The FTC Seemingly Thumbs Its Nostril on the Supreme Courtroom

Whatever the Supreme Courtroom’s newest 6-3 ruling in West Virginia v. EPA that regulatory companies might want to have “clear congressional authorization” to make pointers pertaining to “predominant questions” which could be of “good political significance” and would affect “a great portion of the American financial system,” and the import of that ruling to the realm of noncompete regulation (which we addressed intimately in Law360), the Federal Commerce Payment (FTC) and Nationwide Labor Relations Board (NLRB) launched yesterday that they are teaming as a lot as deal with positive factors affecting the labor market, along with the regulation of noncompetes.

In a Memorandum of Understanding (MOU) issued on July 19, 2022, the FTC and NRLB shared their shared view that:

continued and enhanced coordination and cooperation concerning issues with frequent regulatory curiosity will help to protect workers in direction of unfair methods of opponents, unfair or deceptive acts or practices, and unfair labor practices. Issues with frequent regulatory curiosity embrace labor market developments referring to the “gig financial system” and totally different totally different work preparations; claims and disclosures about earnings and costs associated to gig and totally different work; the imposition of one-sided and restrictive contract provisions, resembling noncompete and nondisclosure provisions; the extent and impression of labor market focus; the impression of algorithmic decision making on workers; the pliability of workers to behave collectively; and the classification and treatment of workers. (Emphasis added.)

Accordingly, the purpose of the MOU is “to facilitate (a) knowledge sharing and cross-agency consultations on an advert hoc basis for official laws enforcement features, in a vogue in keeping with and permitted by the authorized pointers and guidelines that govern the [FTC and NLRB](b) cross-agency teaching to educate each [agency] regarding the authorized pointers and guidelines enforced by the other [agency]and (c) coordinated outreach and coaching as acceptable.”

This follows the Biden Administration’s July 9, 2021 Authorities Order throughout which it “encourage[d]” the FTC to “take into consideration” exercising its statutory rulemaking authority beneath the FTC Act “to curtail the unfair use of non-compete clauses and totally different clauses or agreements which can unfairly limit worker mobility.” Nothing concrete has however come of that Authorities Order, although the MOU possibly represents the following stage of the FTC’s “take into consideration[ation]”of the issue. As we beforehand reported, FTC Chairwoman Lina Khan recently knowledgeable the Wall Street Journal that regulating noncompetes “falls squarely in [the FTC’s] wheelhouse,” and he or she has on no account been shy about sharing her view that noncompetes must be banned nationwide and that the FTC has the authority to take motion. This view would not appear to have modified whatever the Supreme Courtroom’s decision in West Virginia v. EPA.

Solely time will inform what, if any, movement the FTC takes with respect to regulating noncompetes, however when it does take steps to ban or in every other case limit noncompetes nationwide beneath Half 5 of the FTC Act, there’ll little query be litigation tough these guidelines. And you may wager that the Supreme Courtroom’s decision in West Virginia v. EPA could be entrance and center in any such downside. Actually, in keeping with Law360, US Chamber of Commerce Authorities Vice President and Chief Protection Officer Neil Bradley talked about that the MOU displays Chairwoman Khan’s imaginative and prescient for the FTC “goes properly previous what’s equipped in laws and what was envisioned by Congress.” Chairwoman Khan would not seem too perturbed by the prospect of challenges to the FTC’s authority on this regard, however, and seems intent on shifting forward whatever the Supreme Courtroom’s admonition.

As always, we’re going to report proper right here on any future updates to state or federal laws concerning commerce secrets and techniques and methods, noncompetes, and totally different restrictive covenants.