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Chip Griffin: Hello and welcome to another episode of Chats with Chip. I’m your host, Chip Griffin, the founder of SAGA, the Small Agency Growth Alliance. And I’m, I guess I would say I’m delighted to have with me Patrick Rogan of Ignition HR, a great mind when it comes to all things talent related to agencies. And it is a pleasure to have you here, Patrick.

I’m not sure it’s a pleasure to talk about regulatory issues, but that’s what we’re going to be doing today.

Patrick Rogan: Well, it’s kind of like going to the dentist. No one wants to go, but if you don’t, it’s just going to hurt a lot more later. So that’s, that’s why I’m here.

Chip Griffin: Yes, absolutely. So we’re going to try to make it hurt less and we’re going to talk about new federal regulations around non compete agreements with your employees as well as around overtime pay. And we’re going to start with non competes because I think that should be a little bit easier and Patrick and I have both been of like minds for many many years which is giving advice: don’t do non competes. Don’t, don’t have it as part of your arsenal, but we’ll elaborate on that and share what you need to do in light of this new, regulation for, or I guess ruling from the Federal Trade Commission.

Patrick Rogan: Yep. I’m looking forward to it.

Chip Griffin: So, so what has the Federal Trade Commission done to American businesses?

Patrick Rogan: Well, regarding non competes, they’ve outlined a process, 120 days after it’s filed, where it will effectively be illegal to have non competes with employees you’re going to hire, employees you have, contractors, independent consultants they basically are saying that, this will be wiped out.

No more non competes. and when we say non competes, let’s be really clear. What we’re saying is that we’re not allowing employees with a non compete to typically work for a competitor of ours – depends on how it’s working, but it’s more about going to one of our competitors. Which is different than other things that we’re going to be talking about in a little bit more that kind of get more to the meat of what’s important. But that that piece in particular assuming the courts don’t overrule this which You know, who knows what’s going to happen.

that’s the piece, that’s changed.

Chip Griffin: And I think that’s an important caveat. Both of these decisions and regulations are facing strong opposition, shall we say. Yes. And the courts and or Congress may step in. Public pressure may cause decisions to be changed. Who knows. But this is what appears to be taking effect and I think it’s important to plan in both cases as if these regulations will take effect because it’s a lot easier to back off on whatever plans you might have than it is to scramble at the last second to figure out what your solution might be.

Patrick Rogan: Yeah, and also it’s a great time to take a look at what do you have in place right now. On the day this came out, I was talking to one of my agency clients who are like, Oh my gosh, we can’t do non competes anymore. And this is going to be a huge change for us. And, and my response to that was, well, you actually, you don’t do non competes. You do non solicitations. And they’re like, no, no, we, we, we do. And I’m like, no, you don’t. Let’s look at it. Right. And they’re like, I thought that was a non compete. No, you’re good. You have a non solicitation. That’s fine. Right now. Stick with that.

Chip Griffin: We’ll come back to that in a minute, but I think that I do want to underscore one of the things that you said, that I think has been glossed over in a lot of the media coverage, but it’s really relevant to agencies, which is that this applies to independent contractors as well as employees.

Yes. And so, so you need to look at those agreements as well, not just your employee handbook or employee agreements. It is absolutely applicable to independent contractors, which is a place where even agencies that have gotten it out of their employment agreements, I have typically seen often still keep it in their independent contractor arrangements.

No go. Can’t do that. The other thing is you need to understand that these are retroactive to previous employees. So it’s not just, it’s not just people who will work for you today or in the future. If you have this with someone who has already left your agency, unless it’s already the subject of, of court action,

 then it’s gone, too, assuming these rules hold up.

Patrick Rogan: Yeah. The only exception, is there is a carve out for some highly paid senior level employees.

That’s a, that’s a small piece of it.

Chip Griffin: Yes. I mean, there are exceptions, you know, we always encourage you to talk with someone about your specific circumstances, whether that’s an HR advisor like Patrick or a lawyer, or somebody who can help you evaluate the specifics of your circumstances. But the vast majority of agencies don’t have individuals who ar