is likely to be challenged in the courts, and legal experts are skeptical it would pass muster.
Heather said Congress has never delegated the FTC “anything close to the authority it would need to promulgate such a competition rule.” The proposal could change before it is finalized, cautioned, as hundreds of comments pour into the FTC. After that, a legal challenge would work its way through the court system.“That is the million dollar question. We expect it to be challenged in court,” said Peter Glennon, president of The Glennon Law Firm. “The initial issue will be whether the FTC has authority to act under law. The FTC follows the FTC act.
“Notably, noncompetes have been around for a very long time. But it is being determined only now that they are unfair business practices under Section 5? What changed? In my practice, I see fewer noncompetes and more resolutions that benefit both sides of the agreement. Very few people end up ‘sitting on the bench.’ So what data does the FTC point to of people being barred from working that causes harm to consumers?” Glennon said.
The FTC might also run into legal obstacles with how it defines a worker, which the agency said includes those paid and unpaid, as well as contractors.