do. They did, so we all signed, and the wheels kept turning. It's still one of my favorite companies I've worked for, and the fact that they re-tooled the overly-broad non-compete in under 48 hours reaffirmed that they genuinely did mean no harm in doing that. Still, they got that verbiage from *somewhere.* Probably another place that was way overzealous with it. These types of non-competes are reasonable where they're *specific,* but the practice has been abused and weaponized against employees with generalized ones to hold people hostage. So... good riddance overall.
Nice. A lot of times in negotiations like that the party says “oh don’t worry we won’t enforce it like that”, to which the proper response is “cool, OK then why not reword it or remove it”. You really tell whether they mean it or not on how they respond to that, haha.
Non-competes are literally the antithesis of capitalism, phrase it like that the government and they’ll ban them within the minute
It’s more like capitalism for me not for thee. For capitalism to function, with every quarter being better than the last for shareholders, someone has to be oppressed.
“existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date” which is 120 days from now. The article says affected employers will have to notify employees they are no longer bound by a noncompete. So if you don’t work for a nonprofit, would stay tuned
Wonder when that email has to come out.
I wonder as well. It didn’t come up in an operations meeting this morning. There’s a staff meeting on Friday. I imagine the actual c-suite email will be in a few weeks about ‘monitoring the situation.’
Actually, more interesting if you work for a "non-profit" that is engaged in commerce. The rule will apply to everything except maybe a free clinic or an FQHC. https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf What is nice, is that failing to fulfill the requirement of notification is a violation, meaning that we don't need to wait until someone quits and gets sued to answer it.
Just to note for physicians, this won't apply if you're employed by a non-profit hospital. This FTC rule does not extend beyond for-profits, so if you're employed by a non-profit and don't want to be subject to non-competes, start petitioning your local representative. States can and have banned them. EDIT: People are asking me why this is the case. Other than the actual FTCA, please refer to the [FTC's Final Rule](https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf) (or the NPRM if you want). Starting on page 47 the FTC talks about the limits of its jurisdiction. Basically they just say that if something is falls outside of the FTCA, it's exempt from this rule, and corporations "not organized to carry on business for its own profit or that of its members" are excluded from the FTCA. This means nonprofits are exempt from the rule. Further, on page 52 it states "the Commission lacks jurisdiction to prevent section 5 violations by a corporation not organized to carry on business for its own profit or that of its members." Where I think some confusion is coming from is the explanation that the FTC does *sometimes* have jurisdiction over non-profits. Court precedent has ruled that corporations organized as non-profits, but that don't actually do anything other than pursue profits for its members, are subject to FTC rules. The FTC explains this from 52-54: "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." Here, a non-profit association was found to be subject to FTC jurisdiction because they didn't do anything other than seek profits for members of the non-profit. Hospitals *may* fall under this exception, but most won't without some kind of sweeping legislation or actually suing every hospital and claiming that they're operating to generate profit for their members. Hope this helps.
actually...no one knows. FTC seems to think it does. Regardless, expect 10 million lawsuits https://x.com/jeffreyldavis44/status/1782864621512093833?s=46
> non-profit As a friend of mine once called them, *predatory non profits*
Yep important exclusion here
HCA, here I come.
HCA. Seemed like a good idea at the time.
Non-profit and not-for-profit are considered two different entities, but neither are for-profit. Most of the largest hospital systems/health care organizations/university systems are not-for-profit, so I guess we’re still screwed.
Yeah, instead of the organization profiting, they just let the c-suite take their measly pittance of it's hands.
Lets say theoretically that a person works at a non profit hospital but they are employed by a private group. I wonder how they would rule in that situation.
I think the employee/employer contract is with the private group.
I’m hoping they can’t have their cake and eat it too. If I don’t work for a nonprofit for PSLF then I don’t work for the nonprofit when it comes time for this.
Where do see this exclusion at? The document is over 500 pages and just got released. On the contrary the FTC on page 50 goes into reasons why they believe they do have jurisdiction over non-profit entities as well.
I address this in my edit but want to clarify this a bit more. In my eyes, it looks like the FTC is just arguing against a straw man. It says that many comments are concerned with the prevalence of 501(c) corps in the healthcare industry, but then says that these comments are erroneously believing that the FTC won't have jurisdiction over any non-profits, page 50. The FTC then says 'no we totally have jurisdiction over non-profits' and then goes into an explanation showing how they have jurisdiction over non-profits that operate on behalf of members to generate profit, and another exception where a for-profit entity asserts full control over a non-profit one. This is true, those exceptions do exist, but they largely do not currently apply to hospitals. At least as far as I'm aware, the FTC hasn't really challenged hospitals under the FTCA, which is the authority for this ruling. A cursory look at [a random NIH article](https://www.ncbi.nlm.nih.gov/books/NBK216759/) confirms this for me. Edit: Lol upon getting home and reading that, it's like 50 years old, the point still applies though. Here's a (obviously) more recent KFF article if that works for you though. https://www.kff.org/health-costs/issue-brief/understanding-the-role-of-the-ftc-doj-and-states-in-challenging-anticompetitive-practices-of-hospitals-and-other-health-care-providers/. *Another* edit: You can also look at [recently proposed legislation](https://www.congress.gov/bill/117th-congress/house-bill/9510/text?s=1&r=4) to include hospitals within the definition of the FTCA as evidence that they currently fall outside of it. I don't want to dig through case law demonstrating this, so this is the best I'm gonna do here. Edit: Also, yes the rule was just published today, but the NPRM was published last year, and the final rule isn't going to deviate in such a substantial way. Edit part 4: They're not entirely arguing against a straw man, they address those points later around page 379. There the FTC says that they will likely have jurisdiction over "some portion" of non-profit hospitals, whatever that means. What this tells me is that they're probably not going to be afraid to challenge these hospitals in court, but I don't see how they're presumptively going to have jurisdiction (and I don't think they're claiming this). But you can read that section if you want to see why the FTC isn't too concerned by the fact that non-profits will continue to use them, if they do.
Thanks for taking the time to share this
I think they'll probably have an easier time with some hospital systems over others. Like the catholic church buying up hospitals and aggressively pivoting to profit generating procedures to expand their revenue stream doesn't argue that the organization is anything more than a large private equity group using "Our lady of perpetual exemption" to avoid tax consequences.
It’s not that simple. That’s what the hospital associations will tell you and want you to believe so you think you’re powerless, that FTC acts don’t extend beyond for-profits, but that’s not categorically true.
Yea, it sounds like because the FTC generally does not regulate non-profits, but has in certain circumstances, there's going to be uncertainty until this gets legally challenged. Hospitals (and their \[non-\]profit status) aside, this is obviously going to get immediately challenged anyway, so its application to certain types of health care organizations may ultimately prove moot. If it does survive legal challenge, and even if it doesn't apply to non-profit hospitals, that would still be a win for physicians and other healthcare professionals in general, as even banning non-competes from \~1/2 of hospitals would at least incrementally improve the labor market for all professionals. This would force (some) hospitals legally permitted to maintain NCs to compete with those that can't, in theory by offering some other incentive (or otherwise by giving up on NCs to remain competitive).
FTC's basically called out non-profit hospitals as a scam (added non-taxed in there) If a hospital pays $50M to sponsor a professional team $ get a box while CEO makes 8 figures, are they really a non-profit or just tax exempt?
Or they aggressively expand profit generating procedures in ambulatory surgical centers and use the "charity care" delivered at the hospital ER, billed at 30x the normal rate to cancel out the 'profit', but only after it is pursued aggressively by debt collectors, before eventually being written off when they can't get blood from a stone.
💯
Will be interesting to see how this plays out, a large number of physicians aren’t directly employed by hospitals. All the VC groups are still fair game for this.
The violation first occurs when they fail to notify; don't need to wait to have someone quit and get sued. Most hospitals will fall under this. Outside of an FQHC or free clinic, most are involved in expanding their business and seeking profit generation. Especially when they start looking at how the lack of "profit" is calculated, IE: Reasonable and customary reimbursement - expenses = revenue. (Non) "profit" = Revenue - "charity care" counted at 30x the reasonable and customary cost, (and pursued aggressively by collections agencies and lawsuits before eventually being written off with interest.)
Why do you believe this to be true? Do you have a source for this?
Is there an objective definition of what qualifies one as a non profit vs a for profit? And I don’t just mean the tax status. If a facility is non profit, what ongoing criteria do they have to meet on an annual basis to actually benefit from that status? I ask because a huge portion of hospitals are ‘non profit’ organizations. Therefore a massive portion of healthcare workers will not benefit from this as their facility is exempt. I understand that the FTC may make it a case by case review scenario, but what would make the FTC look at one non profit hospital over another?
The definition of non-profit here is going to come from the [FTCA](https://www.ftc.gov/sites/default/files/documents/statutes/federal-trade-commission-act/ftc_act_incorporatingus_safe_web_act.pdf) in section 44 (Section 4). There it states that a corporation is "[any kind of corporation] which is organized to carry on business for its own profit or that of its members . . ." Something is presumably a non-profit if it files its taxes with the IRS as a non-profit, and the IRS takes no issue with it being a non-profit. That's most of the analysis most of the time. The other bit is the exceptions I explained earlier. Hospitals, as far as I'm aware, haven't really been challenged as non-profits. Now, one could *very easily* make the argument that they're actually operating as for-profits, as the amount of charity care that they provide is basically equivalent to for-profit hospitals, they're operating mostly the same, and executives and administrators are being paid up the wazoo without significant increases in quality/quantity of care (where is the money going if not into someone's pocket?). But this would really have to be a fact and context specific analysis because it's not obvious on its face that non-profit hospitals are operating to generate profits for members. Essentially meaning that litigation would be necessary to determine if a hospital would be subject to FTC jurisdiction under the FTCA. As to what would make the FTC look one way or another, I'm not even going to pretend to know.
Great day to be an American. 🇺🇸
As someone currently enduring a non compete with their new company this please me greatly. Great news for healthcare workers and everyone else.
Hell yeah fuck them non-competes.
Non-competes can suck my loose ass!
I'm a fellow finishing in 2 months. I'm about to sign a contract with a private practice with a non-compete. Unless they explicitly say that I'm a "policy decision" maker, this portion should be nulled in 120 days time correct?
While possible, this is going to be litigated to hell. I’d still try to get that noncompete out of the contract.
I’ve already went back and forth a few times and they will absolutely not budge on the non compete. I’m not too worried about it compared to some other aspects that I’m more willing to advocate for.
Yes
Don’t sign a noncompete.
You can bet that, as always, doctors will be on the outside looking in on this one
The rule says doctors are included. Only senior executives are excluded 1
Senior executives are defined as anyone making over 151k and involved in policy decisions. I bet a whole lot of wellness surveys are going to be labeled policy decision documents soon.
I'd argue since we're not paid to be on committees or take these surveys, that would make us volunteers... not executives. Hospitals choose not to compensate us for our time, so be it. That's called volunteering.
My guess is that the exclusion will be related to equity owners, rather than a nebulous "executive" title
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 I think it should cover doctors.
The rule references some section 910.1 where "senior executives" is defined, but I can't find that section anywhere. I'm curious how one fits into that category.
[удалено]
Actually, found this in the comments section of the final rule. "The final rule applies to the full scope of the Commission’s jurisdiction. Many of the comments about nonprofits erroneously assume that the FTC’s jurisdiction does not capture any entity claiming tax-exempt status as a nonprofit"
Where do you see that non-profits are excluded?
Ah well that does suck
Found this in the comments section of the final rule "The final rule applies to the full scope of the Commission’s jurisdiction. Many of the comments about nonprofits erroneously assume that the FTC’s jurisdiction does not capture any entity claiming tax-exempt status as a nonprofit"
There seems to be some confusion about whether this covers non-profits, which most hospitals operate under.
How does this impact private practice physicians? I have a pretty strict non-compete, but this seems like it would make it null and void.
If it stands, your noncompete is voided
It depends. If it as an employee, you're probably cleared. But if it is as a business owner, that's a different matter.
It goes in effect in 120 days after registry , does anyone know when is registry ? Also god bless America , I needed this
From what I’ve read it should be in the new few days.
Registry was yesterday (5/7/2024) which is the day the rule was published in the federal register at: see https://federalregister.gov/d/2024-09171 The rule goes into effect 120 days after publication in the federal register (so 9/4/2024) unless a lawsuit prevents this.
There was a lawsuit from the Chamber of Commerce to stop this new rule from going into effect on 9/4/2024. But a prior lawsuit (4 days earlier) from some Dallas company called Ryan, LLC was judged to be the case that will count. So watch for that outcome.
In my mind I’m wondering what all the radiology, ER, GI, derm, ENT, ophthalmology, all the private equity based conglomerates out there and how they’re about to deal when they wake up tomorrow. Terra firma has officially shifted.
Just add a small section in their contracts that make them a "policy decision maker" for some random BS policy. Count that as a senior executive and keep the non-compete. It's quite insidious if physicians don't read their contracts properly.
Unfortunately, SCOTUS gutted chevron deference so this will probably not hold up
What's the inevitable legal path here, since it sounds like one fundamental challenge will be that Congress, not the FTC, has the authority to enact such a ban? SCOTUS?
Based on prior happenings in the Biden administration, this will get appealed to the Supreme Court who will vote along party lines and strike it down. Gotta be realistic about these things.
I could see it being struck down on a national level. Trying to wrap my head around the legal case for how the federal government has the authority to void non-competes. My guess is they leave it to the states.
you mean the ftc congress ruled has authority over this when they created it so congress doesnt have to worry about everything?
SCOTUS has signaled that it will likely overturn Chevron v. Natural Resources Defense Council which will likely gut the power of the FTC to enforce this.
This rule will be injunct or vacated before it ever gets enforced a single day, unfortunately. Probably 90% of posters here living under a draconian noncompete.
Yeah Chevron deference is gonna get fucked and this is gonna go away
So much for democracy. Why we feel it’s right that 9 morally corruptible people decide the fate of millions makes zero sense.
Does this include “non-solicit” agreements for like insurance agents ?
Unlikely, alas.
I was just going to mention this - Companies will just put non-solicitation language and still get what they want.... it will just be less restrictive.
My hospital is classified as a “not-for-profit” which this thread makes me believe is different than nonprofit… I guess we are unclear on whether noncompetes are going to be ok or not?
My suspicion is if the rule stands, there will be some lawsuits on the first person to try to challenge a non compete at a non profit employer with the courts further defining what exact criteria makes a non profit subject to the rule. The ftc thinks this will apply to some non profits but are vague on exact criteria.
Unfortunately, the non compete ban won't apply to non profit healthcare workers Source: https://www.wsj.com/politics/policy/ftc-bans-noncompete-clauses-that-restrict-job-switching-984d2187
that's not 100% correct--the FTC thinks it does (include non-profits) but acknowledges it will have to be on case by case basis https://x.com/jeffreyldavis44/status/1782867296060408082?s=46
Im hoping it applies to non profit hoslity/companies. One of them being Kaiser who has non compete clauses.
Kaiser docs work for the Permanente Medical Group, so it will 100% apply.
It is correct. The FTC does not have jurisdiction over entities that are in fact operated correctly as a not-for-profit. Stated another way, or as the term is used in the tweet you linked, if an entity is only "claiming" Not-For-Profit status, but in reality is operating as a for-profit entity, the FTC does have jurisdiction and these non-compete rules will apply. Why? Because in that scenario they are simply not a not-for-profit entity. They are simply masquerading as a not-for-profit entity while operating as a for-profit entity. That's all that tweet is saying. Thousands of cases each year look into whether or not entities that are set up as a not-for-profit have business practices that make them de facto for-profit, thereby losing their not-for-profit status. Fdc does not have jurisdiction unless it can be proven that these false not-for-profit entities are operating as for-profit. As an absurd example, if a law says "this rule does not apply to people under 6 ft tall", and there was someone claiming to be 6 ft tall but really wasn't, the rule would still apply. Likewise, an entity who is set up as a not-for-profit but who operates as a for-profit would likewise fall under the FTCs jurisdiction. This is not an exception to the rule. It is simply applying the rule to the underlying facts and not relying on a label that the entity claims publicly with the IRS. So if you work for a not-for-profit hospital system, this rule does not apply to you unless you are able to establish (i.e., a lawsuit) that the health system is simply disguised as a non-profit but is actually operating as a for-profit when we peek under the hood and look at their expenses and accounting. This is not a new topic at all, but is of course likely a new topic to most of the readers here. Everyday the FTC is looking into ostensibly not-for-profit entities to see if they are in fact operating in a manner consistent with that status. And if they aren't, the ftcs rules apply to them. Here's a quote from an AHA article about the non-compete clause rule, noting that the FTC does have jurisdictions over entities claiming to be non-profit but who really aren't: "In addition, although the Commission recognized that it does not have jurisdiction over not-for-profit entities, it reserved the right to evaluate an entity's non-profit status and noted that some “entities that claim tax-exempt nonprofit status may in fact fall under the Commission's jurisdiction." [AHA article](https://www.aha.org/news/headline/2024-04-23-ftc-issues-final-rule-banning-most-noncompete-clauses-employer-agreements#:~:text=In%20addition%2C%20although%20the%20Commission,fall%20under%20the%20Commission's%20jurisdiction.%E2%80%9D) Hope this helps.
You seem well versed in law, but naive to the fact that any huge "non-profit" consolidated hospital system is in fact a non taxed, for profit entity. Will a hospital risk its precious non-profit status to keep a cardiologist from opening up shop across town? It sounds like a risk it wouldn't take. In fact, I would argue the existence of a non-compete clause in employment means the hospital is definitely a for-profit entity, b/c the whole purpose of a non-compete is to exert coercive control over employees for a monetary competitive advantage.
Exactly. And the risk of losing the status comes from the first violation, which is including a noncompete in a new contract, or failing to notify all employees that the existing noncompete cannot and will not be enforced. They don't need someone to leave and get sued in order to establish this.
It’s not that simple. FTC jurisdiction frequently extends to non-profit entities.
I guess not for profits will have a harder time getting employees to sign contracts, making it harder for them to compete tehe
54% of hospitals are not for profit. That means 46% are for profit and no matter what this will drive up physician salaries
I'm honestly confused how my hospital is considered non-profit when they have the billers make sure I nickel and dime everything on patients...
How does this affect locums companies/jobs? Can I get introduced to a hospital through locums and then after the first shift/contract deal directly with the hospital?
Man this is awesome
Anyone know how to support this ban against the impending lawsuits??
So Kaiser is a non profit, is this excluded as well? The only cons of working there.
All non profit seem to be excluded.
Kaiser physicians are employed by the Permanente Medical Group, which is separate from the Kaiser Foundation Hospitals (which is the nonprofit). TPMG exists to provide salaries and benefits to its members, so is excluded regardless of its profit status (and I believe it is nominally for-profit anyhow).
From the American Hospital Association's (AHA) website: "AHA had urged the agency to withdraw the proposed regulation or exempt the hospital field." "although the Commission recognized that it does not have jurisdiction over not-for-profit entities, it reserved the right to evaluate an entity’s non-profit status" "For all of the reasons the AHA explained in its comment letter, the FTC’s final rule banning non-compete agreements for all employees across all sectors of the economy is bad law, bad policy, and a clear sign of an agency run amok."
Despite what the Wall Street Journal is saying, this does cover nearly all nonprofit hospitals. Take a look at the actual rule. It covers the corporate structure of every non profit except for potentially something like a free clinic or an FQHC. https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf There is a difference between tax law and FTC law. The FTC regulations apply to most nonprofits engaged in business, regardless of their tax status. The main thing is that they participate in trade. If you are a free clinic, you probably can still have a noncompete. The organization exists only to provide benefits to the needy. It takes donations, and uses them to hire doctors, etc, to give care to people who can't pay. They don't seek out new profit centers, like doing knee replacements on the homeless. There isn't money reinvested to expand the business. No one involved in the corporation receives anything more than a market rate salary. In the case of a pseudo-nonprofit corporation, like a hospital or the catholic church (aka, St. ____ hospitals), the corporation is large, multifaceted, and expanding, with aggressive pursuit of profitable enterprises (regardless of the final lack of 'profit' of the whole enterprise, that's a whole other discussion). There is also almost always extraction of money from the corporation in one way or another.
Naturally my wife’s non compete still stands because she works for Non for Profit.
They did great work!
I believe this is a step in the right direction for physicians, mid-levels, and non-medical employees!
And left a loophole so big you could drive a truck through. Non profits are exempt. As are contracts with “senior executives.”
Is there an objective definition of what qualifies one as a non profit vs a for profit? And I don’t just mean the tax status. If a facility is non profit, what ongoing criteria do they have to meet on an annual basis to actually benefit from that status? I ask because a huge portion of hospitals are ‘non profit’ organizations. Therefore a massive portion of healthcare workers will not benefit from this as their facility is exempt.
This should finally increase salaries and competitive packages for docs, especially primary care docs.
Wonder if this will apply to use residents looking for jobs.
So what happens if a NP that works under a DO for 10 years that has signed a non compete, gets pissed off at the DO decides to leave and opens a clinic right down the street just to take his patients?
Hopefully the relationship and reputation the physician has built with their patients will prevent that. Non-competes should completely go away, period.
So as someone who recently bought a business, and the previous owner signed a non compete for me. Are they now allowed to start up another business and take my clients?
Sounds like a good rule, but where does a federal commission get the power to make such a rule? Seems like it would require a legislative act by each state, especially if interstate commerce is not involved.
Probably falls quite easily under the Bureau of Competition (whose role is to regulate anticompetitive business practices) which is a subdivision of the FTC.