US judge throws out FTC's ban on non-compete agreements

Also state vs federal

Congress absolutely has the right to regulate employment.

Congress has been working under the assumption that Chevron was the law of the land for decades. That let them produce laws that delegated technical rulemaking to experts with relevant experience. The idea is that the law would be more responsive to changing times, and that it could be simpler, since it wouldn't need to encode obscure technical standards.

However, the Supreme Court decided to legislate from the bench and transfer that authority to unelected judges. Now, the federal government is all screwed up because none of the laws work as intended, and, so far, the judges wielding this newfound authority have demonstrated some mixture of incompetence and corruption.

I'd like to think they're all taking night school engineering and economics classes to bridge the newly-created skills shortage, but, somehow, I doubt it.

For example: In this case, the courts have come to the nonsensical conclusion that (quoting the article) "The FTC, which enforces antitrust laws and regulates competition", doesn't have the authority to regulate non-compete clauses, and further claims there's no evidence that the proposed regulation would do anything beneficial (despite 80+ years of case studies from California, which happens to have the largest economy in the US.)

Obviously this isn't a hard and fast rule, but in general its safe to assume that any executive agency in the US has been operating under a fairly ambiguous set of rules.

Its always up for debate whether that is a good thing or a bad thing, but without Chevron much of what the agencies have done for decades wouldn't have been allowed.

Was that an issue here?

Yes. The FTC’s powers over employment aren’t as clearly defined.

The way I read it the judge said it was too broad.

Forum shopping at its best, glad Texas is setting a great example here, showing that if you have enough money you can do everything.

That's how our legal system has been allowed to operate all the way down to civil court unfortunately. I've seen much the same happen first hand in civil matters. I've also seen a person convicted of a crime when the case took 4 years to be tried, a charge that had max of 1 year in jail mind you, and the only evidence offered was eye witness testimonials that disagreed with each other and photos of the scene (aka a room) taken days before trial and having nothing to do with the crime in question.

Our legal system is far from infallible.

Take a remote job with a California wage but live in a better-run state.

That trend has changed: CA now has a slight incoming migration, like it used to.

And yes, it's more expensive. But that's the price you pay for reaping the benefits of living in CA.

Gas is, on average, 43% more expensive.

If you can do your job remotely, then go for that.

If you can, but don't want to or you opted for hybrid, that's on you.

Otherwise, that shouldn't be a huge factor unless you drive a gas guzzler.

If nobody wants to live there then why is it so expensive?

It’s a complex feedback loop. On one hand the economy is great. On the other the housing policy is completely messed up. So you get a lot of new wealth that than chases too few houses, pushing everyone else out.

It’s true that California is experiencing outmigration but that’s primarily driven by the fact that Democratic Party voters like to use the phrase “preserve our community” to mean the same sentiment as “build the wall”.

The anti-non-compete is a good thing but it’s not anywhere near a big factor for the vast majority of people.

Housing is more expensive. Gas and groceries, too. Anything you can buy online costs the same as anywhere else. We moved to the Bay Area from Nebraska and my base salary is literally 5x my total comp there. That means I only have to work 1/5th as long to get anything I can find on Amazon. A new car is a fifth as much. Netflix is a fifth the price.

In some important ways, CA is very expensive. In others, its ludicrously cheap.

Given how populous California is, it could be one of the most desirable states and still lose people. Likewise, a low population state like Idaho doesn't need much net inflow to grow by large percentage margins.

What specific evidence possibly exists in California that is relevant to the granularity of rule-making that the FTC can legally perform under federal law? The scope of a regulatory agency's authority isn't linked to the quality of their rulemaking.

Jumping through a bunch of bureaucratic hoops and writing a 500 page report doesn't make you right.

This judge did actually rule that it was "arbitrary and capricious".

That's not a policy judgement is a procedural one. Its not "it should not be done", but "the FTC did not do what is substantively required in assessing the facts and applying the law".

I'm not saying it is right, I am saying "arbitrary and capricious" is specifically a procedural finding in federal administrative law.

Careful with this logic. It leads all the way to the idea of a "good king" who'd quickly bring in nice things, unencumbered by any procedures. Or to just picking good things from store shelves and skipping the procedurally correct checkout and payment.

Procedures are imperfect. But they were introduced to keep away worse imperfections.

FTR, I do think that unpaid non-competes should be considered null and void. I also want this to be codified properly, so that no judge would have grounds to proclaim it frivolous and revoke.

Were they though? The Federal Trade Commission has say in how businesses operate, including their relationship with employees.

While the best approach would be a law, relatively few questioned the initial change because 1) It is good for nearly all parties 2) It makes sense that they could 3) Congress obviously was in no rush to make this change soon, if ever

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.

https://en.wikipedia.org/wiki/Federal_Trade_Commission_Act_o...

Non-competes are unfair methods of competition, unfair practices affecting commerce, etc.

From the most cited supreme court precedent ever.

Not sure I understand your argument. Are you suggesting the federal government can’t, for instance, set a minimum wage?

federalism (employment contracts are a matter of state rather than federal law)

While the US's particular brand of federalism might imply that (or might not), that specific bit need not be a feature of federalism in general.

separation of powers (executive branch agencies enforce the law, they don’t make it)

Decades of legislative delegation and executive rulemaking would seem to disagree with that, no? I'm not making a value judgment on whether or not this is a good thing, just stating the facts on the ground. (SCOTUS seems to want to dismantle all that, though.)

It’s really appalling how many supposedly educated lawyers would arrive at the wrong answer to something a bright 10th grader could figure out from first principles.

Or maybe reasonable people well-versed in the law can disagree in their interpretations? Not sure if you're a lawyer yourself (I'm not), but it seems to me that disagreements on legal interpretation aren't particularly uncommon, especially when it comes to disputes around separation of powers and state vs. federal powers.

There are plenty of cases where executive authority may not be enacted in an arbitrary manner. The government probably spent more time asserting that they had the authority to do so, than that doing so was necessary.

Either way, this will likely end up in a different court, and at a higher level, and get decided again.

Yeah, this project of toppling the administrative state is a slow-motion disaster for consumer protection, environmental protection, basically any limitation that keeps greedy people from taking advantage of people and laying waste to the commons.

Not being able to exclude people because of preexisting conditions and ensuring children have access to coverage seems like a pretty big success story.

Is it perfect? No, probably not. But repealing it would likely increase the budget deficit according to the CBO and put a large number of folks into a much worse situation than they are in now.

Insurance is going up across the board, it’s not a healthcare thing. Obamacare can be successful while premiums go up as well, it is not mutually exclusive.

It is objectively a success lol. The elimination of preexisting conditions and annual/lifetime coverage caps alone was huge. Not to mention the tens of millions of people who received health insurance who wouldn't have had any at all.

It is insane to me you are going to sit there and try to act otherwise.

The premiums are going up because someone has to pay for the profits of the for profit insurance companies, of the for profit hospitals etc

They all have to report yoy increase of earnings right?

So there enjoy your capitalistic health insurance. Which by the way dumps you once you are old, then I have to pay for you too despite the fact it is you who wanted a completely deregulated health insurance market.

Yes. Welcome to how insurance works.

Can you prove to me the counterfactual point: that without Obamacare, insurance premiums would have not risen?

They were going up before the ACA. Not sure what that has to do with anything.

Show me where on the chart PPACA came into effect.

https://www.kff.org/wp-content/uploads/2023/10/Figure-1-12.p...

It should be obvious, right?

I don't deny that it sucks that health insurance is so expensive. Of course it sucks. And I have tons of empathy for anyone who is suffering under the expenses. But blaming our current costs on PPACA is just not supported by the evidence I'm seeing. If you have other evidence I should look at, I welcome it.

From https://en.wikipedia.org/wiki/Ada_Brown_(judge)

Brown is a member of ... the Federalist Society.

https://en.wikipedia.org/wiki/Federalist_Society

"She" refers to the person who furnished the quote in the comment I replied to. She is not a judge, she is a lobbyist.

Surely you don't believe that? After Clarence Thomas and his lifelong friendship with Harlan Crow - it must be a whole lot cheaper and easier to buy off less important federal judges.

once is happenstance, twice is coincidence...

Federal judges in the U.S. (like this one) are not elected. They’re appointed for life by the president.

I can kick you in the balls, and presume to know what you think.

I think you are really confused about theory and reality.

But if I give you a good faith excuse, often time we prescibe evil motives to more mundane human heuristics like "All my friends tell me great things about small business owners and as such, we should try to protect their ability to hire people".

See, some of us know how to properly understand the banality of evil.

Counter point, you are conflating each individual business profits and motives for the profitability of the economy and country.

That was mentioned in the second paragraph.

It's a prisoner's dilemma because even though the economy would be better if non-competes were banned, any individual business makes more money by forcing employees to sign one.

you are conflating each individual business profits and motives for the profitability of the economy and country

I think everyone does really. In fact, I'd say this is the "big idea" behind conservative fiscal policy as a whole. This assumption is the seed of it all.

Given the option to pay for it, or have it for free, the choice they make not to pay is a clear reason.

If they did have to pay, it could definitely be advantageous to pay employees not to leave, on a selective basis.

Maybe. Maybe it would lead to other games being played though.

For example, now that the right has the supreme court, it has claimed a lot of extra power over regulatory agencies, elections and even congress. This effectively makes a right wing body the final arbiter; and end run over attempts to get the system working honestly.

I believe reform needs to be a lot more hands on to get things back on track.

A conservative accelerationist who believes that wit will usher in a new era of progressive regulation and long-term social benefit? Now I really have seen everything.

It's not a popular opinion, but I'm pretty convinced that a few (5<=N<=10) years of administrative rulemaking being handicapped would fix Congress up pretty thoroughly.

One party doesn't believe that government should be making laws at all though.

Frankly, it doesn’t mean that at all. There are myriad issues where a clear majority of the country believes something should be legal or illegal but congress either takes no action or goes against that will. The issue is that these people are far more accountable to those with the money to run their campaigns than to the common peasant the campaign ad targets. Consequently, the will that tends to get realized in congress is slanted heavily towards the interests of money, and of course it is. Lack of noncompete legislation isn’t an example of slow pace, it’s an example of companies that have money slanting politics in their favor to maintain a bit of extra leverage over their workers.

Which means that the country, through their elected legislature, has not agreed on a policy.

No, it means that the country has not agreed to the standard demanded by the constitution, which is an insanely high bar not required by virtually any other ostensibly democratic country.

The constitution is obsolete, undemocratic, and does not work in practice. Thus attempts to subvert it are completely legitimate. I don't understand the point of view that if the constitution says we have to do something a certain way, then we must do it that way, because those are The Rules, as if the constitution is some kind of law of nature.

In addition to what you've said, it's still in the hands of states to do something about it and we, as individuals, have significantly more power to affect change at the state level.

All those laws you listed are about maintained the status quo or the status quo of a few decades ago, i.e. conservatism.

This isn't creating solutions to problems, this is bringing back or upholding problems from some time ago so we can look at them and do nothing.

This is the fundamental difference between conservative ideology and progressive ideology. Progressives seek solutions to current-day perceived problems, and sometimes the solutions are bad. Conservatives seek to maintain problems, even across generations, sometimes bringing problems of long ago back into reality.

This is why, for example, conservatives brought Jim Crow during the reconstruction era. Is this not regulation? Yes, but it's also a return/continuation of the status quo. It's the opposite of a solution, it's a the problem extended and then actually PROTECTING the problem so it can't be solved. It's an anti-solution.

That's one, really old, example. But take your pick of any during American history and you will see this is always the case. Because that's what defines conservatism as conservatism.

468 of the 538 seats in congress, including 100% of house seats, are up for election every 2 years.

On top of this, you don't need to change every seat in congress, you generally only need a tiny handful to flip to switch control - for example at this moment the Senate is 51 to 49 and the house is 220 to 212 (with 3 vacancies). To flip both houses would require only 7 seats to flip, or 1.3% of congressional seats.

The big difference between congressional and executive elections is that congressional changes explicitly do not represent national shifts in voter opinions as they are regional elections. Only a national election can demonstrate a true shift in voter opinions, and when such a shift occurs is exactly when laws should change.

"unreasonable" here actually has some legal meaning, and some states have previously established some pretty relevant case law as to what is a reasonable amount of time. I remember running one by a lawyer many years ago, and they said that the state I was in would not enforce a non-compete more than one year in duration. So just because a non-compete is written in your contract, and they're legal in your state, doesn't mean that the specific non-compete you have is legal in your state.

Capitalism includes regulatory capture. It's what the system is

Oh I totally agree. Ive just never encountered 10 years. My jaw dropped a little. Ive definitely seen 1-2 years but also have never seen it enforced. Most people either left on good terms, or were let go not because of performance, but just re-org, etc.... and as long as you were not bringing trade secrets the former employer was really just happy you were working again.

not sure the Founders would have included employment in "commerce".

We can't interrogate them to find out and the world has changed enormously since then. Why should we be bound to the unverifiable world view of dead men?

You cannot have commerce without labor and the understanding of markets now include employees/labor as a market.

Depends on who your employees are. Are they all retained to one state, or several, or international?

It's commerce because money exchanges hands. Labor is sold and bought. To me, and I think almost anyone reasonable, it is obviously commerce.

Personally, I think this entire textualist idea of "let's interpret the constitution like its the 1800s" is bogus. The founding fathers were not stupid and short-sighted. They could see the growth of this country and understood, as time goes on, technology changes and culture changes. They wrote the constitution in such a way where it will remain reasonable.

You know, I think I’d be fine with non-competes that only apply to jobs with employers in the same state, and to jobs with an employer that does no business outside the state.

That’d effectively be a blanket ban anyway, so sure.

Wickard v. Filburn basically destroyed the commerce clause. Growing wheat on your own farm is "interstate commerce" because it impacts national wheat prices (since you would have bought that wheat otherwise!). In the second half of the 20th century, this ruling was used to great effect to limit the power of in-state businesses in the South to discriminate.

On the other hand, it was also used to justify why the federal government can prevent states from legalizing marijuana, even if it won't leave the state. It's certainly a ruling with a complicated moral legacy, in that it has some clearly good use cases, a few bad ones, while also brazenly defying the clear meaning of the constitution because doing so was convenient to the state.

Not sure how I feel about it, but I guess it was inevitable anyway.

A garden leave isn't a non-compete, as you are employed during that time, even if your job is doing nothing.

Techincally, garden leaves are longer, mandatory termination period, not banned under the FTC rules.

Garden leave non-competes were allowed under the FTC's rule.

I hear this quite frequently and I’d have to disagree. While it’s certainly hard to complain about getting paid to ride the bench (I’ve been there myself), garden leave inhibits one’s freedom to work on what they find interesting. Not to mention missing out on bonus.

To my understanding "garden leave" wasn't disallowed, you can _pay_ people to not work for a competitor, but you can't enforce limitations on their employment if you aren't paying them.

Garden leave hurts everyone if key people are disallowed from working in their peaks years of their societal contributions.

More generally, in high turnover industries, we're taking out x% of the workforce and paying them to not work, not develop skills, etc.

How is this different than them being an employee (and the employer deciding that they don't have to work on anything)?

Also, I thought this was a British-ism, because over there employers can't fire at will and instead once the employee (or employer) has given notice then the employer must keep paying them until the end of the notice period.

That might be fine if you are getting 100% salary + benefits, but some of these agreements can be too broad. It could say that the amount of salary can be an arbitrary amount determined at the end of employment. What if they decide they only want to pay something like 50 or 75% base salary? Also once you are on a family plan, paying COBRA can be a substantial expense. My plan is nearly $1,600 a month if I had to pay the full amount.

Burger King doesn't want McDonalds finding out the secrets of why their fries taste so much better.

It's a dangerous road

To be clear, there are exactly 0 communist politicians in the US.

You're creating a false dichotomy. It's not the capitalists vs the communists, it's the capitalists vs the slight less capitalist capitalists. The American left isn't communist, and it isn't even close. Even the closest politicians like Bernie Sanders cannot be considered communists.

What does it mean when the things that happen in a healthy free market aren't happening

It means we don't live in a free market. Because a free market is bad, and nobody actually wants a free market. They want an almost free market. But of course child labor is bad, and poisoning your workers is bad, and also blowing them up on the railroad is bad, and then poisoning the water is bad too. And then giving your customers HIV (yes, real) is bad as well.

So we decided we need some authority over that.

Wasting company time attracting competitors is surely a violation of your fiduciary duty. I don't pay you to sleep or eat, so why should I pay you to interview? At our competitors no less?

For anyone reading this thread seriously, the job market is fine, feel free to market your skills. As a rule of thumb, if your employer didn't agree to the raise till you presented a counteroffer then you should almost always leave. No matter what your employer said when you started or thereafter, if you're doing a fantastic job the "once per year" bonus/promotion cycle is bubkiss, and they will absolutely compensate you accordingly (on the flip-side, if you haven't been hired yet, don't start underleveled with a promise of a promotion except in dire circumstances; this has been hashed out before, but reply if you want more details).

Damn dude the market is bad but its not that bad.

Exactly, bend the knee to your corporate lords and they may show your favor.

There are a ton of federal agencies that have the power to make regulations and then enforce them. This power is specifically delegated by Congress. It’s hard to imagine a functioning government without this. For example, Congress recognizes it is not a subject matter expert at radio signals, so it delegates the technical details of regulating the electromagnetic spectrum to the FCC. Same thing for the FDA. Congress isn’t an expert on how clinical trials should be designed so it delegates that to the FDA. A huge one is the DEA, which can both determine how drugs are scheduled and can also enforce it. Congress has the power to overrule the agency when it sees fit.

We are talking about the police, right, and how they get no say whatsoever in deciding what to enforce, yes?

these agreements are barely agreements

They either are contracts with all the requirements of being a contract (agreement, consideration, etc..), or they are nothing.

You also vote for your Representatives and Senators.

yes, one represenative that has continually lost represenative power for a century, and one senate who's as effective in California as they are in Wyoming.

Senate was always built that way, but represenatives growing weaker is part of the mechanics reasons behind why nothing feels representative.

You mean other than the felony convictions and coup?