Earlier this week, a federal judge in Texas ruled that the Federal Trade Commission (FTC)'s proposed ban on noncompete clauses, which was set to take effect on Sept. 4, was too broad. Judge Ada Brown of the U.S. District Court in Dallas commented in her decision, “The Court concludes that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious. Thus, the FTC's promulgation of the Rule is an unlawful agency action.”
A spokesperson for the FTC, which estimates that 30 million U.S. workers (nearly one in five) are subject to a noncompete agreement, said the agency is considering an appeal.
Colligan Law Partner Erick Kraemer, whose focus areas include conflict management and litigation as well as labor and employment law, was invited to share his thoughts on this decision on WKBW-TV's "Voices" program. He also commented on the likelihood of a successful appeal, if the FTC should choose to do so.
You can see Erick's full interview with host Michael Wooten, here.
"Noncompete clauses are a way that businesses try to protect their 'special sauce.' If the FTC does decide to appeal...they would be going to the Fifth Circuit Court of Appeals, which is one of the most pro-business circuits out there. So, their chances there are not great."