Is the end of Non-Compete agreements coming? Will funeral directors be “Free Agents”?

June 20, 2023/Business, Regulations/

Back in January of this year Funeral Director Daily published this article entitled “Federal Trade Commission seeks to ban (most) non-compete agreements.” There has been a lot of push-back to non-compete agreements as they have become common practice, not only for highly compensated professionals, but for general employees as well.

During the pandemic non-compete agreements even were put in place in some fast-food restaurants to keep student workers from jumping from one business to another simply because of a small wage increase. Fast-food operators argued that they would spend on training a first-time employee only to lose the employee after training to a competitor. Because of that, some of these employers required a non-compete agreement from that part-time student employee.

It was those type of non-compete agreements, not the kind you find with professional employees, such as in a funeral home setting, that really started government regulatory agencies looking at the fairness of them. This article from the Minneapolis Star Tribune indicates it was probably the “overuse” of non-competes that has moved some state governments to stricter governance of non-competes.

For instance, the article mentions that beginning on July 1, 2023, in Minnesota a new law will ban most non-compete agreements. According to the opinion article written by an attorney, “(the laws) meaning is clear: Noncompetes signed after the effective date will not be enforceable”.

However, non-solicitation and nondisclosure agreements will still be enforceable in Minnesota. The difference, he indicates, is that Minnesota employers will be able to “restrict” employees from soliciting your customers after they leave or from taking or using proprietary information. However, a former employer will not be able to ban a former employee from working in any capacity.

Again, according to the article, Minnesota becomes only the 3rd state to ban non-competes altogether — the other two being California and North Dakota.

Funeral Director Daily take: From my point of view over the past 20 or 30 years we have seen a swing in employee rights over employer rights. It’s a pendulum that seems to swing in one direction for a long period of time and then swing back in the other direction for another long period of time. Not just in funeral service, it seems to me that employees are coming up with more benefits. . . sometimes at the sole expense of the business owners.

Some of these benefits include work rules such as hybrid or work from home rules. They also include some states granting paid medical or family leave to employees paid for by varying methods including some states which plan to tax businesses, employees, or both for the benefit.

I believe that some of these new rules will make it more imperative than ever that funeral home professional employees have satisfaction at their current place of employment. The thought of future lack of non-competes will make it easier for employees to move to another business if they believe that the “grass is greener on the other side of the street”.

And, to accomplish the task of keeping funeral directors happy in a world where it seems that there are not enough funeral directors to go around, funeral home owners may have to increase their personnel and benefit budgets in a world where they are already looking at inflationary costs and, in some cases, lower margins as clientele chooses less services.

It’s another challenge that those who own funeral homes will probably need to meet.

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