[granzymes]

Banning (most) non-competes is likely good policy, particularly agreements that do not provide for payment during the period of enforcement. But you also have to ask whether the FTC is the right part of government to make this decision.

The States have 50 different approaches written into their laws on how to deal with non-competes. Some ban them entirely, while others curtail their scope or shift the burden to employers to justify them, and many do not regulate non-competes at all. A rule by the FTC that preempts the laws of every state for all non-competes regardless of scope without any specific statutory authority is the wrong approach.

The FTC is justifying this under Section 5 of the FTC act, which in relevant part prohibits "unfair or deceptive acts or practices in or affecting commerce." This kind of wholesale preemption of state law regardless of context seems like an awfully big change for such a broad and vague statute. Underscoring this point, the FTC has not historically used Section 5 in this way.

Expect to see this challenged in court.

[wpietri]

Sure, anything that inconveniences people with money gets challenged in court.

I also think "they never did it before" is not a very good reason to not do it now. Especially as this is a growing problem. In 2018 research found, "noncompetes cover 18 percent of all U.S. workers and have covered 38 percent at some point in time."

Had the FTC banned them earlier, like in 1914 when the FTC Act was written, surely somebody at the time would have squawked that it was not a problem and how this was just another example of needless government regulation. If the right time to solve a problem is neither when it's small nor when it's grown large, it almost sounds like some people don't want the problem solved at all.

[granzymes]

The problem is not that the FTC has been silent on non-competes in the past. The problem is that the FTC has never used Section 5 this way before in any context. Courts are skeptical of agencies "discovering" new powers based on vague sections of their enabling statutes.

[wpietri]

Courts are increasingly skeptical of regulatory powers at all. Which, gosh golly, might have something to do with the increasing funding by the super-rich of groups that push for judges that think that way.

[granzymes]

I think courts will be rightly skeptical of unelected agency commissioners preempting the laws of 50 states based on 9 words that the FTC has never before relied upon. I also think that this is obvious and should not be controversial.

[Buttons840]

Presumably those 9 words mean something though. The FTC clearly has the power to prohibit deceptive acts that effect commerce, this is spelled out in the law. If that power doesn't apply to making changes that interfere with state rights, then I would ask what does that power apply to? In practice, does it apply to anything at all?

(One conclusion I can imagine for this debate is that laws are not coherent, they are self contradictory in some cases, and this might be one of those cases.)

However this turns out, I'm glad more people are talking about this issue, because I think 95% of the people agree non-competes are unfair, which is enough that maybe things will change.

[wpietri]

I'm sure you do. I think that is obvious that regulatory agencies were established to solve complex and dynamic problems, and so broad language should be interpreted, well, broadly. If Congress wants something else done in response to changing circumstances, they can always change the laws. I think that should not be controversial. But we live in an age of billionaire-driven propaganda about this topic, so controversial it will be.

[Retric]

Non competes have a direct impact on interstate commerce so the Federal government has a clear mandate from the constitution.

Non competes are rarely enforceable as written, so the FTC has a clear mandate from both the unfair and deceptive standpoint.

[granzymes]

Obviously the Federal government is constitutionally authorized to regulate non-competes. That's not my argument at all. And the FTC is not banning unenforceable non-competes, the proposed rule bans all non-competes.

Regardless of which non-competes they choose to ban, however, the fact remains that this is the first time that the FTC is attempting to use Section 5 in this manner. It is very unclear that they have the authority to issue the proposed rule. My opinion is that they do not, and I think the courts will agree with me.

[EMIRELADERO]

Can you explain why they don't have that authority? Do you think Congress can't delegate its power through a statute? Or do you think that it hasn't done so in this speciifc (Section 5) instance?

[granzymes]

The latter. Courts are skeptical of agencies "discovering" new powers decades later that are based on vague sections of their enabling statutes. Congress could of course directly ban non-competes or amend the FTC Act to give the agency this power.

[Retric]

This is hardly a new power, the FTC already regulates business contracts such as franchise agreements. This extends as far as Fortnight’s item shop.

It’s one thing for agencies to suddenly focus on some new area tangential to their mandate, but this seems to be exactly that they are supposed to be looking at.

[Supermancho]

> And the FTC is not banning unenforceable non-competes, the proposed rule bans all non-competes.

Conditional (the condition of every single one going to court) versus unconditional. I see no reason the power to ban would be limited to a specific interpretation, in this case.

What is the argument (not just reiterating the point of contention)?

[starwind]

From the Federal Trade Commission Act of 1914:

"Under this Act, the Commission is empowered, among other things, to (a) prevent unfair methods of competition, and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress."

Seems to me like the FTC is exactly the group to make this decision

[msla]

You're right: It is easier to effectively nullify this sort of thing in state legislatures.

One might conclude from this that there's a reason the Federal government can set minimum standards effective across the country.