Non-Competes Ban is Yet Another Sign of FTC Mission Creep

Earlier this month, the Federal Trade Commission (FTC) released a Notice of Proposed Rulemaking (NPRM) proposing a ban on noncompete clauses. If successful, it will have the potential to impact approximately 30 million U.S. workers. Employers and employees alike have expressed deep concern about the ways the ban could violate trade secrets and intellectual property protections. 

Noncompete agreements are extremely important in fostering innovation as well as competition, and are key in preventing the poaching of clients. While the FTC estimated the ban could increase workers’ collective wages by as much as $300 billion per year, it is still not within the agency’s authority to regulate such a huge chunk of the economy. This ban would have ramifications on essentially every industry, conflict with laws in at least half of all U.S. states, and impact one in five American workers. The U.S. Chamber of Commerce even referred to the FTC’s noncompete rulemaking as “blatantly unlawful.” But it should come as no surprise from Biden’s administration. In fact, it’s just the latest example of aggressive rulemaking from FTC Chairwoman Lina Khan. The noncompetes ban will likely face challenges with the Supreme Court given it would nullify tens of millions of contracts and is not within the FTC’s scope of statutory authority. Hopefully the justice system will stop this in its tracks, though the final rule will likely not take effect until late next year. Meanwhile, it would be wise of consumers who wish to submit comments during the open public comment period (which ends on March 10) to r …