TLDR:
Pursuant to sections 5 and 6(g) of the Federal Trade Commission Act (“FTC Act”), the Federal Trade Commission (“Commission”) is issuing the Non-Compete Clause Rule (“the final rule”). The final rule provides that it is an unfair method of competition—and therefore a violation of section 5—for persons to, among other things, enter into non-compete clauses (“non-competes”) with workers on or after the final rule’s effective date. With respect to existing non-competes—i.e., non-competes entered into before the effective date—the final rule adopts a different approach for senior executives than for other workers. For senior executives, existing non-competes can remain in force, while existing non-competes with other workers are not enforceable after the effective date.
I don’t think it will hold up in court, especially considering the current Supreme Court.
If nothing else, it’s another milestone in a general trend over the last few years to reduce to power/scope of non competes. It’s good for consumers and workers, but employers aren’t gonna be so stoked. For a while now, noncompetes have been very difficult to enforce unless the scope is clearly defined (industry, region, duration) and some states outright don’t recognize them (CA, CO, OK, ND, and MN).
What do you think won’t hold up? The ban on noncompetes?
The abc article above mentions the pending legal battle that is likely. My point is that the Federal courts right now lean conservative, based upon who happened to get to appointment a lot of judges. This case might not even make it to the Supreme Court. If a circuit and federal appeals court both strike down the rule, they simply wont hear the appeal. But I think they would take the case if it went the other way in lower courts so that they could be the ones to reverse it.
The Roberts court has always been pro-business. These are the ones who brought us the “corporations are people” idea, and they have gotten more conservative since then. I just dont see them siding with worker right’s vs big business.
You do you, but the labor board has been consistently anti non-competes for a looong time, and in terms of successfully defended non-competes, there are very few from the past 10 years or so.
The issue lies in the agreements themselves. The only one’s that ever really meant anything to begin with have been ultra-specific, whereas most noncompetes that are signed and exist in the world are ultimately far too general and over-encompassing for a company to reasonably expect to be able to defend it in court.
You’re exactly right about non compete agreements needing to be very specific and limited in scope before they are enforceable. I’m not rooting for the rule change to be shot down, just skeptical that it will stick. Time will tell.
its kind of funny watching conservatives talking out of both sides of their mouth. They condemn the Biden/FTC for this calling it communist when really…banning non-competes is pretty capitalistic. What’s NOT capitalism is stifling competition, and controlling employees in such a way that they can’t leave a low paying job for a better paying job in the same industry. If anything, advocating for non-competes (i.e. anti-competition) is the same as advocating against free market capitalism.