The future of the noncompete ban isn't totally bleak
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Illustration: Aïda Amer, Sarah Grillo/Axios
Earlier this week a federal judge in Texas stopped the FTC's ban on noncompete agreements from taking effect nationwide.
Why it matters: It's increasingly unlikely that a national ban on noncompetes will ever happen. That doesn't mean employers can run wild, however, locking down workers in contracts that bar them from taking jobs with rival firms.
State of play: Thanks, in part, to the increased attention the FTC drew to noncompetes, more states are passing laws limiting these agreements.
- Minnesota passed a noncompete ban last year. California, North Dakota and Oklahoma also have blanket noncompete bans.
- Plus, 33 other states have restricted their use for lower-income workers or in industries like health care.
- "There's a lot happening at the state level. I definitely wouldn't say to a client, if you want to do a noncompete that's fine," says Laura Smolowe, a partner at Munger, Tolles & Olson.
What's next: The Texas ruling will likely get appealed — as will decisions in two other cases challenging the noncompete ban in Florida and Pennsylvania.
- That sets up a fight in a Supreme Court that's become overtly hostile to sweeping actions from federal regulators — particularly since its June decision curtailing "Chevron deference," or agencies' power to interpret laws and make rules.
- After that decision there's "no way the FTC ban survives," says Thomas Muccifori, a partner at Archer & Greiner.
The other side: "I don't think it's over till it's over," says Elizabeth Wilkins, former director of policy planning at the FTC.
The bottom line: Agencies like the FTC have lost hard power thanks to the Supreme Court's recent rulings, but still can pull the levers of soft power to make change.
