The Federal Trade Commission's contested regulatory and enforcement powers got a much-needed endorsement when a Pennsylvania federal judge refused to temporarily block a ban on employment noncompete agreements.
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Anthony B. Haller, a labor and employment partner at Blank Rome LLP, said that when a plaintiff like ATS challenges a government regulation, it has to show why the rule is problematic for that plaintiff specifically. "They didn't have the facts to do that," he said.
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The uncertainty "really pours gasoline on [that] underlying fire that is burning around any employer that relies on these agreements," said Haller, who like others argued that there are employers with legitimate interests in imposing noncompete agreements to protect their most competitively sensitive information — the FTC contends that nondisclosure agreements will do the trick while avoiding the inhibition on employee mobility created by noncompetes.
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Many attorneys said the rulemaking would be doomed for rejection by a U.S. Supreme Court that's shown little tolerance for federal agencies operating outside what they've been explicitly authorized to do.
"The prevailing view has been that the FTC rule would not survive constitutional challenge," Haller said.
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"FTC Powers Get A Boost In Philly In Noncompete Ban Saga," by Bryan Koenig was published in Law360 on July 26, 2024.
