April 2022 • DALLAS MEDICAL JOURNAL | 13
Until early in December 2021, it remained
unclear how the FTC would initially respond
to President Biden’s Executive Order. According
to many experts, the delay in action
by the FTC was likely due to there being a
commissioner member vacancy within the
agency. Specifi cally, “the FTC has been operating
with four members (two Democratic
commissioners and two Republican commissioners),
with one vacancy, which leaves the
FTC with a political tie eff ectively preventing
it from making large-scale decisions.”
However, with the pending confi rmation of
Alvaro Bedoya as the fi nal member of the
commission, the FTC has once again started
to gain traction. Based on President Biden’s
Executive Order and the recent academic
publications of Lina Khan, it came as no surprise
to many experts that the FTC thereafter
began by examining and scrutinizing the use
of non-competition agreements.
On December 6 and December 7, 2021,
the FTC hosted a two-day virtual workshop
titled “Making Competition Work: Promoting
Competition in Labor Markets.” The workshop
brought together a wide array of employment
experts including agency representatives,
lawyers, economists, and academics to
discuss various issues aff ecting competition
in the United States economy and labor
market. Much of the workshop focused on
the future of post-employment obligations
such as non-competition agreements. Specifi
cally, several workshop participants raised
concerns regarding the use of non-competition
agreements within the employment
contracts of low-income employees that
rarely have access to confi dential information.
These same workshop participants also
suggested that “because non-competes are
sometimes used inappropriately, the federal
government should ban all non-competes.”
However, these comments did not escape
criticism from legal experts around the
United States.
For example, in response to several of
the statements and topics discussed at
the FTC workshop, a group of over 70 legal
experts on restrictive covenants throughout
the United States submitted a letter to the
Commissioner of the FTC. In the letter, the
experts outlined their independent research
and suggested that “occasional abuse of
non-competes does not warrant a complete
ban.” The experts also emphasized and reiterated
that non-competition agreements
are currently leveraged in a majority of states
and that “a drastic change in how American
fi rms protect themselves against unfair
competition (like a total ban or substantial
additional restrictions on non-competes)
could have tremendous unforeseen, adverse
consequences.”
The opposition from leading legal experts
on the eff ectiveness of banning the enforcement
of non-competition agreements
is telling. It highlights the fact that many
market participants throughout the United
States may suff er consequences as a result
of banning the use of non-competition
agreements. However, it also makes clear
that health care providers and their advisors
should pay close attention to any rulemaking
decisions stemming from the FTC and ensure
that their current employment contracts are
tailored as narrowly as possible. DMJ
This article is educational in nature and is not intended as legal
advice. Always consult your legal counsel with specifi c legal
matters. If you have any questions or would like additional
information about this topic, please contact Brandon Kulwicki at
(214) 615-2025 or bkulwicki@hallrender.com or your primary Hall
Render contact.
Brandon Kulwicki is an attorney with Hall, Render, Killian, Heath
& Lyman, P.C., a national law fi rm focused exclusively on matters
specifi c to the health care industry.
References:
1. Nikole Mergo, What President Biden’s Executive Order on
Non-Compete Agreements May Mean for Healthcare
Providers, JDSupra (July 20, 2021), https://www.jdsupra.
com/legalnews/what-president-biden-s-executiveorder
6423710/.
2. Morgan Kelly & Craig Seebald, Biden’s Competition
Council Holds Inaugural Meeting to Discuss Competition
Policy Priorities, JDSupra (Sept. 30, 2021), https://www.
jdsupra.com/legalnews/biden-s-competition-councilholds
1608011/.
3. FACT SHEET: Executive Order on Promoting Competition
in the American Economy, White House (July 9, 2021),
https://www.whitehouse.gov/briefi ng-room/statementsreleases/
2021/07/09/fact-sheet-executive-order-onpromoting
competition-in-the-american-economy.
4. Exec. Order No. 14036, 86 C.F.R. 36987, 36992 (2021).
5. Nikole Mergo, What President Biden’s Executive Order on
Non-Compete Agreements May Mean for Healthcare
Providers, Nexsen Pruet (July 19, 2021), https://www.
nexsenpruet.com/publication-what-president-bidensexecutive
order-on-non.
6. Rohit Chopra is a former Commissioner of the Federal Trade
Commission.
7. Rohit Chopra & Lina Khan, The Case for “Unfair Methods of
Competition” Rulemaking, 87 U. Chicago L. Rev. 357 (2020).
8. Id. (“Given the paucity of private litigation challenging
noncompete agreements as antitrust violations, the FTC
might consider engaging in rulemaking on this issue.”).
9. Nikole Mergo, What President Biden’s Executive Order on
Non-Compete Agreements May Mean for Healthcare
Providers, Nexsen Pruet (July 19, 2021), https://www.
nexsenpruet.com/publication-what-president-bidensexecutive
order-on-non.
10. Nominations Sent to the Senate, White House (Jan. 4,
2022), https://www.whitehouse.gov/briefi ng-room/
statements-releases/2022/01/04/nominations-sent-tothe
senate-54/.
11. Kevin Adam et al., Analysis: FTC Encouraged to Ban or Limit
Non-Compete Agreements in July 9, 2021 Executive Order;
Breaks with Tradition, and Follows Trend of Heightened
Antitrust Focus on Labor Markets, JDSupra (July 20, 2021),
https://www.jdsupra.com/legalnews/analysis-ftcencouraged
to-ban-or-limit-5523406/.
12. Cliff ord Atlas et al., Reaction and Response to the FTC &
DOJ Workshop on Labor Market Competition, JDSupra
(Dec. 23, 2021), https://www.jdsupra.com/legalnews/
reaction-and-response-to-the-ftc-doj-529392
13. Letter from Russell Beck, Beck Reed Riden LLP, to The
Federal Trade Commission and Jonathan Kanter, Assistant
Att’y Gen., Antitrust Division (Dec. 20, 2021).