Erik W. Weibust, Member of the Firm in the Litigation & Business Disputes and Employment, Labor & Workforce Management practices, in the firm’s Boston office, authored an article in the Employee Benefit Plan Review, titled “What Do Cancelling Student Loan Debt and Banning Noncompetes Have in Common? The U.S. Supreme Court’s Recent Student Loan Decision May Reveal How It Would Rule on the Federal Trade Commission’s Proposed Noncompete Ban."
Following is an excerpt (see below to download the full version in PDF format):
The U.S. Supreme Court’s decision last year in West Virginia v. EPA made it clear that the Federal Trade Commission (FTC) does not have the authority to use its rulemaking powers to ban (or otherwise regulate) noncompetition agreements because it does not have “clear congressional authorization” to do so.
Now, the Supreme Court’s decision in Biden v. Nebraska, striking down the Biden administration’s student loan forgiveness plan, further confirms that the Supreme Court would likely strike down any noncompete rule promulgated by the FTC under the so-called Major Questions Doctrine.
In Biden v. Nebraska, the Court considered a plan established by the U.S. Secretary of Education (the Secretary) that “canceled roughly $430 billion of federal student loan balances, completely erasing the debts of 20 million borrowers and lowering the median amount owed by the other 23 million from $29,400 to $13,600,” pursuant to the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act). The HEROES Act was passed in the aftermath of the September 11, 2001 terrorist attacks and permits the Secretary to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the [Education Act] as the Secretary deems necessary in connection with a war or other military operation or national emergency.” The Biden administration argued that the COVID-19 pandemic was a national emergency that permitted the Secretary to cancel billions of dollars in student debt under the HEROES Act.
