Alert

Wage Payments and Noncompetes: Louisiana Legislature Amends Two Important Employment Laws

July 30, 2024

The Louisiana Legislature amended two important employment laws: the wage payment statute and the noncompete statute. The amendments to the wage payment statute become effective on August 1, 2024, and the amendments to the noncompete statute become effective on January 1, 2025.

Wage Payment Law

Louisiana has traditionally had a very strong wage payment statute. Employers must pay out final wages within fifteen days or face penalty wages of up to 90 days. Final wages typically include bonus and/or incentive payments. Courts have held that any bonus had to be paid out regardless of whether the bonus was contingent on the employer being paid by the customer or whether the bonus was even due when the plan provided that the employee must be “employed” at the time the bonus is paid.

Under the amendments, employers will not be considered to have required a forfeiture of wages as long as it has a written policy providing for adjustments to a commission when there is a change order or other event that affects the amount of the commission and the policy provides that the employee does not earn a commission, incentive payment, or bonus until the employer receives payment from the customer on the sale or other event that generates the commission, incentive payment, or bonus. If a bonus is to be determined by financial information reflecting the employee’s or employer’s performance on an annual, quarterly, or other periodic basis, employers may have up to 120 calendar days to make payment based on standard accounting practices.

Noncompetes for Medical Professionals

The recent amendments to Louisiana’s noncompete statutes are directed to medical professionals. The amendments have new requirements for two different physician groups: (1) primary care physicians and (2) all other physicians who do not fit into the definition of a primary care physician. Primary care physicians include those physicians who predominantly practice family medicine, general internal medicine, general pediatrics, or general gynecology.

The amendments provide that any noncompete for a primary care physician cannot exceed three years from the effective date of the initial contract or agreement. Any subsequent contract or agreement cannot include any noncompete provisions. If the physician leaves the practice before the initial three-year period has expired, any prohibition against noncompetes is limited to two years. Furthermore, noncompetes after termination of the agreement are limited to the location of where the physician has principally practiced and cannot include more than two contiguous parishes.

For all other physicians, the amendments state that any agreement cannot exceed five years from the effective date of the initial agreement, and any subsequent agreement cannot include any noncompete provisions. If the physician leaves before the expiration of the initial five-year period, it is lawful to prohibit the physician from competing for two years after the termination date.