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On Wednesday, March 8 at 12 p.m. Pacific, Robert Milligan—Seyfarth partner and co-chair of the firm’s Trade Secrets, Computer Fraud & Non-Competes practice—is presenting the “What Does the FTC’s Crackdown on Non-Competes Mean for Trade Secrets?” webinar for the California Lawyers Association.

The panel will discuss:

  • The FTC’s recent non-compete enforcement activities and proposed rule banning non-competes
  • The FTC’s discussion and treatment of trade secrets in its supporting rule materials
  • Policy and practical implications related to trade secrets, including guidance concerning reasonable non-disclosure agreements
  • Effective strategies for companies to employ in current regulatory climate

For more information or to register for the webinar, visit the California Lawyers Association website.

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On February 16, 2023, the FTC hosted a public forum for the purpose of examining the proposed rule banning non-compete agreements. The agenda included, among other things, opening remarks from Chair Kahn, an overview of the rulemaking process by the FTC’s general counsel, a panel discussion, and comments from the public. A recording of the forum is available here.

In her preliminary remarks, Chair Kahn claimed that the proposed rule would increase workers’ earnings significantly and non-competes are an unfair method of competition. She claimed that the FTC has deep expertise on non-competes based upon enforcement, analysis, and addressing public comments. During the explanatory session, FTC staff explained that the comment period ends March 20th and encouraged the submission of additional comments. Staff also explained the functional test in the proposed rule and indicated that the ban applies to any agreement that functionally operates as a non-compete, which could be an overly broad non-disclosure agreement or training repayment agreement. FTC staff stated that the proposed rule does not apply to “run of the mill non-disclosures.”

Continue Reading FTC Holds Public Forum Examining Proposed Rule to Ban Noncompete Clauses and Business Organizations Sharply Criticize It
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As earlier reported on this blog, Commissioner Christine Wilson, the sole dissenter in the Federal Trade Commission’s proposed rule banning non-competes, announced yesterday that she is resigning from the agency over her fierce opposition to progressive FTC Chair Lina Khan’s methods of advancing her agenda. In a Wall Street Journal OpEd, Commissioner Wilson took aim at Ms. Khan’s “disregard for the rule of law and due process.” She cited several examples of this alleged disregard for the rule of law and due process, including the FTC’s launch of the rulemaking process to ban nearly all non-compete clauses in employee contracts, affecting roughly one-fifth of employment contracts in the US. As Commissioner Wilson noted in her vigorous dissenting statement to the FTC’s Notice of Proposed Rulemaking (“NPR”), the proposed rule defies the Supreme Court’s decision in West Virginia v. EPA (2022), which held that an agency can’t claim “to discover in a long-extant statute an unheralded power representing a transformative expansion in its regulatory authority.” As Commission Wilson noted in her dissent, and as we have pointed out here and here, the FTC’s NPR purports to undo hundreds of years of state legal precedent—dating from even before the American Revolution—that employs a fact-specific inquiry into whether a non-compete clause is unreasonable in duration and scope, given the business justification for the restriction.

Continue Reading “Noisy Exit” of FTC Commissioner Christine Wilson Signals Increasingly Contentious Efforts to Regulate Non-Compete Clauses at Federal Level for Foreseeable Future
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There have been some significant developments since the FTC announced its proposed rule banning non-competes in early January.

First, the FTC will be hosting a virtual public forum on its proposed rule on February 16th from 12 p.m. to 3 p.m. Eastern.

The forum is open to the public (see agenda for the forum here). The commission will hear from a “series of speakers who have been subjected to noncompete restrictions, as well as business owners who have experience with noncompetes.” After, members of the public will have an opportunity to comment via livestream. People can sign up to speak through a webform and will be heard on a first-come first-served basis during the time available.

According to the FTC, the forum will examine the “FTC’s proposed rule to prohibit employers from imposing noncompetes on their workers, and providing an opportunity for people to directly share their experiences with noncompetes.”

The FTC indicated that the forum will supplement the FTC’s request for members of the public to submit written comments on the proposed rule, which is based on the FTC’s preliminary finding that non-competes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act. At this point, the written public comment period ends March 20th, despite 100 business organizations requesting a 60 day extension on the deadline.

The FTC’s proposed rule generally would prohibit employers from using non-compete clauses, including independent contractors and anyone who works for an employer, whether paid or unpaid. The rule would also require employers to rescind existing non-competes and actively inform workers that they are no longer in effect.

Next, during President Biden’s State of the Union speech last week, he made several critical comments about non-compete agreements and he supports the FTC’s proposed ban on non-competes. He stated, “30 million workers had to sign non-compete agreements when they took a job. So a cashier at a burger place can’t cross the street to take the same job at another burger place to make a couple bucks more. Not anymore. We’re banning those agreements so companies have to compete for workers and pay them what they’re worth.”

Lastly, Christine S. Wilson, the FTC’s only Republican member, indicated in an op-ed in the Wall Street Journal Tuesday, that she plans to leave the agency, citing Chair Lina Khan’s “disregard for the rule of law and due process.” She accused FTC leaders of abusing government power and questioned their honesty and integrity. “I have failed repeatedly to persuade Ms. Khan and her enablers to do the right thing, and I refuse to give their endeavor any further hint of legitimacy by remaining,” Wilson wrote. “Accordingly, I will soon resign as an FTC commissioner.”

The fever charged climate concerning the FTC’s proposed non-compete ban continues to heat up.

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In this episode, Scott Mallery, Dan Hart, and Robert Milligan discuss the FTC’s authority to issue such a broad proposed regulation, and what constitutional challenges to that authority will likely look like. In addition, we discuss legislation that has been introduced in Congress that would not only do essentially the same thing the FTC’s proposed rule would do, but it would also increase the FTC’s ability to regulate in this space. In a less certain exercise, we pontificate on the likelihood this measure will actually see the President’s desk.

Click here to listen to the full episode.

Click here to listen to Part 1.

Seyfarth's Trade Secrets team recognized by World IP Review Global Trade Secrets Rankings

World IP Review included Seyfarth’s team in the first Global Trade Secrets Rankings, which was announced in 2023. The World IP Review Global Trade Secrets Rankings are based on feedback from the market and reflect the fact that trade secret issues are cross border, complex, and high value. Find more information on the World IP Review website.

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In an unprecedented move, the FTC has issued a Notice of Proposed Rulemaking that would render unenforceable all non-compete agreements currently in existence (with limited exception), and would bar employers from entering into any contract that that could conceivably prevent a worker from seeking or accepting certain employment, or operating certain businesses, after the conclusion of the worker’s employment with the employer. In Part One of our in-depth look at these proposed changes, host Scott Mallery is joined by experts Daniel Hart and Robert Milligan to discuss the fundamentals of non-compete agreements and what the rule’s adoption would mean for employers. Stay tuned for Part Two, in which the same hosts discuss potential constitutional challenges to the proposed rulemaking, as well as a bit on the politics undergirding this move.

Click here to listen to the full episode.

Welcome to the third annual installment of Seyfarth Shaw’s Commercial Litigation Outlook, in which our nationally-recognized team provides insights about litigation issues and trends to expect in 2023.

The likely continuing global tumult and increasing chances for a recession will weigh heavily on the litigation outlook for 2023. In short, we expect an uneven year where some litigation booms and some busts. As was true last year, the trick to navigating the upcoming challenges will require clients and their counsel to be adaptive, creative, and proactive.

Join us for a three-part webinar series, where members of our Commercial Litigation practice group will discuss key trends in the commercial litigation space.

REGISTER HERE

Webinar 1

Tuesday, February 7, 2023
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

In the first session of the series, we will provide insight on the tidal wave of ESG demands, reports, and conflicts (legal and otherwise), as well as significant trends, predictions and recommendations in the following areas:

  • Trial Outlook
  • Consumer Class Actions
  • Trade Secrets, Computer Fraud & Non-Competes
  • eDiscovery & Innovation

Speakers: 

Kristine Argentine, Partner, Seyfarth Shaw

Jay Carle, Partner, Seyfarth Shaw

Rebecca Davis, Partner, Seyfarth Shaw

Dawn Mertineit, Partner, Seyfarth Shaw

Christopher Robertson, Partner, Seyfarth Shaw

Continue Reading Upcoming Webinar Series! Commercial Litigation Outlook: Insights and Predictions for Litigation Trends in 2023
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US Senator Chris Murphy (D-Conn.) and US Senator Todd Young (R-Ind.) on February 1st reintroduced the Workforce Mobility Act. The legislation would ban the use of non-compete agreements with some limited exceptions. US Representative Scott Peters (D-Calif.-52) and US Representative Mike Gallagher (R-Wis.-08) introduced the legislation in the US House of Representatives. US Senator Tim Kaine (D-Va.) and US Senator Kevin Cramer (R-N.D.) co-sponsored the legislation. The bill was previously introduced in the House of Representatives in 2021.

Continue Reading Legislation Reintroduced in Congress to Ban Non-Compete Agreements and Seeking to Go Even Further than FTC’s Proposed Ban
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100 business organizations submitted a letter today requesting a 60 day extension on the March 20, 2023, comment period deadline on the FTC’s proposed rule banning non-competes with employees and workers. The business organizations include organizations in manufacturing, commerce, retail, insurance, franchise, health care, technology, financial services, construction, and staffing.

Continue Reading Business Organizations Seek Extension on Comment Period Deadline on FTC’s Proposed Rule Banning Non-Competes