FTC Chair Lina Khan to continue fighting non-compete agreements | 60 Minutes

Although a federal district judge has blocked a ban on non-compete agreements by the Federal Trade Commission (FTC), FTC Chair Lina Khan said the fight to ban the contract clauses is not over.

“We firmly believe we have the legal authority to do this, and we are prepared to make that clear to the courts over and over again,” she told correspondent Lesley Stahl in an interview for 60 Minutes.

Non-compete agreements can prevent an employee who leaves his job from starting or working for a business in the same industry. The agreements are often time- and location-bound. For example, a doctor may be prohibited from working for another hospital within 50 miles of his current job for one year after leaving.

The FTC estimates that 30 million people, or about one in five workers in the United States, are restricted by non-compete agreements.

The agency narrowly voted to ban almost all contract clauses in April. When the rule was proposed in January 2023, the FTC said it received more than 26,000 comments during the public comment period, including more than 25,000 comments in support of banning non-compete agreements.

But shortly after the FTC announced the ban, Dallas-based tax consulting firm Ryan LLC filed a lawsuit to block the rule, and the U.S. Chamber of Commerce and Business Roundtable also filed another lawsuit.

A federal court in Texas overturned the ban in an August ruling. Judge Ada Brown of the U.S. District Court for the Northern District of Texas wrote that the FTC had exceeded its authority.

One critic of the lifting of the ban argues that abolishing non-compete clauses would put companies' confidential information at risk and enable competitors to poach valuable employees.

In her conversation with Stahl, Khan said the FTC had considered the issue of disclosure of trade secrets.

“One of the questions we asked when we first proposed this was, 'What are the risks and are there alternative ways to address those risks?'” Khan said. “We have a law in this country protecting trade secrets, so if an employer illegally takes a company's trade secrets to another location, that's already possible under the law.”

Critics also question whether the FTC even has the legal authority to impose such a far-reaching ban. They argue that the agency has greatly exceeded its authority in this case.

When Stahl asked why the FTC did not limit its rule, announced in April, to specific groups of workers or specific geographic areas, Khan said the agency intentionally kept it general.

“Once you start kicking some people out and keeping others, you actually take on additional legal risks because companies or people can say, 'Well, that's an arbitrary, a capricious law.'”

If the FTC appeals the Texas court's ruling, the agency could face an uphill battle in higher courts. A recent Supreme Court ruling has limited executive agencies' interpretation of regulatory authority compared to what was established over the past four decades.

In June, the Supreme Court struck down the Chevron doctrine in a 6-3 decision, ending nearly 40 years of judicial deference to federal agencies' interpretations of ambiguous statutes. The ruling significantly shifts power from executive agencies to the judicial branch. As a result, courts will no longer automatically deviate to an agency's interpretation when making rules, but will instead require more rigorous scrutiny of the agency's reasoning.

For the FTC, this means that if the non-compete ban makes it to the Supreme Court, the justices could ultimately undermine the FTC's authority in areas beyond the mere power to prohibit non-competes.

When asked if she was jeopardizing the FTC's power, Khan told Stahl that she thought it was important for the agency to remain “true to the law.”

“And what it means to be faithful to the law is to look at the words that Congress has written into our law and understand what authority those words give us,” she said. “And that's exactly the approach we've taken here.”

She told Stahl that she takes cases to court when she believes the law is being violated. In her view, non-compete agreements are being used illegally to entrap American workers.

“We have advanced the non-compete rule. We have a whole series of other rules that we are advancing,” Khan said. “And we firmly believe we have the authority to do that and we will continue to defend it.”

The above video was produced by Brit McCandless Farmer and edited by Scott Rosann.