Federal Judge Blocks Biden-Harris Non-Compete Rule

I’ll be the first to admit that sometimes non-compete clauses are overboard. I had one way back in the day when I was working for a little wireless company, and they tried to enforce it when I went to work for a carrier, even though I was bringing no customers with me. It might have made sense if I tried to work for another independent agent, but, NC is also a right to work state, so, they had a tough time enforcing it. Regardless, they are often there for a reason, and it is not the federal government’s role to control this

Federal judge blocks FTC noncompete ban

A federal judge Tuesday blocked a nationwide ban on noncompete agreements from taking effect in September.

The Federal Trade Commission (FTC) voted in April to ban most noncompete agreements, which prevent tens of millions of employees from leaving their jobs to work for competitors or start a competing business.

The Dallas-based tax firm Ryan LLC, the U.S. Chamber of Commerce, the Business Roundtable and other business groups sued to block the rule from going into effect, alleging agency overreach that would make it harder for companies to retain talent.

U.S. District Judge Ada Brown in Dallas said the FTC had overstepped its statutory authority and called the rule “arbitrary and capricious.”

“This win preserves the validity of millions of employment contracts across the nation that facilitate trust between employers and employees, innovation through the protection of IP, and investment in the training of employees,” said John Smith, senior vice president, chief legal officer and general counsel for Ryan.

It would be one thing if there was a method to arbitrate non-competes – oh, wait, there is. Court. And, in some cases, state law. The FTC, though, did not have the authority as designated by the US Congress to make this rule.

Last month, a federal judge in Philadelphia rejected a bid by tree-trimming company ATS Tree Services to block the ban, reasoning the FTC has the authority “to prevent unfair methods of competition in commerce” under the 1914 Federal Trade Commission Act.

If it is an unfair non-compete, yes, that’s where courts, usually arbitration, comes in. But, say, someone jumping from one law firm to another in the same city and bringing all those clients of their previous firm is where a non-compete makes sense. Regardless, in most cases the federal government really has no authority to regulate the economy in this manner. But, this is exactly what Kamala and her comrades would want to impose.

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