Along with 54 other lawyers and two paralegals from across the country, Seyfarth partners Kate Perrelli, Robert Milligan, and Erik Weibust recently signed a letter, penned by our friend Russell Beck, in response to President Biden’s July 9, 2021 Executive Order on Promoting Competition in the American Economy, which we previously wrote about. The letter, which was sent to the White House and Federal Trade Commission (FTC) on July 14, 2021, recommends that regulation of noncompete agreements be left to the states, which have been doing so for over 200 years. However, if the FTC were to attempt to regulate non-competes (which we question whether it even has the constitutional authority to do so—although that was not an issue addressed in the letter), the letter recommends that any rules be limited to addressing abuses and not broadly prohibiting non-competes:
In sum, … although sometimes abused, when used properly (as all of the signatories to this letter recommend) noncompetition agreements serve legitimate purposes that are important to the economy, and necessarily require a nuanced approach reflective of variations in jobs, industries, and state economies. … [A]s one of the leading professors on the subject observed, that the current research fails to “isolate random variation in the use of non-competes” that would be necessary to establish noncompetition agreements as the cause of negative outcomes. Accordingly, … [A]ny regulatory efforts should proceed with caution, understand the limitations of the existing research, and avoid adverse unintended consequences.
We will continue to monitor the Biden Administration’s and the FTC’s efforts to regulate non-competes and will provide updates as they become available.