Some States Take a Closer Look at Noncompete Pacts

New York Times writer Steve Lohr reported this week that, “In today’s on-your-own economy, workers are urged to be entrepreneurial job hoppers, constantly adapting and searching for the next opportunity.

“But an estimated 30 million Americans — nearly one fifth of the nation’s work force — are hobbled by so-called noncompete agreements, fine print in their employment contracts that keeps them from working for corporate rivals in their next job.”

Mr. Lohr explained that, “Now a number of states are looking to untangle workers from these agreements. The Massachusetts House of Representatives is scheduled to vote this week on a noncompete reform bill. The state is also the location of a union organizing campaign on the noncompete practices of the EMC Corporation, a large technology company based in Hopkinton, Mass., that is known for its aggressive application of these employment contracts.

“Other states are also taking steps as noncompete agreements have spread to summer interns and sandwich shop employees. Hawaii banned noncompete agreements for technology jobs last year, while New Mexico passed a law prohibiting noncompetes for health care workers. And Oregon and Utah have limited the duration of noncompete arrangements.”

Beyond the states, the Times article pointed out that, “At the federal level, the White House published a report on noncompete contracts in May that concluded ‘noncompetes can impose substantial costs on workers, consumers and the economy more generally.’ The Treasury Department also issued a report this year criticizing the excessive use of the contracts.”

More broadly, Mr. Lohr stated that, “Noncompete arrangements, proponents say, can protect valuable trade secrets and motivate employers to invest in worker training because employees are less likely to leave.

“But recent research underlines the effects of noncompete agreements on engineers and scientists in technology businesses, where more than one-third of the employees are covered by them. Technical workers in Massachusetts would be paid about 7 percent more if the state’s noncompete practices mirrored California’s, said Evan Starr, an economist at the University of Maryland’s Robert H. Smith School of Business.

“Job mobility is reduced, according to other research, and workers are more likely to detour from their original career paths. Sometimes companies sue departing employees, but those cases are the exception.”

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Nebraska Agricultural Land Values Decline

A recent report from the University of Nebraska indicated that, “Marking the second consecutive year of value declines, the all-land category across the entire State of Nebraska for the year ending February 1, 2016 averaged about 4 percent lower than the prior year. Figure 2 summarizes these averages along with the percent changes over last year’s all-land average for the eight districts of the state.”

The report stated that, “Current crop prices once again were listed as the most negative factor for the second year in a row by panel members leading to the decline in land values across Nebraska. Additional concern amongst panel members indicated property taxes may have a negative bearing on the value of agricultural land, depending upon future policies.”

“The ability of new owners to purchase and finance land at low long-term interest rates remain a positive factor in maintaining current land prices from falling any further according to panel members. Historically, periods in Nebraska agricultural real estate when the cost of financing new purchases increases the value of agricultural property tends to act inversely.”

The Universty of Nebraska report added that, “The outlook on land values for 2016 turned considerably more negative according to panel members with the decline in commodity prices. Current crop and livestock prices rank among the top five factors weighing down agricultural land values in Nebraska.”

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U.S. Senate Could Vote on GMO Labeling Next Week, FDA Expresses Concerns About the Measure

Christopher Doering reported in today’s Des Moines Register that, “A bipartisan Senate bill requiring foods with genetically modified ingredients to be labeled potentially could exclude thousands of items, including many with biotech soy oil and other ingredients, according to the Food and Drug Administration.

“In a letter obtained by The Des Moines Register, the FDA expressed concern that the bill’s use of the words ‘that contains genetic material’ would mean that oil made from genetically engineered soybeans, and starches and purified proteins, would not require a GMO label.

“The reason is that once the commodity is processed, the product would not have any detectable amounts of the genetic material.”

Mr. Doering noted that, “Theresa Eisenman, an FDA spokesperson, said the agency has not taken a position on the bill. She said FDA and other agencies regularly are asked by Congress to provide help with legislation;” while, “Meghan Cline, a spokesperson with the Senate Agriculture Committee, called the FDA’s comment ‘odd and misplaced.'”

Today’s Register article indicated that, “A vote on the Senate bill could occur as soon as next week. The House, which approved a GMO labeling bill last year that differs significantly from the Senate version, would need to approve the measure.”

Likewise, the Morning Agriculture report from Politico stated today that, “The Senate is expected to vote next week to limit debate on the bill, which gives food companies three options for providing consumers information on GMO ingredients: on-package labeling; on-package electronic labeling; or a symbol that would be developed by the Agriculture Department. USDA officials would have two years to set thresholds for when labeling would be required, but critics of the bill contend it lacks an enforcement mechanism.”

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Vertical Farm Start-Ups Flourish

Eilene Zimmerman reported in today’s New York Times that, “Dan Albert’s farm is far from traditional. There are no picturesque, rolling fields, no tractors tilling soil; there is no white farmhouse or red barn. For that matter, there is no soil, or sunlight.

“The farm, Farmbox Greens, is inside a two-car garage behind Mr. Albert’s Seattle home. It consists of 600 square feet of microgreens grown in vertically stacked trays beneath LED lights.

“The ability to grow in such a small space is the result of hydroponics, a system in which a plant’s roots sit in nutrient-rich water instead of soil.”

The article explained that, “Microgreens — the first, tiny greens on plants like arugula, radishes and bok choy — can go from seed to harvest in less than two weeks. That enables Farmbox Greens to compete on price against produce delivered from far away.

“‘We are fresher and our greens last 20 to 30 percent longer than those grown outside the area,’ said Mr. Albert, who co-owns the farm with his wife, Lindsay Sidlauskas.

“It has revenue of under $500,000, but was profitable enough in 2014 that Mr. Albert quit his day job as a landscape architect to farm full time. He now has three employees and sells his greens to about 50 restaurants in the Seattle area, a local grocery chain and four weekly farmers’ markets.”

Today’s Times article noted that, “Vertical farming uses no chemical pesticides and far less water and fertilizer than traditional farms, but energy costs can be high;” and added that, “Investment in food and agriculture technology start-ups was $4.6 billion in 2015, nearly double what it was in 2014, according to AgFunder, an online investment platform for the agricultural technology industry. And local foods generated $11.7 billion in sales in 2014, which is predicted to increase to $20.2 billion by 2019, according to the consumer market research firm Packaged Facts.”

“Such setups are also labor-intensive, with multiple systems requiring constant monitoring, in addition to harvesting and packing. A peer-reviewed survey of commercial aquaponics operations conducted in 2013 found that fewer than one-third of farms were profitable in the previous year,” the article said.

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Tech Start-Ups After Brexit: Valuations will be Tested

Christopher Mims reported in today’s Wall Street Journal that, “The world economy is again being tested by an unexpected shock following Britain’s vote to exit the European Union. The pound sterling and stock markets globally have been hammered. What does it mean for technology startups and venture capital, which can sometimes appear virtually immune from macroeconomic forces?

“On one level, it is simple: the Brexit vote means companies large and small are in for a period of uncertainty. And such times are bad for the kinds of speculative investments that are the lifeblood of startups.

“In some respects, the tech industry has been preparing itself for an event like this for a while. Scarred by the big crash of 2000, many who were in the industry then have a muscle memory for what can follow. Venture investors like Benchmark’s Bill Gurley have been sounding the alarm for some time on outsize valuations, clearly trying to tap the brakes on an overly exuberant funding environment.”

The Journal article noted that, “Fewer new companies will be funded, and others will be unable to grow from seed stage to profitable enterprise. The herd of highly valued startups, the so-called unicorns, would be thinned.

“Still, nothing will happen overnight. Venture firms raised record amounts of capital in the first quarter of this year, and will need to deploy it one way or another.

“Moreover, tech isn’t nearly as exuberant now as at the peak of startup-investment mania a year ago. Even before Brexit, the funding environment had cooled.”

Mr. Mims also pointed out that, “A global economic slowdown, and declining equity values, could prompt more M&A activity. Tech has already been the busiest sector for mergers this year, and potential acquirers are sitting on record piles of cash. Witness Microsoft Corp.’s recent acquisition of LinkedIn Corp., at $26.2 billion its largest ever and yet still just a fraction of its more than $100 billion cash hoard.

“Such consolidation could help in another way. Arguably, tech’s most precious resource is the constrained talent pool, which has been fragmented across startups with deep pockets as they compete with each other for employees.”

Today’s article added that, “Lean times can inspire discipline in startups. Famously, Facebook was started in 2004, during the dark years after the tech bubble of the late 1990s burst.”

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Brexit Causes European Start-Up Community to Reassess

Sam Schechner reported in yesterday’s Wall Street Journal that, “Britain’s vote to leave the European Union is already forcing Europe’s nimble, tech startup community to reassess operations there—a potential early warning for the kind of dramatic action bigger companies may have to take.

“Dozens of global corporations and executives from multinationals reacted with alarm after the vote, calling for a quick road map for a split, to minimize the sort of uncertainty that can delay or curb investment and hiring. But it could be smaller companies—including Europe’s more flexible vibrant startups—that make the first concrete steps to insulate themselves from the ramifications of a so-called Brexit.”

The Journal article noted that, “Patrik Arnesson, chief executive of Sweden-based Football Addicts, said Sunday that he has scrapped plans to open a second office in London where he had planned to hire as many as 30 people over the next two years. The problem: not being guaranteed to be able freely move staff from Sweden, or hire more from anywhere in the EU.

“‘The U.K. will be less attractive for startups,’ Mr. Arnesson said. ‘One of the most important things is to be able to hire people easily.'”

Mr. Schenchner added that, “London has in recent years grown to become a major hub for European startups, and particularly fintech businesses. Venture capitalists and entrepreneurs say that stems from the city’s status as Europe’s financial capital. But that could change if investors get cold feet about the city’s future.”

“Another regulatory uncertainty relates to privacy laws. A strict new EU privacy law is set to go into force in 2018, but it remains unclear if the U.K. will enact a matching law. If it doesn’t, there is the danger that EU privacy regulators will block companies from storing personal information about Europeans in the U.K.—complicating life for any U.K. company serving Europe,” the Journal article said.

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Waters of the U.S. Rule, Questions of Jurisdiction Remain in Limbo

DTN writer Todd Neeley reported yesterday that, “Although one federal appeals court already has claimed jurisdiction in the numerous legal challenges to the waters of the United States rule (WOTUS), there appears to be a split at the appellate level on the jurisdiction question.

“A federal appeals court in Atlanta has scheduled oral arguments in an 11-state lawsuit challenging the waters of the United States rule, according to a court order handed down Friday.

“The U.S. Court of Appeals for the 11th Circuit scheduled oral arguments on the case for July 8. In that court the states of Georgia, Kentucky, Kansas, West Virginia, South Carolina, Alabama, Wisconsin, Utah, Indiana, North Carolina and Florida have asked the court to overturn another federal court on the question of jurisdiction.”

Mr. Neeley noted that, “The U.S. Court of Appeals for the Sixth Circuit in Cincinnati stayed the WOTUS rule nationally in October 2015, pending its review. The Sixth Circuit already is moving forward with consolidating numerous cases into a single case likely to play out in 2017.

“The states are asking the 11th Circuit to reverse the Sixth Circuit jurisdictional determination, to allow the states to proceed with their legal challenge in Atlanta.”

The DTN article added that, “Paul Beard, a Clean Water Act attorney at Alston and Bird, LLP in Los Angeles, told DTN such a division among courts isn’t all that unusual.

“‘The circuit courts, which cover mutually exclusive jurisdictions, simultaneously can adjudicate cases concerning the same legal issue,’ he said. ‘That is, after all, how circuit splits develop. So it’s not out of the ordinary and I wouldn’t read too much into it.’

“In their appeal to the 11th Circuit Court the states argue an earlier ruling by the Sixth Circuit that it has jurisdiction shows a three-judge panel on that court is divided on where jurisdiction lies.”

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Farmer Veteran Workshop Set for Beck Ag Center

A Purdue Unviersity news release on Friday indicated that, “Military veterans, active duty members and their families can learn more about how to start or operate a farm during a daylong program sponsored by Purdue University’s Indiana Beginning Farmer program.

“The Beginning Farmer Veteran Workshop is 9 a.m. to 5 p.m. July 30 at the Beck Agricultural Center, 4540 U.S. 52 W, West Lafayette.

“Sessions will cover both the business and production sides of agriculture. Topics will include small fruit and vegetable production, livestock management, business planning, equipment for small farms, beekeeping, forestry, marketing and regulatory requirements for meat and food sales.”

The Purdue update added that, “There is no cost to attend but registration is required. Lunch and refreshments will be served. To register, go to https://edustore.purdue.edu/wk_rules.asp?itemID=22553. Space is limited.

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Department of Labor Overtime Rules, and Agriculture

DTN Executive Editor Marcia Taylor reported last week that, “Agriculture’s 24/7 workload poses special issues for payroll. Most farmers assume they are not required to pay overtime for any farm work performed by their employees, points out Paul Neiffer, a CPA with CliftonLarsonAllen in Yakima, Washington. But given the new rules imposed by the Department of Labor starting December 1, you need to carefully review that policy and the impact on your labor expense, he advises.

“The Department of Labor announced final regulations on new overtime rules May 18, greatly expanding who qualifies for overtime treatment.

“‘Direct’ agricultural work still is generally exempt from overtime, so if you’re pressed to run full speed during planting and harvest, you simply pay field hands their hourly rate multiplied by time worked. Immediate family members employed on farm also are completely exempt from overtime rules. Neither of those exemptions have changed, says Angie Ziegler who advises clients on payroll issues for the accounting firm of EideBailly in Mankato, Minnesota.”

The DTN article indicated that, “However, today’s farms also include a number of business entities, some which will qualify as ‘farm’ and some which may not. Frequently non-farm sidelines can include commercial trucking, custom hire work or perhaps a commercial grain elevator. In those cases, the work performed is no longer exempt from overtime rules.”

Ms. Taylor explained that, “The big change in a new Labor Department rule is white-collar employees who have been paid more than $455 per week ($23,660 per year) and were exempt from overtime in the past because of their job category. In the past, managers, administrative staff and technical workers who worked on farms were still considered farm labor. ‘As long as they were paid at least $455 per week, they were entitled to nothing for overtime,’ Neiffer says.

“Beginning Dec. 1, 2016, however, the overtime-wage standard for white-collar jobs jumps to $913 per week, or $47,476 per year. ‘White-collar’ employees who earn less than $47,476 a year and who work in non-farm businesses must be paid overtime at time-and-a-half for all hours above 40 hours a week.

“However, ‘white-collar’ employees who work for the farm and earn under the $47,476 salary threshold — and are not involved in any non-farm sideline businesses — won’t need to be paid time-and-a-half, Neiffer emphasizes. Still, these workers will need to be paid their flat hourly wage for all hours above 40 hours per week, he says.”

After additional analysis, the DTN article noted that, “For agriculture, the new rules may be more complicated than they look, especially farms with a mix of custom work and rental farms or with ag-related businesses. Consult an attorney or accountant to make sure your farm employees actually qualify for exemptions.”

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House Ag Committee Examines Big Data in Agriculture- Imagery and Technology

A news release from the House Agriculture Committee on Thursday indicated that, “Today, Rep. Frank Lucas (R-OK), Acting Chairman of the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management, held a hearing to educate members about innovations in agricultural imagery and technology. This is the second hearing in a series examining Big Data and its role in agriculture. The subcommittee heard from a variety of stakeholders about using satellites, manned airplanes, and Unmanned Aerial Systems (drones) as a way to collect imagery that farmers can leverage to make better business and conservation decisions for their farms. As technology continues to evolve, the witnesses stressed the importance of maintaining the privacy of individual farmers and ranchers and ensuring that their data is protected.”

At the hearing Rep. Lucas noted that, “While we are only scratching the surface on the innovation that satellites and Unmanned Aerial Systems will bring to agriculture, manned airplanes also continue to play a vital role. Aerial imagery from manned airplanes is the foundation of the administration of Farm Service Agency programs, such as ARC and PLC. We will hear more today about how FSA’s National Agricultural Imagery Program, or NAIP, is useful to farmers and to a broad spectrum of other users, which in the past have included companies such as Google.

“This hearing is also timely since the FAA finalized the Small Unmanned Aircraft Rule, known as Part 107, which governs commercial use of drones, just this week. Commercial drone use will now be possible without the need to acquire a special exemption, which under the old regulations could take up to six months to be approved. We will be engaging with industry to gather their views on the impacts of this new rule on the use of drones in agriculture.”

Lanny Faleide, the President of Satshot, Inc. pointed out on Thursday that, “Recent estimates show the size of the precision agriculture market in the U.S. is between $1.5 and $2.0 billion. It is estimated over the next 5 years to grow at greater than 13% per annum to reach $3.0 to $3.5 billion. Outside the U.S., including developing countries where the need to improve productivity is even greater, the growth rate is expected to be over 25% per year. Satellite imagery offers the compelling benefit of being the fastest growing area of the precision agriculture market, while also having the highest ceiling.”

Also at the hearing, Robert Blair, a farmer and VP of Agriculture, Measure, stated that, “I am hopeful that my testimony has planted one of many seeds on the road to the next Farm Bill. Congress and USDA will need to work with traditional agriculture organizations while expanding to those in the UAV industry to start laying the foundation of how this technology can be used and promoted.

“However, without better connectivity and a stronger Internet infrastructure, rural America and all Americans will not benefit. Those utilizing precision agriculture and UAV data today are struggling greatly to deliver, in relative terms, this small amount of data today. America will need to invest into rural connectivity the same way America invested in a successful electrical infrastructure starting at the beginning of last century.

“We are in the information age where timing of data is becoming more critical every day. We have larger tractors, combines, and implements that are equipped with the technology that can utilize the data collected from a UAV. I have been implementing these technologies on my farm for over a decade and I am very optimistic about the future of agriculture, because in America the sky truly is the limit. With today’s low commodity prices and tighter margins, UAVs can help reduce costs while keeping farmers where they belong…on the farm.”

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