FTC Bans Non-Competes

David Ehrlich JD, Eric Vickery and Alex Nottingham JD MBA discuss FTC’s proposed non-compete rule, its impact on dentists, policy-making roles, and the importance of legal consultation.

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About David Ehrlich JD

David Ehrlich grew up in South Florida and earned a business marketing degree from the University of Central Florida and graduated in the top of his class from Nova Southeastern University Law School.  Practiced business litigation, insurance coverage litigation, real estate litigation, corporate transactions, and is a FL Supreme Court certified mediator.  He’s been a lawyer for twelve years, seven of which was at Blank Rome, one of the largest law firms in the world.  David started his own practice in 2019 to handle his own client base and focus on areas of the law that he’s passionate about. He’s a proud husband and father of two elementary aged kids.

About Eric Vickery

Eric holds a degree in business administration and brings a strong business and systems approach to his consulting. His initiation into the field of dentistry was in the area of office management. He managed dental practices for over ten years and has been consulting over 250 offices nationwide since 2001.

About Alex Nottingham JD MBA

Alex is the CEO and Founder of All-Star Dental Academy®. He is a former Tony Robbins top coach and consultant, having worked with companies upwards of $100 million. His passion is to help others create personal wealth and make a positive impact on the people around them. Alex received his Juris Doctor (JD) and Master of Business Administration (MBA) from Florida International University.

Episode Transcript

Transcript performed by A.I. Please excuse the typos.

00:02

This is Dental All-Stars, where we bring you the best in dentistry on marketing, management, and training. Welcome to Dental All-Stars. I’m Alex Nottingham, founder and CEO of All-Star Dental Academy, and with me is David Erlich, managing partner of Erlich Law LLC. I also have Eric Vickery, our president of coaching with me, and we’re talking about this issue of how the FDC band non-competes and how this may or can affect dental practices.

 

00:31

So welcome everybody. Hi, Alex. Hi, Eric. Hey. Yeah. So Eric sent me this email and he’s like this long email FTC bands non-competes. It’s like, how does this affect us? And I’m like, Eric, it doesn’t affect you FYI. Um, and, uh, uh, we’ll get that as a side hustle. We’ll talk with the attorney and Dave is an attorney. If it wasn’t obvious, right. Law firm. And I’m like, well, you have to get my buddy Dave. He does this stuff, business law and contracts and, and so on with his firm. And so we wanted to talk to.

 

01:02

a practicing lawyer. I’m a lawyer that I did pass the bar. I’m a lawyer, but you wouldn’t want to hire me. I’m not studied like David, I don’t do it for a living get you in trouble. So you talk to a real attorney here that does it. So thank you for being here. So I guess Eric, let’s start with you. Lay out the issue. How did this come about to your attention? Or what do you not know? What I’m going to be the client in this scenario.

 

01:31

And I’m going to be the one pretending like I’m the client going, what just happened? You don’t even know what’s going on. I am an, I’m an owning doctor. I’ve got an associate and all of a sudden this, this email passes my desk and says, guess what? That non-compete you have with your associate does not matter. And I’m freaking out now and I don’t know what to do because that’s how I got the email sent. Okay. So here we are. Well, Eric, Eric, and, and Alex, I’m going to do a couple of things. First, I’m going to do the classic lawyer.

 

02:00

This is over a podcast. This is not giving legal advice. I am only, my license is limited to Florida. So if you are not in Florida, this is not providing legal advice to anywhere outside of Florida. And even if you are in Florida, you are not my client. This is a macro bird’s eye view of some issues that will be coming down the pike. But what I will say is, let’s put yourself in the shoes of what Eric just, the hypothetical that Eric just said. I have an, you’re a doctor and you have,

 

02:29

an associate that has non-compete agreement in your office, and you say, oh my goodness, I just read this email, I just read that the FTC came out with this ruling, what do I do? Okay, a few things to keep in mind. One, the FTC is not Congress, and Congress is not your state legislature. So in fear of, and I am also not a be all end all

 

02:57

person to make these decisions, I can assure you that for the next three to five years we are going to be reading about whether this decision will have any legal effect. Because what this is, is a policy statement of the United States government. Okay? Is what this is. Okay?

 

03:27

very, very interesting and incredibly motivated and who I find fascinating woman who could be one of the most important women of our, people of our time. And it’s Alina Khan. I highly, regardless of what your interests are in life, read up on a woman named Alina Khan, K-H-A-N. She’s the head of the FTC. The Wall Street Journal had a great write-up on her in March because her…

 

03:55

primary motivation in life is antitrust. Okay, and this is breaking up big monopolies and promoting competition. Okay, that is where this comes about. Now, because she has attacked at from the macro side, big corporations, this is their attempt to attack this from the micro side, from the down all the way from attacking Amazon and Apple.

 

04:25

down to the local dentist practice, right? And this is now, we’re now seeing that possibility, right? And now this is a policy, my opinion is that this is a policy statement that has no direct legislative effect. Now, the important thing to keep in mind is, and this is where it is possible to have some actual teeth to it, is that the FTC has come out and called non-compete agreements

 

04:54

that they are actually an unfair trade practice. And that they argue gives them the right to take some kind of enforcement action against it. All right, and that they call them void. All right, now that still in and of itself does not automatically create that, does not render it void automatically. There is going to be a

 

05:22

bevy of litigation. There’s already three lawsuits challenging the validity of this. The day it came out, numerous lawsuits were filed. The United States Chamber of Commerce has come out challenging the constitutionality on several grounds. And just some inside baseball stuff when we all first started talking about doing this together. The first thing I said was, well, that’s a executive agency. It’s not Congress. Right. And that is the primary

 

05:53

They’re challenging this. This is not Congress. So without getting too far afield, let’s get back to the doctor. What do you do? There’s a couple different things you can do. All right. First, you can do nothing. This doesn’t go into effect until September. These lawsuits are seeking immediate relief from the court as to whether this is gonna go into immediate effect and we’re likely to get some kind of federal court ruling before September that will either enjoin

 

06:22

which means that it’ll stop from this rule from going into effect, which means non-competes with workers are void and not enforceable. You can be proactive and say, well, look, if the United States government is calling these void, I can get ahead of this and take this opportunity, call your local contract attorney that you’ve been dealing with all these years,

 

06:52

she or he help you work through it and perhaps redo some of your independent contractor agreements or your employment agreements with your staff, depending on what you have, which I highly recommend everyone to do, and omit various provisions of those agreements specific to the non-compete agreement and omit those if you want to get ahead of it.

 

07:18

There are some middle ground things you can do, like non-solicitation agreements that you say, okay, well, look, the primary reason I don’t want you to go into business for yourself, said I don’t want you to go after my client base. Some of these rules in this long opinion that the FTC came out with, leave some room for middle ground on that. And maybe we should get more into that, but it’s a 500 page Leviathan.

 

07:48

of a finding. Good word. Look that one up. That’s your word. I don’t know what that means. That’s a word of the day. That sounds big though. Man, must be a lawyer. So kind of like you, you know, breaking it down. So from a policy perspective, the federal government is saying, and I guess it makes sense to some extent, right? That you don’t want to inhibit people to have a livelihood unnecessarily.

 

08:13

They did make the exception for executives, senior executives that could be a dentist as an executive, a DSO or a big dental business that has a, to stop them from then doing what you’re doing in that area. It did exempt, I believe, like if it’s a buy sell agreement, that makes sense. Like it has to have some justification, but it’s saying if you have associates and you put them into these non-competes, now they can’t make a livelihood.

 

08:41

you’re restricting that. And so that makes sense from a policy perspective. So like David’s saying, you can get ahead of it and understand David’s a brilliant political mind. So he’s explaining how that this is laws are based on policy and trying to do something of how you want the government to work and how you want trade to work. So of course, most people don’t want to restrict trade and restrict people making a livelihood. However,

 

09:10

So that’s with respect to the associates, so you can get ahead of it. Now you were talking about non-competes, non-solicitation, intellectual property that your clients are intellectual property and you can restrict them. Let me ask you, because you kind of get to the same end, right? Nobody’s saying when an associate leaves, you can’t make a living. You’re saying, don’t affect me what you already did. Don’t take my clients or the current patients.

 

09:40

And don’t solicit them. So let me ask you David because it gets to the same point I would think Eric let me ask you and then I go David With the dentist that Eric being our president of coaching working with a lot of clients and many coaches under you And we we help dentists on board associates because associates are important to make money Is that the biggest concern from a policy perspective that we want to an associate leaves? We don’t want them taking our our patients, correct? That’s the main concern, right? Exactly. Yes

 

10:09

And that’s what the non-competes are there for. So David, this is what we can do with law, right? Find the book. How do we still achieve this end if non-competes are not in order? Well, there’s a few different things to keep in mind. One, some of this is still gonna be based on geography. Okay, this is a state issue. And that’s another part of whether this all matters.

 

10:36

because this is the first time the federal government is attacking this. So I still can’t stress this enough. This matters what state you’re in. If you’re in California, it’s gonna matter a lot. It’s gonna be different for folks who live in California from people who live in Florida, for example, because in California, non-competes are already generally prohibited, and in Florida, they’re generally permissive. And so, for example, in Florida, what I’m accustomed to,

 

11:05

is Florida is more of a errors on the side of promotion of contract and the ability for business to operate, whereas other states are more consumer protection in line or worker friendly, right? Or worker defer to the side of employee versus employer, right? Is the best way I would say that. And here, to get back to the specific question, what can I do?

 

11:35

non-solicitation agreements, so long as they’re tailored to this potential new rubric that do not limit the ability for the person to operate this specific type of business or work for a different employer, so long as that does not include contacting potential patients.

 

12:04

interested in is how that develops and how those things overlap because in my world, those two things go hand in hand. And if now the FTC is saying you can have one without the other, I am interested because I am interested in that interplay because I’d love to give you a one word answer. Sure, just cut out the non-compete part, keep the non-solicitation part and then we all live happily ever after. I’m not going to give you that answer because I don’t think it’s that simple.

 

12:33

I see a world where, and I’ll give you the doctor associate example, I think is the most complicated here, because if you and I have an agreement, if I’m your associate and I leave the practice because for whatever reason, and now our non-compete is no longer enforceable and I go to a different practice, and the only thing that survives is my non-solicitation agreement.

 

13:03

And those, under this surviving agreement, I can’t contact the existing patient role that you would have had, right? That I would have been not permitted to contact while working at your practice. But if those patients follow me because they saw something that led them to me, right?

 

13:32

of contention between us, and that is still going to be, you know, who contacted who, how did you learn of my existence at the other practice, and it’s still going to be the source of discontent, so to speak. And I’m curious on the interplay of how that is going to work, because as much as the FTC have spent quite a bit of time trying to limit those,

 

14:02

They’re trying to be narrow in still promoting business and still allowing business to thrive, but they want worker movement without the restriction of worker movement. I am curious in this how broad that’s going to go. We also know that lawyers can be very creative in finding areas to say that this creates a private right of action.

 

14:29

and that it’s a violation of my freedom to go work somewhere else that I wasn’t able to contact somebody. If this goes into play, let’s say it’s upheld or the Congress supports it, whatever, that’s the baseline, meaning Florida cannot lower the protection. They can only add more like California. You can never go below the federal government.

 

14:58

So you’re saying this is an executive action. It’s got to be upheld. And if it is upheld, whatever reason, then no state law can lower it. Correct? That is if all of this, in theory, once it’s affirmed, if it’s affirmed as legal, then you can’t do that now. Um, and like you’re saying there’s lawsuits and things that will go on. Um, so it may just be postponed or whatever. Now, could you.

 

15:27

you’re saying getting ahead of it, could you just say, all right, for the meantime, make sure all your agreements have the non-compete, non-solicitation, IP protection, NDA, all that good stuff, all in one that, I mean, what’s the harm of that?

 

15:47

I would certainly encourage folks to keep whatever you have. I would also encourage folks to be mindful of the possibility of this being a bellwether for where policy goes forward. It could have the opposite effect though, that if this is found to be unconstitutional, that states that are pro-business could have a…

 

16:17

rubber band effect as they say that could actually expand employers rights as to what can be.

 

16:26

Uh, what employers can contract for. And then conversely in the other States that are more employee friendly, what can be additionally restricted. So I guess my, my statement is it could, you’re saying it could strike down the other way that if there’s a Supreme court action or something that goes on, that it could say, Hey, California, you cannot, not only is this non-constitutional, not permitted for the legislature. Put something that

 

16:55

you know, restricts it and say you can’t add these additional protections that go too far. So you’re saying it could go the other way. Now is there any harm of having the provisions? I mean, basically it would only, so let’s just go, a scenario happens. Let’s say I’m in Florida here. I have all of them. Let’s just say it was upheld. Well, it’s upheld. Once it’s fully upheld and clearly illegal to do it.

 

17:24

You’re going to have to change it. Well, so there’s two scenarios. One is it’s unclear and I have everything in there. It is clear and I may continue to have it. Really lawsuits are only an issue when they happen. So you can talk all you want now, because ultimately you just, I mean, as long as you don’t get dismissed, you can bring a lawsuit associate violates your agreement. You go and you file a lawsuit against them.

 

17:51

And they’re going to file motions, you know, dismiss whatever. Um, so from a strategically, like, uh, if I kept that provision in there, would it hurt me or the judges say, okay, I’m not going to section a, I’m not going to allow, but B and C we can look at, there’s an issue of fact there. There there’s two issues to that could come to pass. Uh, one regulatory and for compliance can enforcement can be a thing.

 

18:21

Uh, where, for example, I’ll just give you a total, uh, example where, um, the CFOs and the department of revenue of states often will ask medical practices for copies of their employment agreements or their independent contractor agreements to ensure that workers compensation laws have been followed. I can see a world, I can see a world where this is something.

 

18:50

that is something they check for, right? Because states are always looking for, and this is me thinking outside of the box, Alex, to be honest with you, but if they hire me for looking for revenue sources, this is something I would suggest. I hope they’re not listening. They would, I would say this could be something they would look at, right? The same time they would do those kinds of Department of Revenue audits and for whether they’re properly disclosing employment.

 

19:19

when they’re using independent contractor agreements instead of employee and I had one of those Yeah, sure and we were okay, but they wanted all the agreements. They want to see what’s going on So you’re saying if you get audited They could say you’re in non-compliance. You’re doing something improper. You got to fix it and we’re finding you Potentially reprimanding you for for doing that. So okay, so you can get ahead of it. But the point is that So what I’m hearing right now? just

 

19:48

like make sure you have an attorney ready to be ahead of it, that if this is upheld, that you cannot use that provision. But have other provisions. Lawyers are designed to be creative to still get that upheld. I’m sure, again, from a policy perspective, I don’t know what the FTC is thinking. Maybe they’re not thinking dentists. But we also don’t want to burden…

 

20:18

dentists or business owners from people taking their stuff. And I would argue that patients are your IP. This is an equitable, I think, law, not necessarily some statutory here, but procuring cause that I procured these leads. I put money in and marketing to have them come and you’re unfairly benefiting on just enrichment. There’s a lot of things that you could argue, either statutory or equitable to be able to. And the point is this.

 

20:49

Part of, and David, you can attest to this, because often lawyers will say, is it worth it to bring the lawsuit? You can be all right, but is it worth it? And from, look, my dad, as a dentist, his associates took people and left, and he didn’t wanna sue him, because he’s a super nice guy, I love him, but potentially had a claim. But he didn’t wanna go through the law, the stress and all that. And you have to say, is it worth it? They took one or two patients, is it worth it?

 

21:18

They took 20 patients. Now I sue and just having a lawsuit is the, if you are gonna do it, is a stressor for both parties that they got the message. It’s like, listen, I’m watching you. Even if you lose a lawsuit, as long as you’re not frivolous, you’re saying, listen, I’m gonna enforce my rights. This is how we do it. And it was stressful for everybody. That is, because again, we get into law, then it’s where you guys, David, say, is it worth it? Is this what you wanna do?

 

21:48

And being vindictive usually doesn’t work, but if you are upholding the right to work in your business, it’s there. So you have to look at multiple scenarios. This is where your great mind is. You’re talking about, this is amazing. You talked about the political perspective, the regulatory perspective, the business perspective, the is it doesn’t make sense to enforce perspective. So all of these things you have to consider. Yeah. A few things, Alex. Now, I think, and I liked where you were going with trade secret,

 

22:18

My understanding is they sort of skirted that. You use intellectual property in terms of what your patient list, your confidential information and the non-disclosure agreement. A few things to that effect, and that is that you can still use what is in the right to contract to do your best to.

 

22:47

protect yourself in this environment from those things by using those types of agreements. And my understanding is that the concept of trade secret is relatively unaffected by this. And trade secret is so inviolate that there’s, at least in Florida, there’s definitely statutes that go to this specifically and even in Florida’s non-compete statute. And again, I encourage you to consult your local jurisdiction.

 

23:17

lawyer in your jurisdictions ability to consult your state’s non-compete issue one way or the other. But in Florida, there’s actually a separate component to the non-compete statute of whether how many years is presumed reasonable and unreasonable. If it’s related to a former employee, if it’s related to the sale of a business, say you buy someone’s medical practice, you know, you buy a

 

23:46

the dental practice versus trade specific to trade secret. And so you just straight up buy someone’s client list to the extent that’s possible. Oh, okay, that’s interesting. So let me ask you this. So we talked about the associate situation. What about the, you’re selling the business. What about you’re buying the list, you’re buying the patient base and maybe not the physical, which happens. You buy the patients and not the facility. Eric is saying yes.

 

24:15

In those two scenarios, and by the way, I’m being chatted here. We’re live streaming. Over here, we’ve got a dentist who is on our YouTube channel, and we’re chatting away. We’ll see if questions come up. We’re also on Facebook and LinkedIn Live, so if you have questions, just chat them away. About those scenarios, you’re selling a business or you’re buying the book of business. Does this FTC apply?

 

24:45

situation apply in non-competes? No, so the final, they call it the final rule because the FTC has been investigating this for a long time So you might hear me say the word the final rule, but the ultimate decision this 500 page I call it Leviathan earlier, does not apply to non-competes entered into by a person pursuant to a bona fide sale of a business entity. So the straight-up answer to the sale of a business component

 

25:13

is that that is somewhat immune to this. Now, the other components are, it is still ultimately going to apply to the worker B level, okay? So hygienists, front desk associates, those are the two kind of primary bread and butter components to this, and stop me if I’m wrong, but my thoughts would be you have associate dentists, you have hygienists, and you have staff.

 

25:43

The staff and hygienists and front desk folks, that is who this is primarily going to. This rule is primarily trying to tell you that as of September 4th, the United States government wants to tell you that non-competes are going to be void as to those folks. A lot of lawyers in your local jurisdiction, I would defer to them. I am telling you that I…

 

26:12

I am not convinced that it is automatically enforceable. And I think we will get some ruling from a federal court that will say it is automatically enforceable right now or it’s not, okay? Because of these pending federal actions, seeking to enjoin it. Now, the other, there’s another question in there also. I wanna clarify something. First of all, I wanna say to all the dentists and dental team members listening, this is how your patients feel.

 

26:42

This is why we teach verbal skills. Listening to these two guys talk is like listening to mumbo jumbo, squeezing my brain. So I want to see if I’m understanding. I’m going to simplify this, make this really, really simple. It’s a little too early to worry. We don’t really know too much. We’ll know more in September, but it’s a good idea to meet with someone in your jurisdiction to say, Hey, do I have an NDA and a non solicitation agreement in my contract? That good? Did I catch what I needed to catch? Yes.

 

27:12

And confidentiality. Or you mentioned that. Yeah. I will take it one quick step further, Eric. And I think there’s three kinds of buckets that I would put dentists and practice owners in of where they might fall. And some of this might depend on your jurisdiction. Okay. There’s the do, do, do nothing and wait and see, cause you have until September. We think there’s going to be some rule one way or the other. I apologize for the YouTube folks because of the sunlight.

 

27:41

I have an office window and it’s set up right on my face. So I might, I don’t know if I can rearrange myself. You look great, you look great. Thank you, thank you. I wish I looked like you too, but we’ll see. Now, next, there’s the folks that might be persuaded to embrace the future. You’re okay with this and you wanna get ahead of it and it’s okay with you that you just say to yourself, okay, I’m not getting anything out of this non-compete issue.

 

28:10

It’s more hassle to me than it is than I’ve ever gotten a benefit from. I’ve never sued anyone over this. I’ve never even followed up with anyone that’s ever left me to even care about this. The only thing I really care about is the confidential nature of my client list. So as long as they’re full sign of that, so be it, assault your local attorney, make sure that’s still kosher and go with that. And then there’s something of a middle ground, which is

 

28:39

And we didn’t, we touched on this, but we didn’t get too specific. And that is retain non-competes for your higher level executive. They call it higher level executives in the, in the opinion. And that’s why I’m using that language. That’s what Eric is at All-Star. There you go. See? So you’d say, you know, that these are your associate dentists. These are perhaps your junior partners at a PA. These are, you know,

 

29:07

junior members of an LLC practice. So you’re saying associate dentists may rise to the level of a senior executive. I’m glad you asked that Alex, because that is at least defined by this opinion as those with over $151,164 in annual compensation and in a policy making position for the business.

 

29:34

Okay, so let’s break that into two parts. Let’s break those two parts. That is the back of the envelope definition. We finally got there. There’s two points. That’s a synthesis. I think the second part might get these associate dentists out, right? So let’s break it down. So anyone earning as a W-2 employee, does that matter? Anyone earning $151,500 or more? That’s a great question. So it says annual compensation. Now that’s something of a nebulous term. Because that could be a owner distribution. Okay.

 

30:02

that could, you know what I mean? Because a lot of medical practices and a lot of dental practice have moved to the 10K model. Yeah, a lot of them are doing, well, and a lot of associates are doing 10K. Wow, this is huge. This is the most important part right here, Alex. Okay, for the associates side. Yeah, because almost every associate’s gonna be paid over $150,000 a year, okay? If not, we’re doing something wrong. All right, and now, David, what was the second part of that? Or what was the other part? And in a policy- Oh. And in a policy-making-

 

30:32

position for the business. Now, and that’s where I think it fails. That’s why I think associates are exempt because even if there’s, even if they’re W2 or 1099, that might there, but I think if they’re not making policy, now, there may be some associates that are not owners that are making policy that are leading, that have a management role. Those will be considered executives. But if you’re just a, you know, like your associate is no different than a hygienist in that respect, um, they’re just a producer. Um, so let’s debate this Alex.

 

31:02

I’m specifically thinking about a practice right now. Three locations, four doctors, one owner, one owner. But we have leadership meetings. We have leadership meetings where we bring these doctors in and they play a role in how we lead these teams in all three of those locations, but they’re not owners. They all make more than 151,000. What do we need to put in place to get them to an executive leadership role where they have a policy-making position?

 

31:30

What title do we need to give them? They need titles. They need to be part of the job description. It says that you have an executive role, senior executive role, or that we can interpret from it, right, David? That there are functions. Because if you just have a leadership meeting and everybody’s there and the hygienist and the team, that won’t fly. And remember, this is all going to get down to if it’s litigated instead of to be there. And it’s also, look, it’s substance over form. This is law school, right, David? You can write whatever you want.

 

32:00

But if a lawyer says that you form isn’t what your substance, you’re not actually doing that, but you call it that, they’ll throw it out. So they better really have a policy making experience. Like you at All-Star drive All-Star. I was just commenting how proud. I’m like, nobody, everybody thinks Eric’s the CEO, which is the whole point. Our company, we have senior executives that lead. That’s different, but if you can’t put that on them. So they better really be, don’t mess around.

 

32:29

Judges hate that if you’re just kind of like, So let’s make, so you need to talk to somebody and make, make that legit a lawyer in your area, but it sounds like they need to be able to sign an NDA to be in that role. Yes, every, yeah, any contractor, those things. And then, you know, we’ll spend. Well, you both brought up an important point. I’m sorry to interrupt you, Alex. I think he just brought up an important point because you said sign one. This, the, the opinion goes on to discuss.

 

32:56

and this is, I don’t want to get too legalese, but the SEC, the Securities Exchange Commission, has discussed executive officers as part of its reporting duties, and it’s putting this group of folks under that heading, and it’s what the court is gonna use as any analysis for whether folks fall under that, and part of that is doing a jobs duty test. So the FTC really spent 500 pages trying to give courts

 

33:26

a blueprint for what analysis to undertake for all this. And one of the things they did in whether this person has policy making authority is also, is whether they have policy making authority, not even just like input, whether they have authority for the entire organization and would closely align to the SEC’s definition of executive office. So for example, if they’re leading team meetings, if they’re implementing the All-Star Dental Academy training system, if they’re helping with hiring.

 

33:54

If they’re doing things like that, that lead the company, if they’re, you know, firing, firing, sure. They have the authority. They have the authority to fire. Right. And this is but you know what? Now I’m just saying this and this is this is only for those are also not going to be enforced. So this is only until this goes into effect. This only keeps alive those until September. So this is yes. I just wanted to throw some water on the senior.

 

34:24

only those are also out the window. So what do you mean they’re out the window? They want all non competes gone. They wait. So they’re basically saying there’s a gone. Yep. This is so they’re only saying Alex, I got you. Alex, I got you. These are I got you on the non solicitation and the let me let me let me say you can’t go anywhere. Go ahead. Yeah. What it’s saying is essentially

 

34:50

No new ones. So it’s going to grandfather those. Oh, really? That’s a grandfather. Hold on. Let me, let me, let me see this. The minutes back. It’s nuts. It is, it is really a mind boggling expansion. While you’re looking at that, just to be clear, um, just to be clear, you’re buying a practice, you’re buying a list of, you’re buying, uh, the practice in other form, you can enforce a non-compete for the most part. That’s a business sale. Correct.

 

35:20

That doesn’t fall under this. Exist. Okay, I’m selling the business to you. That’s different. Where we’re getting into trouble, so that’s clear. Where we’re getting into a problem. So you’re saying, and then, if you actually have associate dentists that are senior executives, this will be grandfathered in. But anybody new, even if they are a senior executive, you cannot do non-compete. You may have to go the route. But remember, we were saying, you still can go the route as.

 

35:48

This is my IP. So I don’t want to pick on Eric, but if Eric were, I mean, well, I would say, so, so if one were to, he’s a president of coaching, right? So he would go and say, I want to build another coaching company using all the IP. So you can’t stop him from coaching. You can’t stop him from, uh, so you can’t as a senior executive, let’s say he was a new president of coaching. You cannot, um, uh, he cannot start, uh, he could start his own coaching firm. He could do things, but he cannot take the IP of all star.

 

36:18

or the clients of All-Star. That can be enforced. Now, how do you enforce it if they come around? Is that what you’re saying? Or with a dentist, same thing. I don’t pick on Eric. This is for the entrepreneurs that are listening. If you’re a dentist and the associate leaves, okay, this is the important thing, the associate leaves, then you can stop them with the other provisions by using your IP. So if they are senior executives, they’re using your IP to train people to run things. So this could be

 

36:47

Again, we’re picking on dentists, but what if you have leadership, real leadership dentists that leave, they can’t take your IP and use your systems. Because let’s say Eric, give me an example, Eric coached, we coach leadership training. This is very important. We do leadership training, high level training for offices, not just phone and scheduling. Now we are giving all-star systems that become the system to the office. Now this senior executive dentist says, I want to leave and I’m going to start my own dental business using all the systems that I’ve used.

 

37:16

You know, and then reaching out to those patients that we can get them on. You’re taking your IP and you’re taking an RIP also are our patients. So you can’t use our IP. Stop that. Do your own IP and you can’t use our IP, which are patients. You can’t solicit them. Those would be enforceable. Likely. This, this is designed specifically for worker movement and intellectual property and trade secrets are.

 

37:47

still under the auspices of safe and secure, as far as the FTC is, their modus operandi goes. Now, will creative plaintiffs, attorneys, attempt to try to muddy those waters? That’s the thing that I’m curious about, and we’ve touched on that before, that I’m curious about how the interplay of all that is gonna go. And whether there’s overlaps to those provisions. How do some of those survive without the others?

 

38:17

But no, no, sorry. You literally one more. I’ll give you the last word. I want to wrap it up. Um, I want, I want second to last. So Eric’s going to, Eric’s going to ask, Eric’s going to ask a question. David, you’re going to ask, well, you answer what you’re going to say. David’s asked a question. We’re going to wrap it up. We’re also going to define lefiathan before the end of the meeting. And then, um, remember David is a good friend of mine and, you know, great political mind, legal mind. We, uh, I’ll make sure to get him back here.

 

38:44

as this progresses or new legal things come in. When Eric sent me this email, I said, dude, this is a David question. We got to get him on a call. We have no right discussing this without a seasoned attorney. David, what are you going to say and then go to Eric? Just a couple of things. You asked a bigger important question and then I led you down a different path. I just wanted to say the bigger question is, what do we do now? How is this going forward? The big thing is as of…

 

39:13

Right now, for your existing senior executives, existing non-competes, existing that already ink to paper are okay, and they’re enforcing. Starting September 4th, it precludes, it bars employers from entering into…

 

39:40

or attempting to enter into a non-compete clause from a senior executive. That was the one thing I wanted to clarify. Got it, that helps. Okay. Translate that Alex, translate it. So what he’s saying is, your agreements are fine the way they are now, assuming that your associates are senior executives, because it’s grandfathered in. Going forward, you cannot enter into non-competes with any employee or contractor, can’t do it.

 

40:09

It’s not going to be enforced. Assuming this law is upheld. But let’s say I have an associate who has a non-compete, but I haven’t made them a senior executive. They don’t have any decision-making ability. I should do that now before September 4th. But again, it’s assuming that this is upheld. I actually would probably, I would have an attorney ready to go, but if the FTC, keep your eye on it. If the FTC uphelds it or there’s no, or it’s being upheld by the courts, we have to follow it.

 

40:38

I would assume, David, we won’t wait and see. Watch that date and within a few weeks if nothing happens or… So what happened, let me ask you this. David, if nothing, something will happen before that date, there will be a court, there are already lawsuits. So something has to happen now. Could it also be deferred where no decision, meaning because they haven’t or still will be a ruling by that date, whether it’s upheld or not, correct? I think so because to me, it’s a pretty clear question of law.

 

41:07

of three things. There’s kind of, you know, and this is, I want to help dentists run their practice but I could talk about this for three and a half hours about the legal issues going on with this situation. But does the FTC have this ability? Because this is something that is uniformly a state issue. Contract law is a state thing. When I sue you for breach of contract, I sue you under state common law. Period.

 

41:36

Right? States have state, there’s state statutes on non-competes. The United States Congress has never passed a non-compete statute. Florida and California and Minnesota and Indiana have non-competes statutes. So let me ask you this David, because your political mind, being that we have two sides of government, right? Two parties. Do you think, what’s your prediction? Do you think this will be upheld or do you think this will be?

 

42:06

challenge and lawsuits and all that because states and are you don’t think it’s gonna be up if you want my if you want my Yeah, my opinion is this is not enforceable ultimately, this is a Ultimately, I think three things one. Why don’t we have this whole discussion? We should have led with that because no in all fairness because these are business owners that want to do something the United States government Just say don’t do something. We’re not gonna enforce your contracts that you just paid a lawyer to prep for you

 

42:35

And I’m not saying whether and we’re not taking a political stance. We don’t all star. I try to keep very But I’m just saying from what we see The other side because we have one administration that’s that oversees the FTC The other side is not going to like this for a variety of fronts Just the fact that they’re doing something and then the states aren’t gonna like it and all their representatives So it’s gonna be a big hoopla that’s going on. Then you have the Supreme Court. There are a lot of things that happen So we have to be mindful of it. It’s great thing. It’s very scary because when Eric sent it like, oh my goodness, but

 

43:04

let’s hold on because there’s going to be a lot there’s merit to all this but this is going to be litigated and so on so we have to keep in mind this was a great primer by the way for those listening I know David has got the point he doesn’t think this would be forceful but still this is really I know Eric’s like whoa but for some of our listen our dedicated podcast listeners and YouTube subscribers and so on they like to hear the details I know some of our dentists they like to hear all this stuff it’s very interesting

 

43:33

I mean, David’s so talented, he could have his own political show. I mean, on policy and stuff, it’s brilliant. So this is the way he does it. In another life. That was my dream. I went to law school to do that. And be a history professor too is one of your goals too. But so anyways, we’ll keep you posted on it. Thank you everybody for being on the show. David, define Leviathan. Sure. So it comes from…

 

44:00

Apparently in ancient Hebrew myth that comes from the root that means to twist and turn and wind and coil. It’s a sea serpent apparently. I had no idea that I was… Well there’s a few definitions. There’s a large aquatic creature or a thing that is very large or powerful or a ship. It’s a leviathan. So there’s a… This guy man, great words. Thank you for the word of the day. I always just thought it was a big… That will be your wordle tomorrow.

 

44:30

All right, David, David Ehrlich, the managing partner of Ehrlich Law LLC, Eric Vickery, president of coaching of All-Star Dental Academy. Thank you for joining us. Remember to follow us on Apple Podcasts, Spotify, YouTube, get the episodes as they are released and also Instagram, Facebook, we’re everywhere. Share with your friends and until next time, go out there and be an All-Star.

 

44:54

We hope you enjoyed this episode of Dental All-Stars. Visit us online at allstardentalacademy.com

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