FTC Faces Immediate Backlash For Getting Rid of Non-Compete Clauses
What's the big problem? I thought you business people loved free markets?
The FTC, much like the DOJ, IRS and ESPN, is one of those abbreviated institutions that influences not only what we can do with our money, but how much of it we take back home. This week, the Federal Trade Commission announced a rule banning non-compete clauses, predicting that the decision would create businesses, raise worker wages, and boost innovation.
It didn’t take long before a lawsuit was filed challenging the FTC’s intervention as a massive overstep. CNBC has coverage:
The U.S. Chamber of Commerce and several other business groups on Wednesday sued the Federal Trade Commission in Texas federal court over the commission’s vote to ban noncompete clauses, which are used to block employees from leaving to work for competitors in the same industry.
On Tuesday, the FTC voted to enact the ban on the basis that noncompete clauses stifle the efficiency of the labor market, hinder competition and can lead to higher prices for consumers. Noncompete agreements often prevent workers from pursuing other jobs in their industry, and the better pay those jobs would offer.
In the meantime, the business groups are seeking to block the ban, claiming the FTC does not have the authority to implement the rule, and the rule itself is too wide in scope.
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The Chamber of Commerce offers the usual song and dance about a decision that could have such a large impact on businesses nationally should rest in the hands of Congress. That’s the legal way of keep things as they are forever — the only decisions Congress seem to be able to make with expediency involve forcing ByteDance to divest from TikTok, and even that decision has a 9 month tail on it.
At least this isn’t likely to heavily impact lawyers. Lateraling lawyers usually find conflict checks to be the greater hurdle.
Despite the Chamber’s very grave concern that the FTC is making a decision that could bind the whole nation, the Washington D.C.-headquartered group filed its suit in Tyler, Texas, opening up the case to be heard by either Trump-appointed Judge Jeremy D. Kernodle or Trump-appointed Judge J. Campbell Barker. Hurray for random selection!
I’m not saying that this rules out a decision that leans in the FTC’s favor, but I’m betting Lina Khan is a little stressed out right now.
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U.S. Chamber of Commerce, Business Groups Sue FTC Over Ban On Noncompete Clauses [CNBC]
Chris Williams became a social media manager and assistant editor for Above the Law in June 2021. Prior to joining the staff, he moonlighted as a minor Memelord™ in the Facebook group Law School Memes for Edgy T14s. He endured Missouri long enough to graduate from Washington University in St. Louis School of Law. He is a former boatbuilder who cannot swim, a published author on critical race theory, philosophy, and humor, and has a love for cycling that occasionally annoys his peers. You can reach him by email at cwilliams@abovethelaw.com and by tweet at @WritesForRent.
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