The FTC is not alone in taking aim at non-competes. Yesterday, the NLRB’s General Counsel Jennifer Abruzzo issued a memo to all regional directors, officers-in-charge, and resident officers at the NLRB stating that non-competes in employment agreements and severance agreements violate the National Labor Relations Act except in rare circumstances. Specifically, Ms. Abruzzo claims that such covenants interfere with workers’Continue Reading The NLRB Joins the Fray: Another Attack on Non-Competes
This post was originally published to Seyfarth’s Gadgets, Gigabytes & Goodwill blog.
Last week, a joint statement was issued by four federal agencies expressing their apprehension regarding the use of AI for discriminatory or anticompetitive purposes and outlining their plans for regulation. This comes on the heels of Elon Musk requesting a “pause” in AI development and meeting with…Continue Reading Regulation of AI – the Path Ahead
With the extension, the FTC will now be accepting comments on the proposed rule until April 19. Originally, the deadline for submitting comments was March 20.
Information on how to submit comments can be found in the Federal Register notice.Continue Reading FTC Extends Public Comment Deadline on Proposed Rule Banning Employment Non-Competes Until April 19th
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:
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
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
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…Continue Reading The Non-Compete Crackdown Continues: FTC Hosts Public Forum on Proposed Rule to Ban Non-Competes, Biden Attacks Non-Competes in State of Union Speech, and FTC Commissioner Wilson Resigns
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…Continue Reading Policy Matters Podcast: FTC’s Crackdown on Non-Competes Through Agency Rulemaking Part 2
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…Continue Reading Policy Matters Podcast: FTC’s Crackdown on Non-Competes Through Agency Rulemaking
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