Your Dental Practice Likely Has New, Complicated, and Rapidly Approaching Reporting Obligations Under The Federal Corporate Transparency Act
Jordan Uditsky • February 22, 2024
Dental practices already have a long list of regulatory obligations that require their compliance, from those related to licensing to billing to patient privacy to employment policies and practices. But as of January 1, 2024, practice owners now have a new, non-negotiable, and complicated disclosure requirement to add to the pile.
That is because almost every dental practice is considered a covered “Reporting Company” under the federal Corporate Transparency Act (CTA). Under this law, dental practices will need to provide the federal government with detailed information about their ownership and identify any other individuals who exert control over their practice.
With mandatory reporting deadlines approaching, and with steep penalties awaiting practices that fail to comply, practice owners need to act now to ensure that they understand and comply with the CTA’s disclosure mandates.
What Is The CTA?
The CTA was signed into law in 2021 as part of the federal government’s efforts to combat illegal money laundering and "the use of shell and front companies by illicit actors who use them to obfuscate their identities and launder ill-gotten gains through the United States."
Accordingly, the focus of the CTA is on revealing the identities of the individuals and entities that actually own or control a business. This is accomplished by requiring all covered companies to disclose "Beneficial Ownership Information" (BOI) to the Financial Crimes Enforcement Network (FinCEN) division of the U.S. Treasury Department.
While dental practices may seem like unlikely vessels for money laundering and similar nefarious activities, it does not matter. In fact, the CTA is focused on smaller businesses like individual practices since most larger companies already have ownership reporting obligations under various federal regulatory schemes. That is why the government estimates that approximately 90% of all businesses and organizations in the U.S. will need to comply with the CTA’s reporting requirements.
Almost Every Dental Practice Is a Covered "Reporting Company" Under the CTA
As defined in the CTA, a "Reporting Company" that must comply with the CTA is any corporation, limited liability company, or any other entity created by filing a document (e.g., Articles of Incorporation) with a secretary of state or equivalent agency. This includes “professional corporations” established under most state laws, the corporate form that most dentists choose for their practices. Entities like general partnerships or sole proprietorships that can be created without such filings are not subject to the CTA's disclosure and reporting requirements (but any dentist who practices as such should remedy that dangerous and ill-advised situation immediately).
While the CTA includes a long list of entities exempted from the CTA, it is unlikely that any active small or mid-size dental practice will fall into any of these categories. Unless your counsel determines that your practice is exempt, you should presume that you will need to provide FinCEN with your practice’s BOI.
What Is The “Beneficial Ownership Information” Practices Must Disclose?
In addition to basic corporate information such as name, address, and tax ID number, Reporting Companies must provide FinCEN with BOI about two groups of individuals: "Company Applicants" and "Beneficial Owners."
A "company applicant" is "the individual who directly files the document that first creates the domestic reporting company" and "the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document." Effectively, the person who filed the documents with the secretary of state forming the practice entity is a "Company Applicant" whose BOI must be reported.
Notably, the reporting of applicant information only applies to Reporting Companies created from and after January 1, 2024. Such new Reporting Companies need not provide FinCEN with updates regarding Company Applicant information after their initial disclosure.
"Beneficial Owners"
All Reporting Companies must also disclose information about their "Beneficial Owners." As defined in the Final Rule implementing the CTA, a "Beneficial Owner" is any person who, directly or indirectly, either:
- Owns or controls at least 25% of a reporting company's ownership interests; or
- Exercises “substantial control” over a reporting company.
Who Has "Substantial Control" Over a Dental Practice?
Determining whether a person exercises "substantial control" over dental practice such that they are considered a "Beneficial Owner" involves an analysis of the person's actual authority and the actions they are empowered to take on behalf of the practice. Under the Final Rule, an individual has "Substantial Control" over a practice if they:
- Serve as a senior officer of the practice;
- Have authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body) of the practice; or
- Direct, determine, or have substantial influence over important decisions made by the practice, such as:
- Entry into and termination of contracts.
- Acquisition, sale, or lease of the practice's principal assets.
- Reorganization, dissolution, or merger.
- Amendment of any governance documents of the practice.
BOI That Dental Practices Must Be Report to FinCEN
Non-exempt dental practices must provide FinCEN with the following information regarding individuals who qualify as Company Applicants or Beneficial Owners:
- Full legal name.
- Date of birth.
- Street addresses (identified as a current residential or business street address).
- Non-expired state identification document or passport.
Reporting Deadlines Depend On When Practice Was Established
The CTA's compliance deadlines largely depend on when the "Reporting Company" was formed.
- Entities Formed in Calendar Year 2024: Covered Reporting Companies created or registered on or after January 1, 2024, and before January 1, 2025, must submit their BOI report within 90 days after the date of the entity's formation (i.e., the filing date of its Articles or Certificate).
- Entities Formed Before January 1, 2024: Covered Reporting Companies formed before 2024 must report their BOI on or before January 1, 2025.
- Entities Formed on or After January 1, 2025: Covered Reporting Companies formed after 2024 must file their BOI within 30 days after its date of formation.
Penalties for Non-Compliance
Covered dental practices that fail to comply with the CTA's reporting requirements face significant penalties. Any entity or person that "willfully provides, or attempts to provide, false or fraudulent information or willfully fails to report when required" faces civil penalties of $500 per day, criminal fines of up to $250,000, and a maximum of five years in federal prison.
While this new federal obligation may be another annoyance for practice owners, the consequences of failing to comply are far more than an inconvenience. For questions and assistance with your practice’s reporting under the Corporate Transparency Act, please contact Grogan Hesse & Uditsky today.
We focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you.
Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices, and this blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
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Whatever shortcomings and deficiencies there may be in the dynamic between dental practices and insurance companies, their distinct roles in patient care are not among them. While dentists certainly want to maximize reimbursements for the services they provide, they are not beholden to insurers and remain in a position to advocate for their patients and challenge an insurer’s cost-related decisions without fear of retribution. But a recent unprecedented move by Delta Dental in Wisconsin threatens to upend this relationship model and has raised serious concerns among industry groups, patient advocates, and regulators about conflicts of interest, competition, and provider independence. Over the summer, Delta Dental announced that it had acquired Cherry Tree Dental, which owns and operates 31 clinics, 25 of which are in Wisconsin. The American Dental Association (ADA) is among several organizations that have vocally opposed the transaction. As the ADA wrote shortly after the deal was announced: When an insurance company becomes both health care provider and insurance payer, questions arise regarding potential conflict of interest. From a business standpoint, dental insurance companies seek to minimize cost and maximize profit. As a result, patients may find their treatment options limited to what is most cost-effective for the insurer, not necessarily what is most effective for their oral health. The ADA believes that the health interests of patients are best protected when dental practices and other private facilities for the delivery of dental care are owned and controlled by a dentist licensed in the jurisdiction where the practice is located. In November, the ADA filed a letter with the Wisconsin Office of the Commissioner of Insurance expanding on its concerns and opposition, including worries about provider independence in making care decisions: Direct ownership by Delta Dental could compromise dentists’ ability to advocate for patients. In traditional arrangements, dentists can appeal plan decisions regarding patient care or choose to leave a network if plan policies are overly restrictive. However, the ADA warned that when dentists are employed by the payer, challenging cost-related decisions could label them as “problem employees,” potentially discouraging proper patient care. The potentially anti-competitive effects of such arrangements were also raised by the ADA, which noted that “Delta Dental’s acquisition could influence agreements, business practices, and fee schedules between Cherry Tree and other payers, potentially creating unfair competition.” In addition to the ADA, the acquisition has drawn concerns from the Wisconsin Dental Association, the American Economic Liberties Project, and the Alliance of Independent Dentists. The fallout of this acquisition, if consummated, could ripple through other markets, potentially leading to a seismic shift in the provider-insurer landscape. We will continue to monitor developments and provide updates as warranted. We Focus on You So You Can Focus on Your Patients At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
For many associate dentists, the sound of opportunity knocking comes in the form of an offer to become a co-owner of the practice where they work. Rare is the dentist who would reject out of hand the chance to reap the rewards of years of hard work and move from employee to owner. For the practice owner who opens the equity door for their associate, such a “buy-in” can infuse cash and value into the business, laying the foundation for a seamless ownership transition upon their retirement. The key to a successful buy-in is a clear and equitably structured deal that is workable for both parties in terms of how the associate will pay for their equity interest. However, there is no one-size-fits-all approach. The structure of a dental associate buy-in can vary significantly depending on factors such as the associate’s financial capacity, the practice’s value, and the owner’s long-term objectives. Whether you are the associate or the practice owner in such an anticipated transaction, you should consult with an experienced dental practice attorney to understand your options and determine which structure provides you with the most value. Your discussions with your attorney will likely include some or all of these common dental associate buy-in arrangements: Cash Purchase A cash purchase is the most straightforward buy-in model. With either cash on hand or through financing (the more likely scenario), the associate purchases an agreed-upon percentage of the practice (for example, 25% or 50%) for a lump sum based on the appraised value of the practice. That appraisal will likely use metrics such as collections, earnings before interest and taxes (EBIT), or a percentage of annual gross revenue. The main advantage of a cash purchase is its simplicity and immediacy. The associate becomes an owner right away, while the practice owner receives a clean and full payout for the equity sold. However, obtaining the needed financing may be easier said than done for an associate dentist, and a large cash payout may also come with unwanted tax ramifications for the owner. Buy-in documents for a cash purchase should address governance rights, profit distribution, and exit mechanisms. They should also define what happens if an associate departs, how future buyouts are valued, and whether non-compete or non-solicitation covenants apply. Installment Sale An installment sale allows the associate to purchase equity over time, making periodic payments instead of an upfront lump-sum payment. After the practice value is determined, the associate agrees to buy a certain percentage of ownership through regular payments (e.g., monthly or quarterly) over several years. Payments may include interest, and ownership may be transferred incrementally or upon full payment. This is a good option for associates who do not have the means for a full cash buy-in immediately. For owners, this arrangement provides a steady income stream – so long as the associate does not leave before completing payments. That is why the documentation should clearly outline the timing of ownership right transfers and provide robust default remedies, such as forfeiture of prior payments or reversion of ownership interests. Sweat Equity In a sweat equity buy-in, the associate essentially cashes in their years of service, earning ownership over time based on their contribution to the practice’s growth or profitability rather than through an immediate cash investment. In a typical sweat equity arrangement, the associate receives equity credits or options tied to measurable performance benchmarks, such as production levels, collections, or tenure. Once those targets are met, a portion of ownership is granted or sold at a reduced price. This structure enables talented but liquidity-challenged associates to become owners without initial financial strain. It also incentivizes them to grow the practice and stay long-term. Shadow Account (a/k/a Phantom Equity) As I discussed in detail in this post , a shadow account (also known as a phantom equity plan) is an increasingly popular buy-in model, especially when the owner is not yet ready to transfer real equity but wants to reward the associate as if they were an owner. In this model, the associate receives the right to cash payments equal to the value of the shares at a specified later date or distribution event. That value can be established through an appraisal or an agreed-upon formula. The selected events that give an associate a right to a payout can include such things as achieving performance goals, termination, or retirement. There are two types of shadow account/phantom stock plans. In an "appreciation only” plan, the cash payout upon vesting does not include the value of the underlying shares, only the increase in value of that stock since it was granted. In a “full value” plan, the practice pays both the underlying value of the stock and the amount the stock has appreciated while held by the associate. Like actual stock, phantom stock has a defined value and tracks the practice’s performance, but an associate holding phantom stock typically does not have either minority shareholder rights or voting rights in the practice. This makes phantom stock plans attractive for owners who want to provide associates with a sense of equity ownership without giving up any actual control. The practice has broad discretion and flexibility in designing the plan, including valuation formulas and vesting conditions, and the administrative burdens are less than for traditional stock option plans. As noted, the “best” buy-in structure depends on the unique goals of both parties. No matter which model is ultimately adopted, well-crafted documentation, preceded by careful consideration and consultation with counsel, is essential. That is because these deals do more than just transfer ownership - they can lay the foundation for a stable, profitable partnership that preserves the practice’s legacy and rewards everyone’s investment, financial or otherwise. We Focus on You So You Can Focus on Your Patients At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
For years, state courts and legislatures have taken a skeptical eye toward non-competition agreements. Judges here in Illinois and elsewhere routinely struck down overly broad and overreaching provisions, while an increasing number of jurisdictions have passed legislation or ordinances banning non-competes outright or limiting their scope and enforceability. During the Biden administration, the federal government injected itself into the heretofore state and local assault on non-competes. Both the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) took the position, in a Final Rule and counsel's opinion, respectively, that almost all existing and future non-competes were void and unenforceable. Those actions were immediately challenged in court, and litigation about the FTC's ban resulted in dueling district court rulings, with injunctions issued against its enforcement in some cases, while other judges found the FTC had properly issued the Final Rule. The FTC subsequently appealed federal court rulings in Texas and Florida that invalidated or enjoined, respectively, the FTC's non-compete ban. Then came Election Day 2024. Nationwide Ban Abandoned, but Challenges to Non-Competes Remain Unsurprisingly, for an administration with a penchant for being business-friendly and regulation-averse, the newly comprised FTC quickly changed its tune on a nationwide non-compete ban. A series of moves this year has made it clear that the federal government, at least for the next three years, is abandoning any such blanket efforts. Specifically, the FTC moved in September to dismiss its appeals of two district court decisions that had struck down the Final Rule. Simultaneously, the commission took steps towards acceding to the vacatur of the non-compete ban . At the same time, however, the FTC has also indicated, through recent enforcement actions and warning letters , that it will continue to pursue remedies against employers on a case-by-case basis for the unlawful use of post-employment non-competes under Section 5 of the FTC Act, which prohibits "unfair methods of competition." Those FTC efforts, which are nothing new, mean the battle over the validity of non-compete agreements will continue to be fought largely at the state and local levels. Once again, dental practice owners and other employers will need to tailor their non-competition agreements to comply with the patchwork of jurisprudence, laws, and regulations of the states and localities where they have employees while remaining mindful of anti-competitive overreach that could attract the FTC's attention. With the nationwide non-compete ban dead and buried, but restrictions on and litigation about the enforceability of such agreements very much alive, now is an opportune time for practice owners to consult with experienced employment counsel who can review and revise any existing or contemplated non-competition provision as necessary. If you have questions about your company’s non-competes or would like assistance reviewing or drafting such agreements, please call Grogan Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation. We focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices, and this blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
Whatever shortcomings and deficiencies there may be in the dynamic between dental practices and insurance companies, their distinct roles in patient care are not among them. While dentists certainly want to maximize reimbursements for the services they provide, they are not beholden to insurers and remain in a position to advocate for their patients and challenge an insurer’s cost-related decisions without fear of retribution. But a recent unprecedented move by Delta Dental in Wisconsin threatens to upend this relationship model and has raised serious concerns among industry groups, patient advocates, and regulators about conflicts of interest, competition, and provider independence. Over the summer, Delta Dental announced that it had acquired Cherry Tree Dental, which owns and operates 31 clinics, 25 of which are in Wisconsin. The American Dental Association (ADA) is among several organizations that have vocally opposed the transaction. As the ADA wrote shortly after the deal was announced: When an insurance company becomes both health care provider and insurance payer, questions arise regarding potential conflict of interest. From a business standpoint, dental insurance companies seek to minimize cost and maximize profit. As a result, patients may find their treatment options limited to what is most cost-effective for the insurer, not necessarily what is most effective for their oral health. The ADA believes that the health interests of patients are best protected when dental practices and other private facilities for the delivery of dental care are owned and controlled by a dentist licensed in the jurisdiction where the practice is located. In November, the ADA filed a letter with the Wisconsin Office of the Commissioner of Insurance expanding on its concerns and opposition, including worries about provider independence in making care decisions: Direct ownership by Delta Dental could compromise dentists’ ability to advocate for patients. In traditional arrangements, dentists can appeal plan decisions regarding patient care or choose to leave a network if plan policies are overly restrictive. However, the ADA warned that when dentists are employed by the payer, challenging cost-related decisions could label them as “problem employees,” potentially discouraging proper patient care. The potentially anti-competitive effects of such arrangements were also raised by the ADA, which noted that “Delta Dental’s acquisition could influence agreements, business practices, and fee schedules between Cherry Tree and other payers, potentially creating unfair competition.” In addition to the ADA, the acquisition has drawn concerns from the Wisconsin Dental Association, the American Economic Liberties Project, and the Alliance of Independent Dentists. The fallout of this acquisition, if consummated, could ripple through other markets, potentially leading to a seismic shift in the provider-insurer landscape. We will continue to monitor developments and provide updates as warranted. We Focus on You So You Can Focus on Your Patients At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
For many associate dentists, the sound of opportunity knocking comes in the form of an offer to become a co-owner of the practice where they work. Rare is the dentist who would reject out of hand the chance to reap the rewards of years of hard work and move from employee to owner. For the practice owner who opens the equity door for their associate, such a “buy-in” can infuse cash and value into the business, laying the foundation for a seamless ownership transition upon their retirement. The key to a successful buy-in is a clear and equitably structured deal that is workable for both parties in terms of how the associate will pay for their equity interest. However, there is no one-size-fits-all approach. The structure of a dental associate buy-in can vary significantly depending on factors such as the associate’s financial capacity, the practice’s value, and the owner’s long-term objectives. Whether you are the associate or the practice owner in such an anticipated transaction, you should consult with an experienced dental practice attorney to understand your options and determine which structure provides you with the most value. Your discussions with your attorney will likely include some or all of these common dental associate buy-in arrangements: Cash Purchase A cash purchase is the most straightforward buy-in model. With either cash on hand or through financing (the more likely scenario), the associate purchases an agreed-upon percentage of the practice (for example, 25% or 50%) for a lump sum based on the appraised value of the practice. That appraisal will likely use metrics such as collections, earnings before interest and taxes (EBIT), or a percentage of annual gross revenue. The main advantage of a cash purchase is its simplicity and immediacy. The associate becomes an owner right away, while the practice owner receives a clean and full payout for the equity sold. However, obtaining the needed financing may be easier said than done for an associate dentist, and a large cash payout may also come with unwanted tax ramifications for the owner. Buy-in documents for a cash purchase should address governance rights, profit distribution, and exit mechanisms. They should also define what happens if an associate departs, how future buyouts are valued, and whether non-compete or non-solicitation covenants apply. Installment Sale An installment sale allows the associate to purchase equity over time, making periodic payments instead of an upfront lump-sum payment. After the practice value is determined, the associate agrees to buy a certain percentage of ownership through regular payments (e.g., monthly or quarterly) over several years. Payments may include interest, and ownership may be transferred incrementally or upon full payment. This is a good option for associates who do not have the means for a full cash buy-in immediately. For owners, this arrangement provides a steady income stream – so long as the associate does not leave before completing payments. That is why the documentation should clearly outline the timing of ownership right transfers and provide robust default remedies, such as forfeiture of prior payments or reversion of ownership interests. Sweat Equity In a sweat equity buy-in, the associate essentially cashes in their years of service, earning ownership over time based on their contribution to the practice’s growth or profitability rather than through an immediate cash investment. In a typical sweat equity arrangement, the associate receives equity credits or options tied to measurable performance benchmarks, such as production levels, collections, or tenure. Once those targets are met, a portion of ownership is granted or sold at a reduced price. This structure enables talented but liquidity-challenged associates to become owners without initial financial strain. It also incentivizes them to grow the practice and stay long-term. Shadow Account (a/k/a Phantom Equity) As I discussed in detail in this post , a shadow account (also known as a phantom equity plan) is an increasingly popular buy-in model, especially when the owner is not yet ready to transfer real equity but wants to reward the associate as if they were an owner. In this model, the associate receives the right to cash payments equal to the value of the shares at a specified later date or distribution event. That value can be established through an appraisal or an agreed-upon formula. The selected events that give an associate a right to a payout can include such things as achieving performance goals, termination, or retirement. There are two types of shadow account/phantom stock plans. In an "appreciation only” plan, the cash payout upon vesting does not include the value of the underlying shares, only the increase in value of that stock since it was granted. In a “full value” plan, the practice pays both the underlying value of the stock and the amount the stock has appreciated while held by the associate. Like actual stock, phantom stock has a defined value and tracks the practice’s performance, but an associate holding phantom stock typically does not have either minority shareholder rights or voting rights in the practice. This makes phantom stock plans attractive for owners who want to provide associates with a sense of equity ownership without giving up any actual control. The practice has broad discretion and flexibility in designing the plan, including valuation formulas and vesting conditions, and the administrative burdens are less than for traditional stock option plans. As noted, the “best” buy-in structure depends on the unique goals of both parties. No matter which model is ultimately adopted, well-crafted documentation, preceded by careful consideration and consultation with counsel, is essential. That is because these deals do more than just transfer ownership - they can lay the foundation for a stable, profitable partnership that preserves the practice’s legacy and rewards everyone’s investment, financial or otherwise. We Focus on You So You Can Focus on Your Patients At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
For years, state courts and legislatures have taken a skeptical eye toward non-competition agreements. Judges here in Illinois and elsewhere routinely struck down overly broad and overreaching provisions, while an increasing number of jurisdictions have passed legislation or ordinances banning non-competes outright or limiting their scope and enforceability. During the Biden administration, the federal government injected itself into the heretofore state and local assault on non-competes. Both the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) took the position, in a Final Rule and counsel's opinion, respectively, that almost all existing and future non-competes were void and unenforceable. Those actions were immediately challenged in court, and litigation about the FTC's ban resulted in dueling district court rulings, with injunctions issued against its enforcement in some cases, while other judges found the FTC had properly issued the Final Rule. The FTC subsequently appealed federal court rulings in Texas and Florida that invalidated or enjoined, respectively, the FTC's non-compete ban. Then came Election Day 2024. Nationwide Ban Abandoned, but Challenges to Non-Competes Remain Unsurprisingly, for an administration with a penchant for being business-friendly and regulation-averse, the newly comprised FTC quickly changed its tune on a nationwide non-compete ban. A series of moves this year has made it clear that the federal government, at least for the next three years, is abandoning any such blanket efforts. Specifically, the FTC moved in September to dismiss its appeals of two district court decisions that had struck down the Final Rule. Simultaneously, the commission took steps towards acceding to the vacatur of the non-compete ban . At the same time, however, the FTC has also indicated, through recent enforcement actions and warning letters , that it will continue to pursue remedies against employers on a case-by-case basis for the unlawful use of post-employment non-competes under Section 5 of the FTC Act, which prohibits "unfair methods of competition." Those FTC efforts, which are nothing new, mean the battle over the validity of non-compete agreements will continue to be fought largely at the state and local levels. Once again, dental practice owners and other employers will need to tailor their non-competition agreements to comply with the patchwork of jurisprudence, laws, and regulations of the states and localities where they have employees while remaining mindful of anti-competitive overreach that could attract the FTC's attention. With the nationwide non-compete ban dead and buried, but restrictions on and litigation about the enforceability of such agreements very much alive, now is an opportune time for practice owners to consult with experienced employment counsel who can review and revise any existing or contemplated non-competition provision as necessary. If you have questions about your company’s non-competes or would like assistance reviewing or drafting such agreements, please call Grogan Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation. We focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices, and this blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
