FTC to Finalize Noncompete Rule Today

The fight now shifts to the courts, where the U.S. Chamber of Commerce will likely try to strip the agency of its rulemaking authority.

BY DAVID DAYEN, LUKE GOLDSTEIN APRIL 23, 2024

The Federal Trade Commission (FTC) will hold an open meeting today to vote on a proposed rule banning noncompete agreements, which restrict employees at a company from taking jobs at rival firms for a set period of time.

It is expected that the rule will be finalized today. Sources have indicated to the Prospect that little in the final rule has changed from what was originally proposed at the beginning of 2023. The agency has held public events hearing from workers affected by noncompetes, and more than 27,000 comments were submitted on the proposed rule, most of them in favor.

But while today’s meeting will almost certainly result in a final rule, that doesn’t make it completely safe from its antagonists. The U.S. Chamber of Commerce indicated at the American Bar Association antitrust law section’s spring meeting earlier this month that it would file suit to overturn the rule. It’s no secret that the Chamber is staunchly opposed to the rule, as they filed a public comment calling it “arbitrary and capricious.”

A lawsuit could more broadly threaten the rulemaking authority the FTC cited when proposing to ban noncompetes. This authority, under Section 5 of the FTC Act, was dormant for decades until the ascent of Lina Khan to the position of chair. Writing definitive rules protecting against unfair methods of competition across the economy relieves the FTC of having to rely on lawsuits against individual firms. Lawsuits often take years and require costly expert analysis, while rulemaking can set bright lines barring anti-competitive activity.

https://prospect.org/labor/2024-04-23-ftc-finalize-noncompete-rule-today/