The Federal Trade Commission’s (FTC’s) proposed ban on noncompete agreements is expected to be finalized this year, perhaps as soon as April. SHRM has opposed the proposal, calling for it to be scaled back. Will the final rule be more limited and, if so, what might it look like?
“Unless the proposed rule is scaled way back, I think there will be litigation. And I think that litigation will be successful,” said David Woolf, an attorney with Faegre Drinker in Philadelphia.
Regardless, John Siegal, an attorney with BakerHostetler in New York City, said courts in most places are taking a harder look at noncompetes.
“It used to be that we’d say if you want to enforce a noncompete, the employee better be making more than the judge,” he said. “That is especially true now when the fairness of noncompetes for employees who don’t have rich deals to carry them through a restricted period has become such a public issue.”
Any litigation challenging the FTC’s rulemaking authority will face an uphill battle because the proposed rule ties the agency’s position with Section 5 of the Federal Trade Commission Act, said Dylan Wiseman, an attorney with Buchalter in San Francisco and Sacramento, Calif. The proposal “is one of the Biden administration’s cornerstone initiatives,” he said.
Workers most likely to be exempt from a ban on noncompetes in a final rule are senior executives, said Eliot Turner, an attorney with Norton Rose Fulbright in Houston and Washington, D.C.
As it stands now, the...
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