When the Federal Trade Commission’s recent ruling takes effect in September, noncompete agreements will be over. Or will they?

In a new episode of the Cornell Keynotes podcast from eCornell, Cornell Law School professor Stewart J. Schwab and host Chris Wofford discuss the history of noncompetes and why the FTC might not have the final say.

The FTC estimates that one in five American employees are bound by noncompete agreements that impose time or location restrictions on their ability to pursue work with or create competitor companies. In April, the FTC issued a rule banning noncompetes with the intent to “generate over 8,500 new businesses each year, raise worker wages, lower health care costs and boost innovation.”

Will a court issue an injunction against the rule? Does the FTC even have the power to make the call on noncompetes?

"My prediction is [that a court] will enjoin it. The real question is, will the court, ultimately the Supreme Court, strike down this regulation under the major questions doctrine—going beyond what the Federal Trade Commission is allowed to do.

The Federal Trade Commission only is looking at noncompetes. Now, what it says in its rule, in its regulation, any agreement that is the functional equivalent of a noncompete, that's what we are banning here. That's a recipe for a lot of litigation."

—Stewart J. Schwab

Listen to Episode 34: "Are Noncompetes Really Dead?"

Visit Simplecast to read more about this episode, and join Cornell’s most celebrated scholars and industry experts for candid conversations on trending topics and current events by subscribing to the Cornell Keynotes podcast. 

Explore employee duties, including noncompetes, wage and benefit regulations, anti-discrimination principles and more in Stewart J. Schwab’s Employment Law for Leaders online certificate program from eCornell.

Interested in other aspects of law and business? Consider these programs:

• Legal Essentials
• Employment Law
• Labor Relations
• Employee Relations and Investigations

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