Erik W. Weibust, Member of the Firm in the Litigation & Business Disputes and Employment, Labor & Workforce Management practices, in the firm’s Boston office, was quoted in Law360, in “FTC Powers Get a Boost in Philly in Noncompete Ban Saga,” by Bryan Koenig. (Read the full version – subscription required.)
Following is an excerpt:
The Federal Trade Commission's contested regulatory and enforcement powers got a much-needed endorsement when a Pennsylvania federal judge refused to temporarily block a ban on employment noncompete agreements.
In refusing to grant Philadelphia-based ATS Tree Services LLC a preliminary injunction against the noncompete ban that goes into effect Sept. 4, U.S. District Judge Kelley Brisbon Hodge offered a weighty defense of the FTC's rulemaking powers and a powerful backing of a Biden-era policy statement that commission Democrats are using to push the bounds of agency authority.
Judge Hodge's Tuesday ruling stands in stark contrast to the expected decision from a Texas federal judge who appears poised to block the rule and, attorneys say, heightens the uncertainty over the rule's impending fate. …
Heightened Uncertainty
Attorneys say the different apparent trajectories for the two cases — a third challenge in Florida is not as far along — further heighten uncertainty that was already an issue from Judge Brown's early July decision to safeguard only the Chamber and Ryan specifically, rather than the trade group's members or employers generally. …
Attorneys did, however, frame compliance — even with a fully in force and untouched noncompetes ban — as a choice.
Erik W. Weibust, a trade secrets attorney at Epstein Becker Green, said he's telling risk-averse clients to at least start preparing to notify employees that their noncompetes are no longer valid.
But for clients with a higher risk tolerance, Weibust said he's recommending a wait-and-see approach at least until Aug. 30, noting that the rule itself has an exception for companies who have a good-faith basis to believe it doesn't apply in their particular circumstance. Even noncompliance comes with fairly minimal risks, as Weibust noted the FTC has limited resources to pursue individual enforcement actions.
"All the FTC can do is get a cease and desist order" in its administrative law court, and the agency could not pursue penalties unless the cease and desist were violated, said Weibust, who filed an amicus brief backing the Ryan challenge on behalf of the National Retail Foundation and other trade groups.