The FTC abandons the ban on non-competition in the Biden era but promises continuous application

Diving brief:

• A majority of 3-1 of the Federal Trade Commission accepted reject the agency’s calls In two legal challenges distinct from its 2024 ban on non-competition agreements in employment contracts, the FTC confirmed on Friday in a press release.
• In a press release, the president of the FTC, Andrew Ferguson, said that the ban “The illegality was clearly obvious“And” would never survive judicial control “, adding that it was a waste of the agency’s financing. Ferguson was one of the two republican commissioners who voted against the ban on the FTC When he was initially ready for approval.
• The FTC will pursue implementing efforts against illegal non-concrete, said Ferguson, adding that the Commission invited the public to subject information on the scope, prevalence and effects of non-concurrents. “And in the coming days, the companies in the industries prey to stoves of non-contests will receive letters of warning me, urging them to consider abandoning these agreements while the Commission is preparing surveys and implementing measures,” he said.

Diving insight:

The committee’s decision represents an effective ending that some have described as an ambitious, if not complicated regulatory effort. Federal judges Texas And Florida has issued injunctions on the prohibition of non-concurrents, while a Pennsylvania judge allowed him to continue on the challenge of an employer.

The ban on non-concurrents of the FTC never taken effect. But this would have prohibited the application of most non-competition agreements at the national level, with the exception of contracts involving a close class of “senior executives”. At the time, the agency’s democratic majority said that the rule was necessary due to the limits of these agreements brought to the capacity of workers to compete for better jobs or to start their own business.

The judges who canceled the ban declared that they have exceeded the agency authority. Ferguson agreed in his declaration on Friday, adding that certain non-competition agreements are illegal under American anti-rust laws.

“As I said, non-competition agreements can be pernicious,” said Ferguson. “They can be, and sometimes, abused with the effect of inhibition severely inhibited by workers to earn their living … And that is why Congress, through the FTC Act and the Sherman Act, gave us the power to intervene when they are expensive to become illegal.

The FTC took measures on this front one day before abandoning the 2024 rule by Filing a complaint against Gateway Services – A company cremation company – in which it alleged that the company imposed illegal non -concretes which prohibited almost all employees from working elsewhere in their sector up to a year after leaving the company.

Rebecca Slaughter, the only Current Democratic Commissioner of the FTC and a member of the former majority who voted to approve the ban from last year, Dissenting To end the call process.

Last week’s developments have shown that the FTC continues to continue the application against an anti-competitive conduct alleged in the form of excessive non-competition agreements, Melissa McDonagh, shareholder of Littleler Mendelson and co-chanting unjust competition and the Trade Secrets secret group, in an email at the Didi HR.

“Consequently, the lesson is that in addition to ensuring compliance with the many laws of non-competition of states, employers should develop strategies with their employment council to develop a restrictive closing program adapted to various functions within their organization,” continued McDonagh.