Junk Fees, The Funeral Rule, and Non-Competes

Junk Fees, The Funeral Rule, and Non-Competes

As the Biden Administration closes out its last few days, let’s take a moment to review the regulatory activity IFDF and others have engaged in, at the Federal Trade Commission (FTC). This agency is the deathcare profession’s primary federal regulator. You should be familiar with the FTC because it implements the Funeral Industry Practices Rule, or “The Funeral Rule.” Still, the Commission became even more relevant to the deathcare profession by promulgating several other rulemakings.

The Noncompete Rule

The Noncompete Rule was finalized but later stalled by the courts with four separate rulings before the effective date of September 4, 2024. First, on April 23, 2024, the FTC announced the finalization of a rule governing noncompliance agreements in the workplace. The rule is now being challenged in court.

On July 3, 2024, the U.S. District Court for the Northern District of Texas issued a preliminary injunction stopping the FTC’s rule banning most noncompete agreements from taking effect, but only for the party who brought the litigation challenging the rule.

Then, on August 21, 2024, the Northern District of Texas ruled that the FTC improperly exceeded its statutory authority by creating the noncompete rule and halted the rule nationwide. Chief Justice Ada Brown found that the FTC improperly exceeded its statutory authority. She concluded that the “sweeping rule” is a “categorical ban” that violates the Administrative Procedure Act.

Any temporary block is now permanent, pending any further action, such as an appeal by the FTC, which is expected.

On July 23, 2024, a federal judge from the Eastern District of Pennsylvania ruled in favor of the FTC by writing that the FTC acted within its authority to prohibit such employment restrictions as part of its mandate to foster competition.

Finally, on August 15, 2024, a federal judge in Florida issued a third ruling that also halted the ban. The reasoning behind this decision is that Congress must specifically authorize federal actions with significant economic or political implications.

These varied opinions mean that the appeals process could take years to work through, and this case could be headed to the U.S. Supreme Court.

Rule on Unfair and Deceptive Fees aka the Junk Fee Rule

In October 2023, the FTC proposed the Rule on Unfair and Deceptive Fees, which is known as the Junk Fee Rule. This rule would prohibit junk fees, which are hidden and bogus fees that can harm consumers and undercut honest businesses.

ICCFA, which has targeted changes to these rules, commented that if the Junk Fee goes through as written, which applies to all businesses in the United States, then it needs to define ancillary goods and services so that businesses such as cemeteries are not required to include items such as an opening/closing with the original price disclosure. The influx of numerous comments has likely delayed the making of the rule final. There has been no update in several months for the finalization timeline of this rule.

The Funeral Rule

The FTC issued an Advanced Notice of Proposed Rulemaking on the Funeral Rule in October 2022 and solicited public comments on several issues related to its consideration of updating the rule. The FTC continues to consider comments and has not yet issued the Notice of Proposed Rulemaking.

Because of the ongoing uncertainty in DC, as well as the FTC, we continue to monitor and represent our members.

According to Beth McGowan and Poul Lemasters, in the October 2024 issue of Memento Mori, “It is possible that these rules stall, and we continue onward just as we are today. As far as predictions go, they suggest the most likely to move forward with little debate on the update to the Funeral Rule, mostly because there has been bipartisan support for an update.”

Final Thoughts

The IFDF will keep you informed regarding the progress and legal proceedings of these rules as they continue to weave their way through the system. The IFDF is excited to hear speculation that Florida’s CFO, Jimmy Patronis, has decided to run for the newly vacant Congressional seat in the Panhandle.