Comment Re:20%? (Score 1) 113
I predict this will die a violent death in US courts.
Much doubt about that one I would say. Not unless they are prepared to and can prove Non-Competes prevented by the rule cannot be considered Unfair under Competition/Antitrust law and the FTC act in the US. I would eagerly await their Proof that these agreements are actually reasonably necessary to secure a justifiable legitimate pro-competitive objective that's within the public interest. If There is an alternative available, and the companies did Not have to use a no-compete, then they ought to lose any challenge. The FTC is smart to exclude executives on this one. You're going to be hard-pressed to find a legitimate pro-competitive reason that 100% of the no-compete restriction is necessary On an individual employee who is not an executive or business owner -- for knowledge workers, etc, a NDA, or a very fine-grained agreement specific to the job assignment, and the specific info you will have access to, should be sufficient most of the time, And the broad nocompetes have a high chance of coming back as unjustifiable/unfair from any court.
Noncompetes are not much very well liked by the courts when employers try to use them. Non-competes are an example of restraint of trade agreements. Which makes the validity of all such agreements dubious. The common law requires the Non-compete restriction would have to be reasonably necessary in the protection of a legitimate pro competitive interest under antitrust laws -- the supreme court has rejected the notion that "keeping a level playing field" b/w competitors, etc, is a legitimate justification; the no-compete agreements would have to have some specificity, and the agreement would be invalid if it goes against public policy. The FTC Act passed by congress gives the FTC the authority to weigh the matter of public interest and set the public policy, and it falls under the executive branch of government's discretion when it comes to which type of incidents they are enforcing against as Unfair business practices.
The courts will generally defer to the regulator.
If the Agencies conclude that the restraint has, or is likely to have, an anticompetitive effect, they will consider whether it is reasonably necessary to achieve procompetitive efficiencies. If the restraint is reasonably necessary, the Agencies will balance the procompetitive efficiencies and the anticompetitive effects to determine the probable net effect on competition in each relevant market
Any agreement is unlawful (under the rule of reason) if its restrictive effect on competition is not reasonably necessary to achieving a "legitimate procompetitive objective, i.e., an interest in serving consumers through lowering costs, improving products, etc." (National Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 691, 98 S. Ct. 1355, 55 L. Ed. 2d 637 (1978).)
United States v. Visa U.S.A., Inc., 163 F. Supp. 2d 322 (S.D.N.Y. 2001
This is an area where the legislation passed by congress gives the FTC the explicit power to interpret a Broad law which Forbids all unfair business practices. Therefore, there is a very high chance they would survive challenges in setting a rule about business practices.
If Non-Competes are an Unfair business practice, then they were always illegal for employers to present to employees and enforce: The FTC simply had not yet recognized that fact yet, nor taken any enforcement actions, as the code was not yet interpreted the meaning of the law to preclude the practice.