Erik W. Weibust, Member of the Firm in the Litigation & Business Disputes and Employment, Labor & Workforce Management practices, in the firm’s Boston office, was quoted in HR Dive, in “‘Take a Deep Breath’ in Response to FTC Noncompete Ban, Attorneys Say,” by Ryan Golden.
Following is an excerpt:
The Federal Trade Commission’s proposed rule last week to ban noncompete agreements may have taken employers by surprise, but multiple attorneys who spoke to HR Dive believe the rule faces a difficult path before it can take effect. …
Stakeholders have 60 days to submit public comments on the rule, which would not take effect until 180 days after the FTC publishes a final rule. Even after that point, however, the rule is likely to face legal challenges on several grounds, especially on the question of whether the commission has the authority to issue it in the first place.
Regulation of noncompetes may place the agency at odds with the U.S. Supreme Court’s major questions doctrine, under which general delegation of Congressional authority is not enough to permit agencies to address significant economic and political issues. The high court applied the doctrine in previous high-profile disputes over federal agency regulations, such as the Occupational Safety and Health Administration’s COVID-19 vaccination emergency temporary standard.
“I ultimately think that the Supreme Court, if [the proposed rule] gets there, will strike the rule because the FTC does not have the authority to regulate noncompetes,” said Erik Weibust, member of the firm at Epstein Becker Green.
Proposal won’t change existing legal trends …
For example, Illinois prohibits noncompete and nonsolicitation agreements with employees whose actual or expected annual wages fall below a certain threshold. Rhode Island law prohibits noncompetes for employees who are classified as nonexempt under the Fair Labor Standard Act, among others.
To that end, Weibust said he is counseling clients to “take a deep breath and focus more on compliance with state laws,” given that the FTC rule may be months away from taking effect.
