On April 23, 2024, the U.S. Federal Trade Commission (FTC) voted 3-2 to approve a new rule prohibiting most non-compete agreements in employer-employee contracts. This rule was formally published in the Federal Register on May 7, 2024, and was set to take effect on September 4, 2024. However, many anticipate delays or even a complete suspension of the rule due to legal challenges.
Almost immediately after the FTC's vote, legal opposition emerged, culminating in a federal court decision on August 20, 2024. The court blocked the FTC from enforcing the rule, issuing a nationwide injunction.
In a pivotal Supreme Court decision on June 28, 2024, the Court significantly altered the balance of power between administrative agencies and the judiciary in interpreting laws. In Loper Bright Enterprises v. Raimondo, the Court voted 6-3 to overturn the Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. precedent from 1984. While the Loper Bright case focused on fishing regulations, its repercussions could extend into various industries, including healthcare, given the sector’s complex regulatory environment.
In Chevron, the Court established a two-step framework for courts to review an agency’s interpretation of laws they enforce. The first step required courts to determine if Congress had clearly addressed the issue in question. If so, the court followed Congress’s intent. If the law was ambiguous, the second step involved deferring to the agency’s interpretation, provided it was reasonable.
Over time, the Court placed limits on this deference, restricting it to cases involving formal rulemaking or adjudication.
By overturning Chevron, the Supreme Court emphasized that courts must independently interpret ambiguous statutes, as the 1946 Administrative Procedure Act (APA) requires. The Court asserted that statutory interpretation is fundamentally a judicial responsibility, not one to be deferred to administrative agencies.
The attorneys at Outside Legal Counsel LLP have extensive experience advising Companies and individuals about non-compete doctrines. Reach out to us to schedule a consultation.
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