Comment on the Show by Sending Mark a Text Message.
What happens when the law meets politics in the workplace? In this eye-opening episode of the Employee Survival Guide®, Mark Carey unpacks the recent Texas court ruling that blocks the FTC’s nationwide ban on noncompete agreements, a decision that could reshape the landscape of employment law. As an employee, understanding your rights regarding noncompete agreements is crucial, especially in an era where workplace culture is constantly evolving and legal disputes are on the rise.
Mark dives deep into the implications of this ruling for both employees and executives, highlighting the stark contrast between the Texas decision and a favorable ruling from a Pennsylvania court. Are you aware of the legal avenues still available to challenge your noncompete agreement? Mark empowers listeners to be proactive in asserting their rights and navigating the complexities of employment contracts, even amidst the political motivations that often cloud these issues.
As the upcoming presidential elections loom, the intersection of employment law and political agendas becomes increasingly significant. This episode not only addresses the current legal landscape but also emphasizes the potential economic impact of the FTC’s rule on the workforce. Mark encourages you to stay informed and engaged, as the fight for employee rights continues to evolve.
From severance negotiations to understanding workplace discrimination, this episode of the Employee Survival Guide® is packed with insights and actionable advice for anyone looking to thrive in today’s challenging work environment. Are you facing a hostile work environment or retaliation? Do you understand your rights against discrimination—whether it’s related to age, race, gender, or disability? Mark provides essential tips for navigating these employment law issues, ensuring you are equipped with the knowledge needed to advocate for yourself.
Join us for this compelling discussion that not only sheds light on non-compete agreements but also explores broader themes of employee empowerment, workplace rights, and the importance of advocating for yourself in a system that can often feel stacked against you. Tune in to the Employee Survival Guide® and take charge of your career today!
Links Mentioned in Episode:
Ryan LLC v. FTC (Texas decision)
FTS Tree Service v. FTC (Pennsylvania decision)
If you enjoyed this episode of the Employee Survival Guide please like us on Facebook, Twitter and LinkedIn. We would really appreciate if you could leave a review of this podcast on your favorite podcast player such as Apple Podcasts and Spotify. Leaving a review will inform other listeners you found the content on this podcast is important in the area of employment law in the United States.
For more information, please contact our employment attorneys at Carey & Associates, P.C. at 203-255-4150, www.capclaw.com.
Disclaimer: For educational use only, not intended to be legal advice.
Transcript:
Speaker #0 Hey, it’s Mark here, and welcome to the next edition of the Employee Survival Guide, where I tell you, as always, what your employer does definitely not want you to know about, and a lot more. Hey, it’s Mark, and welcome back. Today we’re talking about the Texas court blocks the FTC ban on non-competition agreements, but the FTC rule is not… dead yet. On August 20th, 2024, a federal court in Texas issued an order barring the Federal Trade Commission from instituting the new rule banning non-competition agreements nationwide. This was a blow to all employees nationwide. And you can read the decision in the show notes below. It’s called Ryan LLC versus FTC. Non-competition agreements are an extremely important constraint on the working lives of employees and executives. I dove deep into this legal quagmire in an attempt to give you a straightforward explanation that will provide what the news media cannot. The following discussion unfortunately addresses the conflict between the rule of law and the political cycle. But I offer an interesting viewpoint. The Texas decision is not controlling on employees outside of Texas, and the FTC rule will be effective on September 4th, 2024. There’s the law, and then there’s politics. First, what is meant by the rule of law? In its raw essence, courts are bound by previous case decisions, acts of Congress, and procedures. The Administrative Procedure Act dictates how a court must address and resolve disputes involving agency rulemaking. Here, the Federal Trade Commission, substantive regulation to ban non-competitive agreements in employment. Simply, the FTC cannot render arbitrary and capricious rules. It must have the authority to make rules as directed by Congress. The Texas court, Ryan LLC v. FTC, said that the FTC did not have this power, even though we all presume the FTC protects against unfair corporate behavior and non-compete agreements squarely fit into the FTC’s jurisdiction. Second, this is really a political issue to garner election support. In the left corner of the ring, there is a decision FTS Tree Service v. FTC by a Pennsylvania federal judge, a Biden appointee, that holds in favor of the FTC rule, and you can read the decision in the show notes below. In the right corner of this heavyweight title bout is a Trump appointee in a Texas case above Ryan LLC v. FTC. The August 20, 2024 Texas decision banned the enactment of the FTC rule on non-competition. The FTC has 60 days to file a notice of appeal from the August 20th decision. As of this date of this podcast episode, the FTC has yet to file a notice of appeal in the court docket. I checked, because I do. This is rather a simple procedure, and I do not expect the FTC to wait very long to file this notice. Once filed, the appellate procedure takes over at the Fifth Circuit, and the FTC must comply with the Fifth Circuit of Court of Appeals rules. I suspect the case will be expedited given the political leverage the FTC will have on voters. Regarding the ATS Tree Service case in Pennsylvania, the court issued a scheduling order on August 22nd requiring ATS to file a motion for summary judgment by September 20th, and the subsequent briefs filed thereafter. Unfortunately, a decision will not be rendered by this court until after the November presidential election. This means the FTC fight will be held in the 5th Circuit. Court of Appeals, and the Democrats must act fast if they want to push this case along before the election. The FTC could also push for an expedited review by the U.S. Supreme Court, pursuant to a federal statute. Expedited appeals are rare, but I believe the FTC rule warrants immediate constitutional review, given the enormous economic impact on employees and executives, whether or not the rule becomes effective on September 4th. The economic impact on employers is de minimis, as the FTC indicated that the cost of notifying employees of the new rule is roughly $27 per employee. Employers have no grounds to argue the economics here, as they benefited financially for decades due to the non-compete case law decisions in their favor. And I have participated in many of those decisions in employees’ clients who have been burned by this issue. It’s just a matter of how politically important this issue is to voters. We have two political candidates running neck and neck here, Harrison versus Trump. And the political machines, if you know what that means in this country, may force the courts to address the very important issue before November. If you are looking through the correct lens, President Biden demanded the FTC issue the non-compete rule to garner favor among the nearly 160 million workers in this country in November. There’s an estimated 30 million employees who are covered by non-compete agreements. Nothing has changed regarding this initiative now that Harris has taken over the DNC nomination for president. Presumptively, Harris has adopted and embraced the FTC rule. As she needs all the voters, she can muster in her hyphenated election bid. The FTC rule is still effective on September 4th. I poured over the Texas and Pennsylvania court decisions. I have the following conclusions. Employees may still void their non-compete agreements because, legally speaking, the FTC rule has not been enjoined. We have two federal district courts rendering opposite decisions in two parts of the country. Under the Pennsylvania ATS decision, the court refused to issue a preliminary injunction, while the Texas court in the Ryan case issued a national ban on the FTC rule, although it previously stated that the case was limited to the parties before it. I question whether or not the Texas court has the authority to issue an order applicable to third parties beyond those in the case before the court. In the decision, there is no justification for the national coverage of the order, just that the judge said so. Given the national urgency of this issue and the FTC rule positively affects millions of employees nationwide, I cannot give the Texas court order the weight the judge arbitrarily assigns to it. especially in light of the conflicting decision from the federal judge in Pennsylvania. This is not what our nation requires right now. I argue the FTC rule has not been banned and is effective on September 4th, and employees must push their employers against this issue individually. The enforceability of the FTC rule is undecided. The appellate courts, and eventually the Supreme Court, must weigh in to this very important issue. I would be surprised if the FTC rule was not enforced. Not surprised if this issue becomes a political football akin to the abortion debate in the current presidential election cycle. Employees literally can force their employers into court and cause state and federal courts around the country to decide which court, Texas or Pennsylvania, got it right as to whether the FTC has the power to substantively regulate non-compete agreements in employment. More importantly, the Texas decision would be merely persuasive legal authority. to any court outside of the state of Texas, meaning other courts are not required to follow that decision. That is a lot of legal leverage for employees, and they must challenge the Texas court order in their local jurisdictions. Likewise, even if the employers took the offense and began just suing employees, leaving for competitors after September 4th, there would be a flood of cases to hit the dockets around the country. Overall, it was going to be a mess, or in other words, a shit show. And there is a lot of room to negotiate and litigate over regarding the applicability of the FTC ban on current and future non-compete agreements. I say employees and executives can and must challenge their employers in support of the enforcement of the FTC rule banning non-compete agreements after September 4th. The Texas court decision in Ryan LLC versus FTC is simply conclusory and holds the FTC cannot make substantive rules about, quote unquote, competition. which is ironic, and further that the FTC rule was arbitrary and capricious. When you read the Pennsylvania decision, the opposite is true. The Pennsylvania court got it right. The Texas court did not. There are quite literally two polar opposite decisions, yet the Pennsylvania court decision is firmly grounded in supportive case decisions and congressional delegation of authority to issue substantive rule that the non-compete agreements are illegal restraint of trade on the American workforce. The battle over this issue has just begun, and employees should be mad as hell about these one-sided default management agreements, as I’ve said all along, that dictate the financial and income affairs of millions of employees across this country. The FTC rule is good for employees and good for this country, regardless of the politics. Just ask Californians in San Jose and Santa Clara, the also called Silicon Valley, because competition, non-compete agreements don’t apply there. And, well, as you know, business is good. I hope you are informed about this decision. what I’ve brought to your attention. It’s beyond what the media has provided to you. And I’ll follow up as things develop here. But good luck and be well. If you like the Employee Survival Guide, I’d really encourage you to leave a review. We try really hard. to produce information to you that’s informative, that’s timely, that you can actually use and solve problems on your own and at your employment. So if you’d like to leave a review anywhere you listen to our podcast, please do so. And leave five stars because anything less than five is really not as good, right? I’ll keep it up. I’ll keep the standards up. I’ll keep the information flowing at you. If you’d like to send me an email and ask me a question, I’ll actually review it and post it on there. You can send it to mcarey at CAPCLaw.com.