Lawyer 2 Lawyer · Attorney J. Craig Williams and Legal Talk Network

THE FTC, Noncompete Ban, and the Recent Ruling

·34 min·2 clips

If you're under a non-compete, oftentimes your best option is just to stay in place and grin and bear it.

1. Lawyer 2 Lawyer examines the FTC's April 23, 2024 rule banning non-compete agreements and the August 20, 2024 Ryan v. FTC ruling that blocked it nationwide. 2. Host J. Craig Williams interviews Sandeep Vaheesan, legal director at the Open Markets Institute, who previously served as regulations counsel at the Consumer Financial Protection Bureau from 2015 to 2018. 3. The central question is whether the FTC has authority to ban non-competes for most workers, given that rulings in Texas, Florida and Pennsylvania reached different conclusions within weeks of each other. 4. Vaheesan says Judge Ada Brown found the FTC can write only procedural rules and relied on "a handful of studies," making the rule arbitrary and capricious, and that she put the rule on hold before the September 4 effective date. 5. He contrasts this with Judge Hodge's late-July denial of a preliminary injunction in the Eastern District of Pennsylvania, which found clear authority under section 6(g) of the FTC Act, and with Judge Corrigan's Florida injunction, which treated the rule as a "major question." 6. Vaheesan argues non-competes reduce job mobility and wage growth and discourage startups, and that employers have alternatives such as trade secret law, NDAs, non-solicitation agreements, and retaining workers through raises and promotions. 7. Citing the Beshara, Prescott, and Starr survey, he says only about one in 10 workers try to bargain over a non-compete, and that real negotiation occurs mainly among senior executives, fewer than 1% of the workforce. 8. Vaheesan corrects Williams's suggestion that the Chevron doctrine's demise drove the ruling, pointing instead to the major questions doctrine from the 2022 case West Virginia v. EPA, which he calls "rather subjective." 9. He says that after the ruling, workers under non-competes face unattractive options such as costly litigation, a new employer's exposure to tortious interference claims, relocating, or staying put, and lawyers often decline these cases because there are typically no damages or attorney's fees. 10. Lawyers, HR professionals, and employment-law followers tracking the FTC non-compete rule would find this useful.

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