, stating that while the proposed rule would have a"profound and dramatic impact" on all employers, especially health care, it likely does not cover nonprofits that are organized and operating exclusively under exempt purposes and whose net earnings are used for exempt purposes.
The firm also pointed out the even more complex issues when it comes to a nonprofit that has an ownership entity in a for-profit subsidiary from which it receives dividend or rental income, even if it does not conduct any of its activities, which might become an issue. Or a nonprofit that gets exempt income from a joint venture with for-profit partners.
The growing complexity of health care systems could give an aggressive FTC a way in to enforcement, Glennon stressed. Nonprofit health care systems have grown, acquired other entities and organized themselves in ways that could invite FTC action. “I do think the way the modern hospital is organized and operated, there might be greater scrutiny by the FTC,” Glennon said.
But Glennon also highlighted how the FTC’s recent action on noncompetes in and of itself has opened the door to discussing, once again, whether Congress should take action to give the FTC authority over noncompetes.
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