Fight over Noncompete Ban Gives Employers Breathing Room
The pause on the implementation of the Federal Trade Commission’s rule banning future use of noncompete agreements for certain employees gives companies time to reassess post-employment restrictive covenants, experts say.
Lawsuits filed by the U.S. Chamber of Commerce and tax service firm Ryan LLC in federal courts in Texas shortly after the rule was unveiled last month seek to block it from going into effect and accuse the agency of overstepping its authority. Many experts believe the legal challenges to the rule could reach the U.S. Supreme Court and that the justices will vacate it.
Philadelphia-based Leigh Ann Buziak, a labor and employment partner at Blank Rome LLP, gives the rule a “slim” chance of surviving should it reach the nation’s high court.
“It’s overreaching to believe that a federal administrative body can displace the laws of 50 states,” she said.
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Regardless of whether the FTC’s rule is implemented, it will influence how companies and employees view post-employment restrictive covenants, Ms. Buziak said.
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"Fight over Noncompete Ban Gives Employers Breathing Room," by Shane Dilworth was published in Business Insurance on May 7, 2024.