A SECOND OPINION
This space is for our physician members to speak their minds freely on both medical or non-medical issues of the day and respond to the opinions of others . The GLMS Editorial Board reserves the right to choose what will be published . Please note that the views expressed in A Second Opinion or any other article in this publication are not those of the Greater Louisville Medical Society or Louisville Medicine .
Let Freedom Ring ( Until March 10th )
by JOHN DAVID KOLTER , MD
The Federal Trade Commission ( FTC ) announced , on Jan . 5 , 2023 , a Notice of Proposed Rule Making ( NPRM ) to ban non-compete clauses imposed on workers in the U . S . This headline-grabbing announcement certainly caught the attention of many in the business and legal community as part of a marked change in the FTC ’ s application of its mandate . However , according to the evidence presented by the FTC in its announcement , this NPRM should be of interest to the American worker across nearly every industry . The FTC estimates that one in five American workers , physicians non-exempt , is currently bound by a non-compete agreement . Support is provided by current academic evidence , presented in the lengthy proposed text of the rule , that non-competes suppress wages and stifle competition . The FTC is currently seeking public comment as a routine part of the rule-making process and , noting the significant and newsworthy chatter since the announcement , the NPRM may well generate robust public comment .
The NPRM , a public announcement , is the first step in the FTC ’ s rule making process . The current NRPM is broad in scope , making it illegal for an employer to enter into a non-compete or maintain a current non-compete clause . Further , citing academic evidence that workers are covered by non-compete clauses at approximately the same rates in states where the clauses are enforceable as states where non-compete clauses are unenforceable ( and in a nod to the outsize legal and bargaining resources of many employers ), the proposed rule prohibits an employer from representing to a worker that they are subject to a non-compete , in fact or theory . The rule also would require current employers to notify workers that current non-competes are no longer in effect . The rule , notably , would not apply to non-solicitation and non-disclosure agreements , and would exempt a significant list of employers including any entity that is not “ organized to carry on business for its own profit or that of its members ” ( i . e . non-profits ).
A brief history is important to understand why this NPRM was announced and why now . The FTC exists on the mandate given by Congress in the FTC Act of 1914 . The Commission states , in its Statement of Enforcement Policy Regarding Unfair Methods of Competition Under Section 5 of the FTC Act published on Nov . 10 , 2022 , that foreshadowed the January announcement , that the FTC Act of 1914 provided a clear mandate in Section 5 that “ unfair methods of competition in or affecting commerce ” are “ hereby declared unlawful .” Further , the Commission notes Congress created this mandate on fears that the Sherman Anti-Trust Act of 1890 was inadequate and allowed “ unchecked discretion on the judiciary .”
Under the current helm of FTC Commission Chair , Lina Khan , the Commission has exhibited and interpreted a more aggressive stance on Section 5 of the FTC Act . The Commission , in its announcement , notes in clarification , “ With this text , Congress distinguished between fair and unfair methods of competition and tasked the FTC with policing the boundary .” It suggests judicial precedent supports the view that Congress “ intended Section 5 to prohibit conduct that threatened fair competition even if it fell beyond the scope of the Sherman Act .” The clearly stated goal from the current
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