Tag: FTC

Chevron is Out of Gas: What the SCOTUS Decision in Loper Bright Enterprises Means for Employees

By: Law Clerk Elizabeth Ropp, Edited by Attorney J. Paul Porter

For the past 40 years, Federal Agencies have wielded growing power over the day-to-day lives of American citizens. This growth is partially attributable to the 1984 ruling in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. Under the Chevron doctrine, courts gave deference to administrative agencies’ interpretations of congressional statutes. In practice, this allowed agencies to define and enforce (and arguably create) the law.

On June 28, 2024, the Supreme Court reversed this precedent in its decision in Loper Bright Enterprises v. Raimondo.

Before this landmark decision, when faced with a question of agency interpretation, courts asked two questions under the Chevron doctrine: (1) whether the statute is ambiguous and, if so, (2) whether the agency’s interpretation is reasonable. If the answer was ‘yes’ to both of these questions, courts ruled in favor of the agency’s interpretation. Now, the Supreme Court has eliminated this two-step test and instead, has weakened agency power by vesting itself with the sole discretion to say what the law is in the face of congressional ambiguity.

So, what does this mean in the context of labor and employment law? Right now, there are pending lawsuits that challenge rules and regulations promulgated by the Department of Labor, Equal Employment Opportunity Commission, Federal Trade Commission, National Labor Relations Board, and the Occupational Safety and Health Administration. Without Chevron deference, these agencies’ rules and regulations are more vulnerable to legal challenges.

Examples of vulnerable rules and regulations include: (1) increases to the minimum salary threshold for overtime exemption; (2) An EEOC rule that says employers must provide reasonable accommodation for their employees to receive abortions; (3) employee-friendly joint employer rules under the NLRB; and (4) the Federal Trade Commission’s rule banning most noncompete agreements in employment.

These examples relate to hot-button issues that will have real effects on employers and employees alike.

EEOC, Employment Law, FTC, NLRB, OSHA

Proposed FTC Rule to Outlaw Non-Compete Agreements

By: Attorney J. Paul Porter

The Federal Trade Commission (FTC) published a proposed rule on January 5, 2023, that would make existing and future non-compete agreements illegal. The FTC says that around 30 million people in the United States are bound by non-compete clauses which restrict their ability to pursue better employment opportunities.

A non-compete agreement is a contract, called a restrictive covenant, that restricts an employee from working for a business or starting a business that does the same kind of work as the worker’s previous employer. These agreements often apply regardless of whether one leaves an employer voluntarily or is terminated.

The FTC says these agreements unfairly limit workers’ ability to earn a living and amount to an “unfair method of competition.” This rule, if it becomes an official regulation, will make existing non-compete agreements unenforceable and employers will have to notify their employees that their non-compete agreements are no longer valid within 180 days of the rules formal publication. It will also make it illegal to enter into new non-competes with employees.

The rule will not bar non-compete agreements for persons who are selling a business.

Right now, in South Carolina, non-compete agreements are enforceable if the employee got something of value for signing the agreement (called consideration), if they do not violate South Carolina public policy, and if they are reasonable as to their geographic reach, duration in time, and scope of work.

CBPH is experienced in assisting employees and former employees in reviewing restrictive covenants and in protecting them from claims they violated non-compete agreements. We are paying close attention to the rule-making process and will update here as significant developments occur.

Business Law, Employment Law, FTC, Non-compete, Noncompete, Restrictive Covenant

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