Federal Trade Commission votes to ban non-competes; US Supreme Court lowers ‘harm’ bar

In the HR news catching our eye this week - the FTC wants non-compete agreements banned; the Supreme Court has lowered the threshold for harm in discrimination cases, plus lots more:

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Apr 25, 2024

US Trade Commission votes to ban non-compete agreements

The US Federal Trade Commission (FTC), has voted 3-2 to ban controversial non-compete agreements – which they say limit employees’ freedom to quit for a new job, and suppress people’s wages by preventing them from applying their skills to work in similar organisations. According to the FTC, around 30 million workers are covered by non-compete agreements – some of which even prevent people setting up their own businesses in a similar field, or limit the geographical area where they can work. “Non-compete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new start-ups that would be created a year once non-competes are banned,” said Lina Khan, FTC chair. Non-competes constituted “unfair methods of competition”, she added. The FTC estimated the new rule could raise an average worker’s earnings by $524 a year. The agency received more than 26,000 public comments on the matter [when it first proposed banning it in 2023], which a sign of its importance to workers and their employers.” However, The US Chamber of Commerce has reacted angrily to the move, and swiftly announced that it would sue the regulator, arguing the agency lacked constitutional and statutory authority to enact the rule. It called the move a “blatant power grab” that “sets a dangerous precedent for government micromanagement of business.”

Bias claims to depend on new definition of ‘harm’

A unanimous US Supreme Court decision on now means employees no longer have to show they have suffered significant financial or other harm when bringing a discrimination claim under Title VII of the Civil Rights Act of 1964. In determining Muldrow v. City of St. Louis – a case that could have far-reaching implications – the justices’ ruling effectively eliminates a barrier that some courts created that prevented employees from bringing certain kinds of discrimination claims against their employers. The case focused on a female police officer who alleged she was transferred to a less prestigious position due to her gender. Although the officer was required to show “some harm” from such a transfer, according to Justice Elena Kagan, “she need not show that the injury satisfies a significance test.” For years, some federal appellate courts have applied varying versions of a materiality standard to decide whether an employee could challenge certain employment actions in court. Essentially, if the employment action caused no economic impact or other tangible harm, a discrimination claim was likely to get tossed out. The court’s ruling establishes that a Title VII plaintiff must show that his employer’s actions caused “some harm,” meaning some “‘disadvantageous’ change in an employment term or condition.” But that “harm” need not be “significant… serious, or substantial, or any similar adjective suggesting that the disadvantage to the employee must exceed a heightened bar.” As a result of this, employers have been urged to prepare for a potential increase in Equal Employment Opportunity Commission charges and lawsuits filed under Title VII as a result of the court’s ruling.

Nike to lay off 740 staff in Oregon

Sports apparel giant, Nike, is reported to be laying off around 740 staff from its Oregon headquarters. News of the layoffs – which are not due to start until the end of June – came as part of an advance notice that is now required, and is happening as the company aims to make good on its strategy of reducing its costs by $2 billion over the next three years. In its financial year 2024 (FY23) third-quarter results, Nike revealed an anticipated low-single-digit percentage decrease in revenues for the first half of FY25, while also planning to scale back on key franchises. In a statement, it said: “Nike’s always at our best when we’re on the offense. The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities as interest in sport, health and wellness have never been stronger.” So far this year, Nike’s share price has declined by around 13%. The news comes on top of a workforce reduction announcement of approximately 2% of its headcount earlier this year – equating to more than 1,600 jobs. This occurred amid challenging product demand. Nike’s has 11,000 staff at is headquarters. It’s current number of employees stands at around 83,700 (as of 2023).

US Volkswagen plant workers vote to unionize…

Workers at Volkswagen’s Chattanooga, Tennessee factory have sensationally voted to join the United Auto Workers (UAW). According to the US National Labor Relations Board, the union won by a vote of 2,628 for to 985 against. If the result is formally certified by the agency, VW will be legally required to collectively bargain over working conditions and pay at the plant. The vote is being seen as a landmark one for UAW, which had been eying the plant since last summer’s disruptive autoworkers strike, which brought car production to its knees. The UAW also has its ambitions on workers at BMW, Toyota and Tesla. Commenting on the result, Union president Shawn Fain said “we can beat anybody.” He added that Volkswagen workers “should have very high expectations,” for what they can win in negotiations over a first union contract. The union has also launched organising efforts at dozens of plants including a Mercedes factory in Alabama. Fain said Volkswagen is “going to be the first domino to fall – I think it’s going to start a chain reaction. Once we show the world that it is possible, I think it’s going to open the door for thousands of other workers, tens of thousands of other workers, to join in and to get justice on the job.”

…as Starbucks takes on federal labor agency

After coffee giant, Starbucks, was forced to re-hire seven workers it fired for attempting to unionize their Tennessee store, executives there are trying to curb this happening again, by asking the Supreme Court to curb the National Labor Relations Board’s (NLRB ) powers. Judges will this week hear representations from Starbucks, which hopes to then make it tougher for the NLRB to step in when it alleges corporate interference in unionization efforts. Workers at 420 company-owned US Starbucks stores have voted to unionize since late 2021, but none of those stores has secured a labor agreement with Starbucks. The case currently before the Supreme Court first began in February 2022, when Starbucks fired seven employees who were leading a unionization effort in Memphis, Tennessee. Starbucks argued the employees had violated policy by reopening the store after closing time and inviting non-employees — including a television news crew — to come inside. The National Labor Relations Board determined the firings constituted an illegal interference with workers’ right to organize. Starbucks said the Supreme Court should intervene because federal appeals courts don’t agree on the standards the NLRB must meet when it requests a temporary injunction against a company. Starbucks says temporary injunctions can be a major burden for companies, since the NLRB’s administrative process can take years.

The most critical threat to businesses this year is… the weather

A survey of CEOs reveals extreme weather is now regarded as one of the most critical threats to their businesses in the next year. Research released to coincide with World Earth Day (22nd April) by the National Commission on Climate and Workforce Health, revealsed extreme heat alone now generates a productivity loss of more than 295 billion work hours per year worldwide. But despite being a major worry, the data suggests only 17% of CEOs have invested in strategies to better protect employees from climate health risks. “In our efforts to protect the future health of our planet, we can’t overlook the significant health vulnerabilities facing our workforce today,” said Dr. David Michaels, former assistant secretary of labor, Occupational Safety and Health Administration (OSHA). He added: “Building resilience will take more than policy change. It will require the active leadership of the private sector.” The increased severity of extreme weather not only poses immediate physical health risks but also exacerbates existing physical and mental health conditions. In the US, 62% of people with employer-based insurance have at least one chronic condition. “Employees today face an array of climate-related health risks, which leaves businesses vulnerable to fractures,” said Susan Potter, president, Mercer U.S. & Canada and co-chair of the Commission.

Workers want ‘deeper connections’ with their colleagues

New research has revealed that more than two-thirds (69%) of US employees say they would be happier if they had deeper connections with the fellow workers. In the poll – which question more than 800 US employees – nearly three-quarters (74%) of male workers and 66% of female workers expressed a desire to have more meaningful bonds with work colleagues. Only two-fifths said they speak with someone outside of their team daily (42%) or with colleagues in adjacent departments (43%) weekly. A staggering 5% said they never talk to someone outside of their team. The survey also found respondents aged 18 to 24 (81%), 25 to 34 (73%) and 35 to 44 (75%) were more likely to say they’d be happier with increased connection compared to those aged 45 to 54 (58%) and older (47%). just 37% of respondents said they have weekly one-on-ones with their manager while less than a quarter (24%) said they have monthly one-on-ones. The research also found that just 43% said they have weekly team meetings and 25% said these meetings happen monthly.