HomeCareCon Key Takeaways: Non-Compete Regulations in Home Care

HomeCareCon Key Takeaways: Non-Compete Regulations in Home Care

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Mike Paladino: Welcome to the CareSmartz360 on Air, a home care podcast.

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Mike Paladino: I’m Mike Paladino, a senior account executive here at Caresmartz.

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Mike Paladino: Today we’re tackling a topic that’s sending shockwaves through the home care industry

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Mike Paladino: as of April 2024. The Federal Trade Commission has effectively banned non-compete agreements in various industries, including homecare.

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Mike Paladino: That’s right. The rules of the game have changed, and it’s time for home care. Providers to adapt

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Mike Paladino: for years. Non-compete agreements have been a staple in employment contracts aimed at protecting businesses from competitors and preserving trade secrets, of course.

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Mike Paladino: but with this new regulation the Ftc. Is prioritizing worker mobility competition. And of course, innovation.

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Mike Paladino: So what does that mean for home care providers? How will they need to adjust their strategies to comply with new rules, and what opportunities might arise from the shift

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Mike Paladino: in this episode. We’ll explore the significance of adapting to evolving non-compete regulations in home care.

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Mike Paladino: We’ll discuss the implications of this ban

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Mike Paladino: the benefits and challenges it presents, and what home care providers can do

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Mike Paladino: to stay ahead of the curve.

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Mike Paladino: So let’s dive in and get started.

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Mike Paladino: Our expert guest today is Will Cantrell, a seasoned attorney and expert in competition, injury, and workplace disputes.

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Mike Paladino: and I’ll join us to know, share the insights on the topics aforementioned before.

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Mike Paladino: With over 13 years of experience in private practice, Will has represented leading companies and individuals in high stakes, business disputes, including employee, mobility, and non-compete agreements.

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Mike Paladino: As a founding member of Cantrell Schuette, a law firm known for its world class service and innovative fee structures, will bring a wealth of knowledge and expertise to our conversation today.

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Mike Paladino: Welcome to the podcast Will.

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Will: Hey? I appreciate it, Mike, and Happy Friday to you, and

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Will: I appreciate, you know, having me on board here. timing. The timing is certainly ideal. I was speaking at a

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Will: a different and a different forum just last week to a

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Will: a number of home care executives

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Will: throughout the nation. In my home State of Florida

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Will: or let me rephrase that my home states Georgia. But I’ve been residing in Florida for quite a while now, and I practice in Georgia and Florida.

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Mike Paladino: Awesome.

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Will: But yeah, to a couple of things first.st in my background, our practice is effectively employment, law and business litigation. But within those very broad, you know, kind of umbrella terms over 50% of what we do all day. Every day is providing guidance and litigation. Counsel to

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Will: companies, executives and workers relating to employee mobility issues. And that’s again, it’s a fancy way of saying restrictive comments now competes non solicits ndas, trade secrets things of that nature so effectively, people in transition, or the companies dealing with folks in transition, or both, coming into the company and leaving the whole healthcare agency.

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Will: regarding the Ftc. Ban. I’ll certainly give a highlight of it. But to, you know, lead with what I think is probably the most important aspect of this is the question of whether it’s going to become effective. In the 1st place

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Will: this is something that obviously made a big splash at the beginning of the year the Ftc. Actually 1st noted they were gonna be issuing a rule. Early last year they took their time as they should have rolled out the proposed rule. That was early this year. With an effective date as of right. Now, I believe it’s September one or September 4, th

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Will: regardless a court in Texas has already come out and indicated they will likely be issuing a national ban at some point in August.

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Will: A different Federal court came out just last week in Pennsylvania and said that you know this band just fine, it can proceed. So what happens in those situations? Well, 1st well, it’s likely. Gonna happen, you know, I can’t guarantee any of this, but I’m certainly watching it closely. I expect

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Will: the court in Texas to issue that national ban at some point in August. I expect this. And then at that point either one or 2 things are going to happen.

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Will: Either this will make its way up to the Us. Supreme Court, where there’s no guarantee. But

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Will: most people who watch this closely. Both this specific law as well. A proposed law, you know law to be as well as the current trends in the Us. Supreme Court, we’d expect the Us. Supreme Court to strike this down as an overreach by the Ftc. In which case you’d be left with what you currently have, which is 50 States with 50 different, slightly rules some of them, you know one end of the pendulum you’ve got California that bans all nonpiece and non solicits.

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Will: with a very few exceptions, to the opposite end of the spectrum. With states like mine, I home State, Florida, which you know they’re all enforceable with as long as you meet certain requirements.

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Will: so the alternative that may happen. Is this not going to the Supreme Court? And that would likely be in the scenario if

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Will: Donald Trump were to take office there is a high probability that he would replace the person who’s currently in charge of the Ftc. And the new person charges the Ftc. Would certainly walk back the new rule that’d be expected. So either way, there is a I would say, high probability that the

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Will: the current Ftc non-compete rule that is scheduled to become effective in early September won’t okay no guarantee and employers certainly should prepare, if it may. But you know, with that said, I’m jumping into the rule, and I’ll get the quick cliff note version of it. In short, it bans all non-competes nationwide and there’s

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Will: a rumor going around a lot of employers that this does not apply to at least executives. That’s a misnomer. You can’t enter into new non-competes going forwards with executives. If this rule were to become long and the exception only applies for a short period of time. I believe it’s a year or 2

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Will: for agreements that you already have in place with certain executives, and these are only senior executives that are in policy making positions, and who make very high comp effectively more than 151,000 per year. Okay, so certainly, even with that temporary carve out.

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Will: it’s still effectively going to gut 98% of the nonprofit workforce non competitors that are out there. Okay? It would not apply now that other actual carve outs would include franchisees and franchisors, and some of those do exist in this space.

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Will: As well as in the context of by selling. So if you’re selling your home healthcare agency, whether to private equity or to another owner. Then in that case the non-compete would still be effective, which it should be. I mean, why would you want to sell your business. Someone could turn around and compete

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Will: apart from that. Again, their they’re band period. It’s not just employees. It’s for all workers that it means all contract labor as well, interns, etc. Anyone

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Will: the

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Will: bob.

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Will: To clarify

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Will: this would only apply to non-competes. It would not apply to or in any way impact non solicit agreements or ndas. So that’s also very important. As it stands, there’s actually many home healthcare agencies who don’t use non-competes. But they do use non solicits and ndas, in which case they’re not going to be impacted at all.

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Mike Paladino: Right.

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Mike Paladino: That’s actually some good feedback. Right? I think that the preamble you gave us really sets the stage for the podcast here today with the questions we’re gonna run through shortly. But I think it’s important to delineate the differences between a non-compete and Nda and anything else that could really help protect an agency’s operating structure and IP right? But I think there’s a lot to it. And

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Mike Paladino: as you mentioned. I think the most challenging part about this right now is, there’s just a lot of uncertainty as to what’s going to happen. So how do you best prepare for that? How do you adjust and adapt to these things that either may or may not happen, depending on what happens in the fall as well. That’s a big, big aspect of this, too. So I’m excited to learn more. Will, I think. This has been a great segue to jump into the 1st question. Which

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Mike Paladino: You know, what are the implications or what are the key implications of the Ftc’s ban on non-compete agreements and home care. And how do you think it’ll impact the industry?

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Will: Well.

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Will: couple of things. First, I recommend my device that I’m giving to my clients right now, which range from Mom and Pop startups to a handful of fortunes. 100 companies do nothing. Wait and see. Obviously, you’ve probably already sent out some type of message to your workforce, acknowledging that this rule may come to fruition. But apart from that, wait and see. Now, how long should you wait and see? About 3 weeks. Okay.

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Will: I’ll give it up 3 more weeks. If there is not a national ban at that point, then you need to be reaching out to your non-compete or employment Council, because there is a required notice.

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Will: That has to go out to anyone who is impacted. And there’s a form. Notice that the Ftc. Provided along with the rule. If, on the other hand, in the next 3 weeks there is a band that is ordered by likely that port in Texas that’s nationwide. Then there’s nothing to do until that ban is lifted.

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Will: So that’s the short version of what employers need to be doing right now, staying tuned to whether there’s any changes. This is being rolled out over the next few weeks. If there’s not, then get those, get those notices prepared, figure out who they need to go out to. And so those things can be disseminated. Come early September.

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Mike Paladino: Yeah.

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Mike Paladino: Yeah, I think that’s a good plan. Right? I think it’s hard to predict what may or may not happen. And if you adjust. I don’t know contracts or other things that impact your business and how you operate, and then things don’t end up coming to fruition. Well, then you just did all this work for nothing, maybe had spent money redoing your contracts, and then legal fees or other fees. Right? And I think that’s a really solid piece of advice. Just kind of hold, pat for it. Understand what’s coming.

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Mike Paladino: But also, kinda I think in this case be a bit more reactive as to the nuance of what may or might not occur. Right? So I think that’s a good plan. And certainly, if I was in the position of, you know, a home Care agency, or in the space of running a business like that, I’d probably do the same thing right. I think it’s just kind of a holding pattern type status right now.

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Mike Paladino: Which I think. Oh, sorry. Go ahead.

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Will: Well, I wanted to jump in to answer more of your question is, you know, what should employers be doing? And so I’m gonna get on my little soap box for a moment. Here.

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Will: I think non-competes are vastly overused, especially in this industry. You look at it. Why are non-competes needed in the 1st place, and really think to restrict covenants, and by that, as an umbrella term for non-compete non solicit ndas things of that nature is to protect your legitimate business interests.

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Will: Okay, what are those interests, you know? Let’s drill down here. You’ve got customer relationships. That’s number one. That’s by far the number. One reason you’ve got employee relationships. You’ve invested training into that. Okay, you’ve got confidential information. And of course you’ve got your own trademarks and things of that nature.

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Will: you know. How else can you protect them other than a non-compete? Easy, a non solicit, a well written non solicit non acceptance type provision along with a strong nda

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Will: that’s gonna take care of your customer relationships. That’s gonna take care of your confidential information non solicits, you know, can and should cover the workforce as well and referral relationships. Okay, and certain vendor relationships. So all those things can be protected with things other than a non-compete. And so a lot of the home health care agencies will say.

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Will: Well, we want this for deterrent. They don’t say this in public very often, but the private conversations deter a competitor, that’s true, but it also has. You know, it works both ways. It also is a deterrence from having folks who otherwise would be working with you, not wanting to work with you because of the non-competes. Top talent, experience talents. They’re savvy enough to know what non-competes actually are, unlike a lot of people who are new to the workforce.

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Will: So just realize it. You know, there’s pros and cons to having non-competes. I think the best thing that an agency should do is have legal counsel. Don’t go to Google.

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Will: don’t just follow the lead from someone else’s agreement you’ve seen, have experienced legal counsel. Prepare a very thorough non solicit, and there are a lot of unique provisions that you could include to really protect your agency. So it’s, you know, you think, non solicit, you can’t contact somebody

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Will: to a customer. Okay to solicit them. You can’t contact an employee to have them leave. Well, you could go further than that. You can have no acceptance, because usually that fight is the former employee saying, Oh, I didn’t solicit them. They came to me.

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Will: I didn’t solicit the referral source. They contacted me. And then we just had a conversation, and they basically signed up and me doing nothing. You know that as their story we know it’s not true, but that’s their story. Well, the easy way to deal. That is, just have an acceptance provision. In the 1st place. Okay. You can go further.

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Will: You can have, you know, have provisions requiring inspection rights, so that the Home May healthcare Agency can require that from a worker to, you know, provide copies of the communications they’ve had with certain employees and customers. Post employment

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Will: you can require the former employee to provide a copy of the agreement to their next employer or their next agency. Okay, you can. Another important one is often overlooked. You can require them to provide a long notice, peer, that they’re leaving 30, 45 days. But what’s the benefit of that? It’s obvious. It allows the agency to start

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Will: to the extent that they don’t have anyone else there that has a strong relationship with some of these referral sources and customers to start going there and building those relationships prior to that person off boarding. So there’s a lot of procedural and legal mechanisms at an agency’s disposal that can really take care of all of their interests, but not having to rely just on non-compete.

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Mike Paladino: Yeah, I think that’s beautifully put. And I think it also gives a bit of context to the question. And you know, how will it impact the industry? Right? And what are the key implications? So I think it’s important information to be aware of. It’s important to be prepared for it. It’s also to understand the different elements that are gonna affect you. But I think kind of circling back to your original point about it. It’s also one of those things that right now, maybe standing pad is the best course of action. But again, I think.

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Mike Paladino: As you’ve mentioned, it’s important to recognize this kind of no, these are the stipulations, or these are the things we gotta be aware of.

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Mike Paladino: From there. I think it’s a great segue based on what you were just describing, Will, in that, you know. The next question I got for you is, how can home care? Providers adapt their employment contracts and policies to comply with new regulations. And what are the potential risks of noncompliance?

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Will: So first, st let’s

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Will: let’s unpack that the last one is the risk of noncompliance, and I think you’re alluding to. You’re implying what happens if the Ftc non-compete bang goes forward, which is certainly not impossible, I think it’s unlikely, but not impossible. If it does, then it’s a straightforward one. There’s fines involved. I don’t know offhand what they are, but the Ftc. Would certainly be looking to enforce this, and they’re presumably going after some of the larger agencies to send a message. As a more practical matter.

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Will: The Ftc. Is not gonna have to be looking for violators. The workforce is gonna come to them. This, the new Ftc non-compete ban, the workforce in general in the home healthcare space is very aware of it.

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Will: And so both

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Will: companies and workers are looking at what’s going to happen here. And so if this band moves forward and an agency tries to enforce a non-compete one, the workers will likely know that that’s a problem. Okay, they’re likely gonna report that to the Ftc. And with the Department of Labor. And certainly if they go to an attorney that attorney is gonna know, that’s a problem. Okay? So

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Will: you know, as far as non compliance, you know, the biggest things is, it’s just that

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Will: everyone knows this is not allowed anymore. What are you doing? Having me sign this in the 1st place, and you’re even

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Will: crazier. If you were to send me a cease and desist letter regarding and not compete. Okay, it’s just. It wouldn’t exist anymore effectively after I believe. September 1st or September 4.th

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Mike Paladino: Right.

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Will: going back to? What policies can they put into place, and what should be put in agreements? Let me be clear

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Will: the following things I’m about to say should be done, regardless of whether the Ftc. Bang goes forward or not. Okay. The best practice is one.

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Will: Have a well written agreement. I touched on that briefly earlier. I’ll get into it again. Okay, have a well written agreement. That is standalone from a job offer document or compensation agreement. And there’s 2 benefits for that. One is the attorney. For reasons I won’t go into. It makes it a lot easier for me to actually enforce it. Okay? And 2, it makes it a lot more clear and conspicuous to the employee. What they’re signing. You don’t want to hide the ball. Okay.

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Will: have them sign it through docusign or something of that nature that way you’ve got a copy, and you don’t lose what they sign, because if you lose it, good luck enforcing it, and almost all States and just support. The employee has a copy of it for their records. Okay, that’s the onboarding part on the off boarding part. Make it standard procedure to send an off boarding letter to former employees. Okay, and it doesn’t have to be.

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Will: you know, just a nasty Gram, reminding them of their post employment obligations it it could be part of the more comprehensive offboarding letter that talks about any employee benefits, and 4 1 k and things of that nature, and then you throw in the blur blurb about reminding other obligations and include a copy out. And that’s important, because there are so many employees. Either A didn’t appreciate what they signed, or if they’ve been there for a long time, they flat forgot they signed something.

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Mike Paladino: Yeah, definitely.

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Will: Instantly go to a competitor, okay, or reach out to the former client. So you don’t want to hide the ball with it. Wave around like a banner, both before when they’re coming on board, and when they’re off boarding. Okay? The last part is what should go into it again. Things of this nature. I I view it as

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Will: just as if you were going to sell your business. You certainly wouldn’t draft up the documents themselves. You would go hire corporate counsel to take care of that merger or acquisition, as the case may be. Okay, same thing here. These restrictive covenants, whether they are enforceable into what scope the language is everything.

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Will: or certainly 80% of it. Yeah, the actual underlying facts are the rest. So go out and get yourself. Someone who specializes in this. Okay, not a generalist. Go get somebody who specializes in this, and it should include things like not only a non solicit of customers and referral sources and vendors and employees and contractors, but also a non acceptance of them. Okay.

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Will: it should include things like requiring that that individual disclose the agreement before they start work with someone new. Okay? It should include that.

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Will: you know, having that employee sign acknowledgement that they returned everything to the company that they don’t have any more confidential.

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Mike Paladino: Yeah.

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Will: So the list goes on, but.

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Mike Paladino: Cost of less, for sure.

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Will: Yeah. The bottom line is, if you’ve got yourself a 2 or 3 page document, that’s not sufficient. These things are that right. These are 8 to 8 to 15 pages long, and that’s for your benefit.

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Mike Paladino: Yeah, absolutely. And you know, I imagine that there’s a lot of agencies out there. That has not given this much thought or don’t really have those really protective agreements to really combat this kind of thing, right? And I think that’s why I’m happy. We’re doing this podcast today. Because again, these are really for educational purposes and no promotional purposes in that regard. And it’s just really helping everyone what we like to say as level up right, understand how they can best protect themselves too.

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Mike Paladino: to adapt to changing rules, regulations, compliances, and just in general from kind of competition and from other things out there, right? There’s a lot of nuance in this, and it’s important that people are aware of what they should be doing, and how to manage it.

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Will: Well, I’ll give you a perfect example in this industry for home healthcare.

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Will: I would say almost half the time. When I have a worker I’m representing. Okay, usually they’re in sales, right? Some marketing type person.

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Will: And they get a nasty gram. Okay, what I call a cease and desist letter, and I get that agreement. And I look at it, and the Home healthcare agency is accusing them of going after not only customers, but after you know certain referral sources. Okay, some of these physician clinics and other helpful professionals who are referring out clients. Okay, or for going after customers. Okay, patients.

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Will: And we will look at the actual agreement. And the only thing it prohibits

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Will: half the time is soliciting patience. That’s it.

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Will: That doesn’t cover the referral sources that doesn’t cover any prospects. So if they’re in sales, you know that the doors wide open for them to go after anyone who wasn’t actually a client yet.

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Mike Paladino: Yeah, absolutely.

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Will: And those are things that are easy things to button up.

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Mike Paladino: Yeah, I think it’s fair, right? Because it’s so broad in that regard, especially as you mentioned like business development or in sales. The reality is, if I have those relationships, that’s what’s enticing for me, or as an employer for the next. No hire that that I make, or that I’m brought on, for

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Mike Paladino: That’s part of my portfolio, right? So if I’m not restricted, or if I ‘m not very, you know, black and white in terms of what I can or can’t do. Of course, I’m gonna leverage my network. That’s part of probably why I was brought on somewhere else because of my expertise in my, you know, relationships and that kind of thing. So it’s important that if you’re offboarding somebody on the Biz dev side of home care.

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Mike Paladino: You protect yourself as an agency. Maybe they have been required to transfer those contacts or not refute ownership of those contacts, too, or something to that regard, but it’s tough and no, some people that are savvy read that. Maybe they don’t even join. In the 1st place, if that’s part of the requirements, right? So.

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Will: And I was gonna add, Yeah, I know this is primarily for home health care agencies. But to the workers who are listening, you know.

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Will: Don’t be afraid to negotiate

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Will: so much. The workforce thinks these things are boilerplate, and they’re non negotiable, and that’s just more often. Not. That’s not the case. The reality is, if an agency wants to hire you, it’s because they want you on board.

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Mike Paladino: Yeah.

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Will: You know they’re sold on you and so recognize

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Will: the really, the only time you’re going to have real leverage and negotiate the details. These agreements are before you sign, so take advantage.

00:25:33.530 –> 00:25:59.559
Mike Paladino: Absolutely 100% I couldn’t have said it better myself. It’s something that I know. It’s kinda unrelated. But my sister is actually a very senior leader in Hr, so she’s involved in, you know, curating contracts. It’s in a different industry altogether. But when it comes to reviewing your employment agreement, reviewing your contract things like that. She’s very well versed because she’s worked with lawyers and legal teams to really curate these agreements that protect their line of business right?

00:25:59.788 –> 00:26:24.469
Mike Paladino: And it’s just it’s given me the opportunity to understand these things, cause I have somebody directly involved in my life that can educate me on it. But I think that’s a challenge for most, because a lot of the time you don’t know what you don’t know, and you don’t know these things if you don’t think about them or haven’t experienced them. Sometimes you go through it, and then you learn, and you’ve kinda got the butt end the 1st time. So you don’t do it again. But it’s all really trying to help people love their knowledge of why, this is such an important thing

00:26:24.470 –> 00:26:32.659
Mike Paladino: in all walks of life and in all business practices and business industries. But I think, as it relates to home care, we’re in a very unique niche where

00:26:32.900 –> 00:26:47.019
Mike Paladino: people transfer no agencies or leave agencies to go to other agencies all the time. Right? Especially as a caregiver. Now, oftentimes what I see is, caregivers are contract workers. They’re 1,099 s. They work with multiple agencies at once.

00:26:47.030 –> 00:27:10.700
Mike Paladino: I see that being a huge risk. If I’m running a business right? You may have no what? Maybe they might confuse client information, or they access one system that one agency uses and another agency uses another system. Maybe those agencies use the same system. They’re confusing their data like there’s a lot of different nuances in there. And I think that’s why this conversation is also exceptionally important in our space, because there’s so much sensitive data out there.

00:27:10.700 –> 00:27:18.500
Mike Paladino: and agencies to avoid fines and other things have to make sure that data and the people that manage the data are protected right?

00:27:18.500 –> 00:27:19.500
Will: Absolutely. Mike.

00:27:20.140 –> 00:27:38.950
Mike Paladino: Amazing. Well, hey, that’s a great segue into, can we already kind of alluded to this? But number 3? Question I have for you is what strategies can home care providers use to protect their business interests and trade secrets in the absence of non-compete agreements? And are there any alternative legal mechanisms? They can be employed.

00:27:40.010 –> 00:27:59.949
Will: Yeah. And we effectively already covered that one, in short, and it’s worth it will. Dead horse here. You’ve got to have a strong non-solicit period. You know. And as a practical matter, someone who goes before judges on a very regular basis to litigate non-competes and non solicits

00:28:01.010 –> 00:28:11.500
Will: You will get a lot of judges who very closely scrutinize a non-compete, even if you have one. So stop right there. If anyone has a non-compete.

00:28:11.520 –> 00:28:16.549
Will: and they think that it is enforceable merely because somebody signed it.

00:28:16.700 –> 00:28:20.100
Will: Don’t drink your own Kool-aid. That’s absolutely

00:28:20.120 –> 00:28:21.849
Will: almost never the case.

00:28:21.970 –> 00:28:29.729
Will: Okay, a lot of judges scrutinize these and have a lot of sympathies for workers with respect to mountain peace nationwide.

00:28:29.970 –> 00:28:43.999
Will: Okay, it’s not just, you know, a matter of which part of the country you’re in. The. And nor is it a, you know, conservative versus liberal thing. I think most judges scrutinize them, have sympathy for the workers in these situations.

00:28:44.700 –> 00:28:48.210
Will: On the other hand, non solicits

00:28:48.935 –> 00:28:58.469
Will: that is where judges have very little sympathy for the workers, and the idea being that.

00:28:58.510 –> 00:29:14.580
Will: you know. Not only did you sign an agreement that says you can’t solicit, you know, customers, and you have a relationship with them, a substantial relationship. They can’t just be any customers under most State laws. Okay, but the

00:29:14.580 –> 00:29:34.090
Will: judge is aware. And then certainly the employers are aware of the Home Health Agency that you’ve been paying these people to build these relationships with the referral sources. Okay, so I know a lot of workers who are in marketing and sales. And they think these are my clients. I built these relationships. No, you got paid to build these relationships.

00:29:34.090 –> 00:29:34.740
Mike Paladino: Exactly.

00:29:34.740 –> 00:29:47.149
Will: On behalf of somebody else. Now, if you brought them along with you, okay, that could be a different story. I still recommend negotiating and carving those people out on the front end and not litigating it on the back end.

00:29:47.150 –> 00:29:47.720
Mike Paladino: Yeah.

00:29:47.720 –> 00:30:04.630
Will: Okay, but that’s gonna be the biggest thing. And then, of course, you know, some of those offboarding things and onboarding things we talked about previously. But listen. The best way to avoid disputes over non-competes.

00:30:04.730 –> 00:30:11.360
Will: either. Don’t have them. It’s hypothesized. They’re overused. You’ll be just fine without a non-compete.

00:30:11.360 –> 00:30:11.680
Mike Paladino: Yeah.

00:30:11.680 –> 00:30:12.530
Will: Column.

00:30:12.720 –> 00:30:30.580
Will: you know, or if you’re going to have them, make them narrow and be very selective on enforcement. It needs to be a pretty egregious situation, because what I think a lot of agencies who haven’t litigated these issues don’t fully appreciate is very expensive.

00:30:30.660 –> 00:30:35.430
Will: To go enforce a non-compete and litigation in general is very expensive.

00:30:35.768 –> 00:30:51.580
Will: You know. So if you were a small agency, or even a medium size one they got, they get sticker shock often when they hear what it’s gonna take to go and force a non-compete. So that’s all for a reason. If you’re going to have them make them narrow, only spend the money on the egregious situations.

00:30:51.580 –> 00:31:00.308
Mike Paladino: Yeah, yeah, it makes perfect sense. And I think you know, one of the things I’ve really taken away from this will be the overuse of non-competes. Right? I think

00:31:00.590 –> 00:31:24.990
Mike Paladino: We think, you know, and there’s many out there that would know this much better than I would. But we think we’re doing this as a means of protecting us. But I I bet you’ve seen this where it gets down to the nitty gritty, and there’s agencies or businesses out there that are spending so much money to review, or to even protect from litigation against these ndas, when it might have just been an easier breakup if they just didn’t have one. In the 1st place, right? And I’m sure it’s much more complex than I’m

00:31:24.990 –> 00:31:38.330
Mike Paladino: kind of simplifying it. But I think there’s merit to that right. I think you know. It’s warranted and definitely in certain situations. But I think that you have to understand why we’re putting these things in place so that we can really act on them if it comes to it.

00:31:39.330 –> 00:31:47.909
Will: Yeah, absolutely. I think one of the disconnects is that too many people view non-competes as any other type of contract.

00:31:47.910 –> 00:31:48.450
Mike Paladino: Yeah.

00:31:48.450 –> 00:32:17.519
Will: In which case, hey, it’s clear on its terms. You both consented to it. Therefore it’s enforceable. That’s not how it works in this area of law. You’ve got 2 separate layers of analysis. You’ve got that. It has to be about a contract. Yes, but it also has to be enforceable under the State law, and of course every State is different. So Heck, if you’re a multi state agency, you know, that’s that’s even riskier in terms of having one boilerplate non-compete and seeking to enforce it.

00:32:17.874 –> 00:32:35.970
Will: But the bottom line is, you know, you have to have legitimate business interest, and it can’t be broader than necessary. And so you know, for example, if you could say Well, you can’t go to a competitor in the State of Florida for the next 2 years.

00:32:37.240 –> 00:33:04.010
Will: Why, you know, non solicit saying they can’t go after the customers. Okay? And they’ve already got a nda, saying they can’t use confidential information. They can’t go after referral sources, vendors, etc. What is left other than simply preventing this person from going to a competitor period. That’s an anti competitive purpose, which is not a legitimate business reason under any State law, to enforce these.

00:33:04.330 –> 00:33:04.950
Mike Paladino: Yeah.

00:33:04.960 –> 00:33:14.219
Mike Paladino: Yeah, absolutely. I think this conversation is a challenging one for a lot to wrap their heads around. That’s why I’m excited. We’re going to the detail about it today, because

00:33:14.220 –> 00:33:37.709
Mike Paladino: There are so many things you can think about, and you can either think about it too much to the point where you’ve over, analyze it and over-implemented something. You could never think about it to the point where you have risk, or you gotta try to find that middle ground. I guess, right where it’s like, what are we doing to protect us in a reasonable way, and also from the employee perspective. Are they feeling like the agency or the business is, you know, trying to

00:33:37.710 –> 00:33:53.439
Mike Paladino: own all the work that they’ve done, or what they brought on board as well. Right? So we gotta make sure from the business side and from the employee side. It’s a good mutual agreement when you start, and when you leave, obviously, amicability is high on the list for most. But it is something that we challenge

00:33:53.710 –> 00:34:22.640
Mike Paladino: That can be a challenge right? Because, leaving amicably, most people would say they wanna leave on great terms. And I have a reference for people they can lean back on or refer to their experiences. But that’s where sometimes this becomes a challenge. If there’s certain contracts or non-competes, or things like this in place where it’s like, well, I’m going to a competitor or a similar business. I clearly can’t use this company as a reference. I can’t really use any of the information or knowledge from there and share it. So it’s kind of like, you know, what does that mean? Even

00:34:22.920 –> 00:34:25.449
Mike Paladino: But yeah, it’s a great point for sure.

00:34:27.000 –> 00:34:49.630
Mike Paladino: Alright. So we have 2 more questions left, will and we’ve already kind of talked about this through some of the examples that you’ve shared. But just to reiterate the question for the audience. Can you share any examples of successful strategies or best practices that home care providers can adopt to attract and retain top talent in a post. Non-compete agreement, landscape.

00:34:50.870 –> 00:34:55.819
Will: Yeah, it. It’s no different than a non-compete landscape.

00:34:56.975 –> 00:35:04.399
Will: And frankly, this question is better suited for a hr type consultant.

00:35:04.400 –> 00:35:04.770
Mike Paladino: Yeah.

00:35:04.770 –> 00:35:06.050
Will: Why is it?

00:35:06.120 –> 00:35:11.329
Will: You know, it’s the things we all know. You need to have a great company culture

00:35:11.430 –> 00:35:14.219
Will: and competitive compensation.

00:35:14.410 –> 00:35:17.950
Will: Okay, most of the people who leave

00:35:17.990 –> 00:35:23.980
Will: not just home healthcare agencies, but anywhere, for one of 2 reasons, overwhelmingly.

00:35:24.050 –> 00:35:26.600
Will: They felt they weren’t getting paid enough.

00:35:26.760 –> 00:35:32.779
Will: not by like a de minimis amount by usually, like someone competitor, offer them substantially more.

00:35:32.780 –> 00:35:33.720
Mike Paladino: Point.

00:35:33.720 –> 00:35:36.310
Will: Or they felt they were in toxic work. Environment.

00:35:36.310 –> 00:35:36.810
Mike Paladino: Yeah.

00:35:36.810 –> 00:35:41.339
Will: That covers the vast majority of everyone in America who leaves their job.

00:35:41.340 –> 00:35:42.729
Mike Paladino: Absolutely. Yeah.

00:35:42.730 –> 00:35:49.490
Will: So if you can nail those 2 items, okay, where you’ve got a great company culture.

00:35:50.170 –> 00:35:52.089
Will: and you are

00:35:52.120 –> 00:35:59.930
Will: keeping happy or most important employees, the ones where you would. You would feel the pain if they left.

00:35:59.930 –> 00:36:00.310
Mike Paladino: Yeah.

00:36:00.715 –> 00:36:12.069
Will: If you can do those 2 things, you’re going to be just fine in both a non-compete landscape and a host non-compete landscape. If that comes to fruition.

00:36:12.070 –> 00:36:39.119
Mike Paladino: Yeah, absolutely. And you put it beautifully right. And I think we’ve all probably experienced this. And throughout our careers I’ve had a 11 year career myself, and technology and sales and and management. And I think you know, I’ve changed jobs a few times. I’ve probably over the last 1011 years had 3, 4 different employers, and usually every time it was because for the same job somewhere else, they offered me more money. That was pretty common, right? So it’s like you want to grow your career and kind of level up if you will.

00:36:39.120 –> 00:37:08.699
Mike Paladino: There has been an instance for me personally where I did leave a very well paying job, but I left because it was just a very toxic environment, and I didn’t feel that that was sustainable for me, or even for the other employees. The turnover was immensely high, Dad. Some, kinda you know, very, very. I’m talking from like the nineties style like rules in place, and they weren’t like adapting to the Times. I think that’s the biggest thing right? You can, you know, put contracts in place, ndas, all those kinds of things. You can do it or not do it. I think the main thing that

00:37:09.250 –> 00:37:15.300
Mike Paladino: Companies or agencies, even in our space, can treat the employees well, make them feel important.

00:37:15.300 –> 00:37:39.639
Mike Paladino: Make sure you have pay equity. So it’s competitive with what other companies in the industry or in the State are paying, you know, for that job from a reasonable perspective, right? And then the other thing is the culture people wake up every day and love going to work? Are they passionate about what they do? And if the answer is no, well, we can do all the legal stuff we want. We can put all the Ndas non-competes or solicit agreements in place.

00:37:39.650 –> 00:37:46.129
Mike Paladino: It’s not gonna matter. People are gonna go what? No, for what motivates them, which could be culture could be money. It could be both.

00:37:46.520 –> 00:37:47.200
Will: Correct.

00:37:48.330 –> 00:37:57.299
Mike Paladino: Yeah. So I guess no, from there. That’s a beautiful example. I think it’s highly relevant. And as it is to home care, it is also relevant to really any other line of work.

00:37:57.570 –> 00:38:15.709
Mike Paladino: The last question I have for you today Will, is looking ahead. What do you predict will be the most significant challenge or opportunity for home care providers as they adapt to the evolving non-compete regulations. And how can they stay ahead of the curve? I know you already kind of talked about this, but I would love your input on this last and final question.

00:38:16.580 –> 00:38:19.750
Will: So, while I hope my crystal ball is wrong.

00:38:20.100 –> 00:38:20.620
Mike Paladino: Thanks.

00:38:20.620 –> 00:38:25.839
Will: Expect there to be a uptick in the amount of

00:38:25.860 –> 00:38:28.230
Will: disputes over non-competes

00:38:28.270 –> 00:38:30.150
Will: over the next few years.

00:38:30.310 –> 00:38:40.580
Will: and I think the reason for that is one you’ve got an increased workforce, including in the home healthcare space that’s resistant to signing non-competes.

00:38:40.580 –> 00:38:41.120
Mike Paladino: Yeah.

00:38:41.501 –> 00:38:53.319
Will: And so I think it’s important for home healthcare agencies to get granular on their workforce in terms of which ones really should have non-competes. Clearly not. All of them should

00:38:53.330 –> 00:39:04.380
Will: okay. And the ones who do you know? Putting thought into the scope of that non-compete not just being a new jerk reaction and saying, This whole state or this whole region. Okay.

00:39:05.690 –> 00:39:12.530
Will: the other element is, you know, you’ve also got individuals who are not only more resistant to signing them.

00:39:12.550 –> 00:39:15.920
Will: but also increased willingness to fight them.

00:39:15.920 –> 00:39:16.610
Mike Paladino: Yeah.

00:39:17.546 –> 00:39:32.600
Will: You know. So you’ve got, you know, things at the rise of, you know, Linkedin being ubiquitous and other platforms where the workforce is more able to educate themselves and hear people’s opinions than ever before.

00:39:32.600 –> 00:39:33.740
Mike Paladino: Yeah, absolutely.

00:39:33.740 –> 00:39:47.440
Will: The opinions you’re seeing on those platforms are very crystal clear. People don’t like non-competes, and they know that other people don’t like non-competes. But then you combine that with this 3rd factor, more and more private equity.

00:39:47.530 –> 00:39:50.069
Will: Okay, getting involved with the space

00:39:50.415 –> 00:40:03.660
Will: and what does private equity look to do? I mean they seek to, you know. They make their money in the margins. So I think you’re going to see continued, you know, perhaps cuts and compensation, or other benefits.

00:40:03.680 –> 00:40:08.040
Will: And what does that do that goes back to? Earlier people are more likely to leave

00:40:08.555 –> 00:40:14.480
Will: and so I think that combination coupled with. If this is the if

00:40:14.520 –> 00:40:18.110
Will: if the Ftc band does not become effective.

00:40:18.340 –> 00:40:20.110
Will: which I don’t think it will.

00:40:20.350 –> 00:40:22.420
Will: If it doesn’t become effective.

00:40:22.460 –> 00:40:31.170
Will: you have a workforce that’s more willing, or more willing to fight back on this kind of stuff with more private equity involved. That’s a recipe for more litigation.

00:40:31.170 –> 00:40:32.330
Mike Paladino: Yeah, absolutely.

00:40:32.330 –> 00:40:56.599
Will: So my recommendation truly is, and this is is, I’m someone who I’m not politically, hey? No non-competes, I or or anti employer? Absolutely not. The vast majority of my clients are employers are the home healthcare agencies, not the workers. My recommendation to them, even behind closed doors, is, let’s see if you actually need any non compete for any workforce, if you don’t do away with them.

00:40:56.770 –> 00:41:13.899
Will: I spent a large portion of my career working with some of the largest home healthcare agencies in the nation, and your jaw would drop if you knew the amount of money they spent on legal fees each year specifically over non-competes.

00:41:14.865 –> 00:41:18.030
Will: And we’re talking in the millions, many millions.

00:41:18.070 –> 00:41:32.129
Will: and even back then I would be thinking if that money was instead used towards culture and compensation. And they found other ways to protect their business interest.

00:41:32.390 –> 00:41:37.429
Will: You know it. It just makes you wonder. It makes you wonder. You know.

00:41:37.580 –> 00:41:39.560
Will: were they making the right decision?

00:41:39.880 –> 00:41:40.939
Will: you know.

00:41:41.020 –> 00:41:44.370
Will: cost benefit analysis? There.

00:41:44.370 –> 00:41:44.835
Mike Paladino: Yeah.

00:41:46.340 –> 00:42:02.019
Will: but I think it’s important that and that could be a challenging analysis to do. But I certainly encourage employers to do that analysis before going and having non-competes, and certainly before going and spending a ton of money to enforce a bunch of non-competes.

00:42:02.020 –> 00:42:24.150
Mike Paladino: Yeah, it. It makes a lot of sense, right? I think that the Cba or the cost benefit analysis, I should say, is an important one, because you have to weigh the difference like, what am I gonna spend in legalities versus? Can I just increase, pay a bit more? Or can I, just, you know, maybe put some more employee programs in place like some wellness programs, some of a big topic. I’ve been reviewing. And I even did a podcast about this the other day

00:42:24.360 –> 00:42:51.829
Mike Paladino: was self-care as an employee within the home care space. And there’s not a lot of businesses that value it. I wouldn’t say they don’t value it, but they don’t actually offer these kinds of wellness programs for self-care as an employee in the office level at an agency, or as a caregiver themselves. Right? And I think if more resources were put into those things, you would see less litigation, less need for Nda, because people like what they do, and they feel like they’re treated well.

00:42:52.030 –> 00:42:59.370
Mike Paladino: And I think the other thing that you mentioned that is, is really, I think it’s a burning platform if you will. Right now, it’s a hot topic.

00:42:59.370 –> 00:43:23.769
Mike Paladino: It’s social media. It’s the voice people are putting out there, and they’re explaining. You know the challenges they’ve faced or the experiences that they’ve had. So they’re now being more vocal about these things, and it’s making others even a bit more apprehensive about making the switch to a certain line of work, a certain industry or working at certain companies. And I think that’s a big risk. And you’ve probably seen this time and time again.

00:43:24.130 –> 00:43:39.970
Mike Paladino: When an employee leaves a company where they leave and they’re unhappy. They’re much more likely to be vocal about that on glass doors or other. You know, company review sources, and people are now a bit more savvy? They’re, gonna you know, is this company good to work for ? They’re gonna.

00:43:39.970 –> 00:43:42.930
Will: Or God forbid the worst case scenar. The Google Review for the.

00:43:42.930 –> 00:44:04.020
Mike Paladino: Google Review. Yeah, exactly. So it’s got the Google Review. Got the glass door. I’m sure there’s like some 1 million other platforms out there. Now in in this digital age. But those are the other things that companies should be kind of considering right? It’s no what is the what are the optics of when we hire and when people leave. No, we want that to be that that gap to be kinda small in terms of

00:44:04.263 –> 00:44:26.909
Mike Paladino: happiness on the way in and on the way out. That’s why exit interviews are immensely important. What could we have done better? You know. How could we have kept you? And was there a chance to come back in the future? These questions that you’re asking very basic. But it gives you the insight into how you can prevent these things from the future, which again all boils back to the same topic of, do we need an Nda? Do we need these things in place. Is it worth the fee?

00:44:27.284 –> 00:44:32.229
Mike Paladino: So in some most cases you can say yes, but I’m sure in a lot of cases you can say probably not.

00:44:32.770 –> 00:44:47.240
Will: Unless all the things you’re talking about they’re not easy. It’s not easy to get it right on all those things, but there’s there’s no question. It’s worth trying to do, even putting in the effort in a visible way for employees to know that you’re trying.

00:44:47.320 –> 00:44:53.789
Will: you know, E, even that itself has often a big size psychological impact on the workforce. We remain there.

00:44:53.800 –> 00:45:18.800
Mike Paladino: Yeah, and I think you’re you’re hitting the nail on the head there, right? There’s no silver bullet. There’s no right answer to this, but I think what you can do is be iterative. And you could learn. And I think as long as you implement the idea of continuous improvement, continuous learning. You’re gonna have gaps along the way. No one’s perfect. And there’s there was a a good strategy for this that everyone would download it from Google and find it on the Internet and implement it right for free right? But it’s people pay a lot of money for a consult

00:45:18.800 –> 00:45:33.170
Mike Paladino: to help them get this thing right? And even then it’s it’s never truly. You know a blanket fix. But yeah, I think this has been such an insightful conversation, though. Well, I think we can leave it at that in terms of the questions.

00:45:33.441 –> 00:45:40.230
Mike Paladino: I want to extend my thanks to you for really sharing your expertise, and of course, to the audience that’s going to tune into this

00:45:40.546 –> 00:45:51.949
Mike Paladino: until next time. This is Mike signing off. But we do hope you found value in this very challenging conversation about the Ftc. And the programs, or that may or may not happen here soon.

00:45:52.320 –> 00:45:54.259
Mike Paladino: Thanks everyone until next time.