The Washington Report
January 9, 2023
In This Issue
Business Operations
FTC Proposes Rule on Non-Compete Agreements
Clean Water Act
EPA Finalizes Water Rule
Home Performance
White House Releases Tax Credit Information
FTC Proposes Rule on Non-Compete Agreements
The Federal Trade Commission released a proposed rule that would prevent employers from entering into non-compete clauses with workers and require employers to rescind existing non-compete clauses. The rule includes “independent contractors” in its definition of “worker” and would supersede any conflicting state laws or regulations that provide less protections to workers.
A non-compete clause is a contractual term between an employer and a worker that blocks the worker from working for a competing employer, or starting a competing business, typically within a certain geographic area and period of time after the worker’s employment ends.The definition of non-compete clause would generally not include other types of restrictive employment covenants—such as non-disclosure agreements (“NDAs”) and client or customer non-solicitation agreements —since these generally do not prevent a worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment, unless they are unusually broad in scope that they function as such a restrictive agreement.
The rule would ban employers from entering noncompete clauses with their workers, including independent contractors, which is not defined through reference to any other existing statute, such as in the Internal Revenue Code or the Fair Labor Standards Act. The FTC stated this was to avoid having employers misclassify employees as independent contractors to evade the rule’s requirements. Gig economy workers were specifically mentioned as an example of independent contractors. The Commission specifically invites comments on whether the rule should apply uniformly to all workers or differentiate between categories of workers based on a worker’s job function, occupation, earnings, another factor, or some combination of factors.
The FTC cites their rulemaking authority under Section 5 of the Federal Trade Commission Act declaring “unfair methods of competition” to be unlawful. Recently, the FTC exercised its enforcement authority on this issue with actions against three companies that resulted in settlements where the companies agreed to stop enforcing their non-compete agreements. See more here. Legal challenges to the rule are anticipated.
Comments on the rule are due 60 days post publication in the Federal Register. See the Fact Sheet and stay tuned to nar.realtor for more information.
Christie DeSanctis, CDeSanctis@nar.realtor, 202-383-1102
back to top
EPA Finalizes Water Rule
The National Association of REALTORS® is deeply concerned in the Environmental Protection Agency’s and Army Corps of Engineers’ final Waters of the United States (WOTUS) rule, announced on December 30, 2022. The rule will take effect 60 after publication in the Federal Register.
The regulated community and many states have called for a rule that provides the clarity and certainty essential for predictable and efficient permitting. Unfortunately, the agencies failed to pay attention to the input they received during their public comment process, as well as their regional roundtables on the proposed rulemaking. Instead, the rule’s reliance on vague terms and unclear definitions will make it very difficult for any business or individual who own or develop property to comply with the requirements of the Clean Water Act (CWA).
Rather than providing clarity and certainty for property owners and other regulated stakeholders, this definition of WOTUS adds uncertainty and confusion to the regulatory process, raises housing costs and increases federal overreach in the permitting process.
In addition, the new rule comes at a time when the Supreme Court is weighing the scope of the CWA in the case of Sackett v. EPA. A ruling in the Sackett case could negate (or render irrelevant) significant elements of this WOTUS rule, which will create even more confusion for landowners and real estate businesses throughout the country.
NAR members work to protect and steward water resources, and a clear, efficient definition of WOTUS would enable us to continue to do so. Regrettably, EPA’s new water rule not only makes these efforts more difficult, it also puts sorely needed infrastructure projects at risk and threatens to make housing even more expensive for America’s families.
Public Fact Sheet: Revised Definition of Waters of the United States Final Rule (epa.gov)
Russell Riggs, rriggs@nar.realtor, 202-383-1259
back to top
White House Releases Tax Credit Information
The White House has released the first edition of a new resource titled Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act's Investments in Clean Energy and Climate Action, which provides clear descriptions of the law's tax incentives and funding programs to build a clean energy economy, lower energy costs, tackle climate change, and reduce harmful pollution.
The Inflation Reduction Act authorizes a combination of tax credits and tax deductions to homeowners who want to make upgrades to their property so they can save energy and reduce their energy costs. They can fix inefficiencies, like drafty windows and poor insulation, that lead to energy waste. New tax credits and deductions in the Inflation Reduction Act can reduce the cost of energy-efficient home upgrades, including heat pumps and other appliances, windows, doors, and more; offset the cost of adding residential clean energy sources, including solar panels and battery storage; and make constructing energy-efficient single and multi-family homes cheaper and easier. The law also includes nearly $9 billion for consumer home energy rebate programs to electrify home appliances and perform energy efficient retrofits, with a focus on low-income consumers.
Inflation Reduction Act Guidebook
Russell Riggs, rriggs@nar.realtor, 202-383-1259
back to top