Benjamin Dryden Discusses Resistance to FTC’s Proposed Noncompete Ban
Foley & Lardner LLP Partner Benjamin Dryden is quoted in the WorldatWork article, “FTC’s Proposed Rule to Ban Noncompetes Faces Stiff Resistance,” commenting on the widespread resistance to the U.S. Federal Trade Commission’s (FTC) January rule proposal to ban employers from adding noncompetes to their employment contracts.
Dryden said that the FTC does not have the legal authority to adopt a noncompete ban, and even if it did, the agency’s jurisdiction to enforce such a ban is inherently limited.
“By statute, the FTC would not have jurisdiction to apply a noncompete ban against nonprofits, banks, or airlines,” Dryden explained. “This means that the FTC’s noncompete ban would, at most, be limited in its reach and may result in similarly situated competitors (e.g., for-profit and non-profit healthcare systems) being treated differently for no legitimate reason.”
While there are instances where the use of a noncompete agreement is unnecessary, Dryden noted there are many reasons for employers to use “reasonably tailored noncompete agreements.” Examples include using the agreements with senior executives or other key employees to protect trade secrets, inventions, competitive strategies, or customer relationships.
Dryden added that the rule would intrude on the laws of most states that do currently enforce noncompetes in certain circumstances.
“I am afraid that the FTC is going to waste a lot of its own resources and create a great deal of business uncertainty and distraction, for a ban that ultimately will be invalidated by the courts,” Dryden said.
