FTC Chair Lina Khan wants to keep fighting non-competes
Although a federal district judge has blocked a Federal Trade Commission ban on non-compete agreements, FTC Chair Lina Khan said the fight to bar the contractual clauses is not over.
"We firmly believe that we have the legal authority to do this, and we're willing to keep making that clear to the courts," she told correspondent Lesley Stahl in an interview for 60 Minutes.
Non-compete agreements can prevent an employee who is leaving a job from starting — or even working for — a company in the same industry, and the agreements are often bound by time and geography. For example, a doctor may be prohibited from working for another hospital within 50 miles of their current job for a year after leaving.
The FTC estimates that non-competes restrict 30 million people, or roughly one in five American workers.
The agency in April had narrowly voted to ban nearly all of the contractual clauses. When the rule had been proposed in January 2023, the FTC said it had received more than 26,000 comments during the public comment period, with more than 25,000 comments in support of the ban on non-competes.
But shortly after the FTC announced the ban, Dallas tax services firm Ryan LLC sued to block the rule, and another lawsuit was filed by the U.S. Chamber of Commerce and Business Roundtable.
A federal court in Texas threw out the ban in an August ruling, with Judge Ada Brown of the U.S. District Court for the Northern District of Texas writing that the FTC had overstepped its authority.
One issue critics of the ban raise is that getting rid of non-compete agreements would put companies' confidential information at risk and enable competitors to poach valuable employees.
In her conversation with Stahl, Khan said the FTC has accounted for the issue of sharing company secrets.
"One of the questions we posed when we first proposed this was, 'What are the risks, and are there alternative ways to address those risks?'" Khan said. "We have in this country trade secrets law. And so, if you have an employer that is illegally taking a company's trade secrets elsewhere, that's something that can already be reached under the law."
Another major issue critics question is whether the FTC has the legal power to draw up such a wide-ranging ban, arguing the agency far overstepped its authority in this case.
When Stahl asked why the FTC did not narrow the rule it announced in April, either by certain kinds of workers or in specific geographical areas, Khan said the agency purposely kept it broad.
"Once you start cutting some people out and keeping some people in there are actually additional legal risks that you take on because companies or people can say, 'Well, that's an arbitrary, that's a capricious law."
If the FTC appeals the Texas court decision, the agency may face an uphill fight in higher courts. A recent Supreme Court decision has narrowed interpretation of regulatory power by executive branch agencies compared to what had been established for the last four decades.
In June, the Supreme Court overturned the Chevron doctrine in a 6-3 decision, ending nearly 40 years of judicial deference to federal agency interpretations of ambiguous statutes. The ruling significantly shifts power from executive agencies to the judiciary. As a result, courts will no longer automatically defer to an agency's interpretation when setting rules and will instead require a more rigorous review of the agency's rationale.
For the FTC, this means that, if the ban on non-competes reaches the Supreme Court, the justices may end up undermining the FTC's authority in areas beyond simply the ability to ban non-compete agreements.
When asked if she was risking the power of the FTC, Khan told Stahl she believes it is important for the agency to be "faithful to the law."
"And what it means to be faithful to the law is to look at the words that Congress wrote in our statute and understand what are the authorities that those words are giving us," she said. "And that's exactly the approach we followed here."
She told Stahl she brings cases to court when she feels the law is being violated, and in her view, non-compete agreements are being used illegally to trap American workers.
"We've moved forward with the non-compete rule. We have a whole set of other rules that we're moving forward with," Khan said. "And we firmly believe that we have the authority to do this, and we'll keep defending them."
The video above was produced by Brit McCandless Farmer and edited by Scott Rosann.
