SMALL BUSINESS INSIDER: Policy & Legislative Update

By at 6 July, 2024, 8:24 am

FTC Non-Compete Ban Put on (Partial) Hold by Texas Court

On July 3, the U.S. District Court for the Northern District of Texas issued a preliminary injunction for the plaintiffs filing for relief against the Federal Trade Commission’s (FTC) ban on most noncompete agreements. A nationwide injunction was not issued by the court, which limits injunctive relief to the plaintiffs including Ryan, LLC, the U.S. Chamber of Commerce-Business Roundtable, and several Texas-based associations. Other challenges are also pending. The Texas court will rule on the merits of the case by the end of August. According to a review of the decision by Morrison Foerster:

The court found that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition under Section 6(g) of the FTC Act. The court analyzed the “text, structure, and history” of the FTC Act in coming to its decision that the FTC exceeded its statutory authority in promulgating the Rule. The court also found a substantial likelihood that the FTC’s actions were ‘arbitrary and capricious.’

As an FYI, the FTC rule is scheduled to take effect September 4, 2024 minus further court action before this date. Stay tuned!

ICYMI: Listen to SBE Council president & CEO Karen Kerrigan’s interview (prior to the court decision) about the importance of noncompete agreements to startups and small businesses, and how the FTC is exceeding its statutory authority in this instance.

As a guest on the Freedom Line, the podcast of the Center for Individual Freedom (CFIF), Kerrigan reviews what the negative effects of the FTC’s (FTC’s) ban on non-competes and why she believes the agency’s action is an overreach, and illegal.

Kerrigan also discusses a House Small Business Committee report, which finds a pattern of similar overreach at other federal agencies. Listen to the podcast here.

Bonus Resource: Coalition Comments in Opposition to the FTC’s Proposal to Ban Non-Competes


Texas Judge Issues Temporary Restraining Order on Texas AG Challenge to DOL’s Overtime Rule

On June 28, the US District Court for the Eastern District of Texas issued a temporary restraining order (TRO) that blocks implementation of the Department of Labor’s (DOL’s) overtime rule, but for Texas state employees only.

According to our friends at the Partnership to Protect Workplace Opportunities (PPWO) this is good news, despite the limited reach of the TRO. PPWO notes that courts issue TROs when they believe the plaintiffs are likely to succeed on the merits. This means that the District Court is likely skeptical about the legality of DOL’s rule and may be considering nullifying the rule in its entirety.

For all employers, the final rule went into effect on July 1. As of that date, the minimum salary threshold is set at $43,888, while the threshold for highly compensated employees is $132,964. Stay tuned for further legal updates!


Aftermath of Eradication of Chevron Deference via SCOTUS

As we noted in last week’s Small Business Insider enews, the Supreme Court issued its decision in Loper Bright, which will serve to mitigate federal regulatory activism and creativity, restore accountability and certainty. (If you missed it, SBE Council president & CEO Karen Kerrigan’s statement on the decision can be read here.)

As brought to our attention by our friends at the Coalition for a Democratic Workplace (CDW), Congress is beginning to approach federal departments and agencies to ask how they will comply with the Loper Bright decision. CDW noted:

Following issuance of the decision, Ranking Member of the Senate HELP Committee Bill Cassidy (R-LA) sent letters to the leaders of the Department of Labor (DOL), National Labor Relations Board (NLRB), Equal Employment Opportunity Commission (EEOC), and Employee Benefits Security Administration requesting information on how they plan to comply with the Supreme Court’s ruling. His letters referenced several labor rules he believes fall outside of the agencies’ authority, including the worker walkaround, joint employer, and fiduciary rules.

March-In Guidance and Loper: In a letter to U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra, Senator Cassidy inquiries about various regulatory activities. In a key policy area where SBE Council has been actively engaged, the Senator queries HHS involvement in an inter-agency working group on “march-in” guidance. The NIST proposal on march-in guidance could revoke the IP rights of inventions and innovations of startups and small businesses if a petition is filed that claims the price of that innovation is “unreasonable.” In his letter, Senator Cassidy points out:     

In another egregious example, HHS has been an active participant in an interagency working group led by the National Institute of Standards and Technology that seeks to reinterpret the Bayh-Dole Act’s criteria for the use of march-in rights to apply to drug prices. The resulting draft framework received significant, widespread negative feedback. Exercising march-in rights on the basis of a product’s price directly conflicts with congressional intent, as publicly affirmed by the law’s bipartisan authors, and how the statute has consistently been interpreted in response to previous march-in petitions during presidential administrations of both parties.

Supreme Court Restores Separation of Powers, Checks and Balances

In a new blog post, SBE Council chief economist Ray Keating also notes the importance of the Supreme Court decision. He argues that Loper Bright restores checks and balances on regulation:

In effect, Chevron wiped out the checks and balances that come with separation of powers.  Regulators were cut lose by both Congress and the Supreme Court. And interpretations of vague laws swung back and forth according to the presidential administration in power. Confusion and regulatory abuses became the rule.

But with the Court’s decision to overturn Chevron, regulators will be reined in from doing whatever they like, and Congress will be forced to write legislation that is clear. Crazy? No, this is a return to sanity, and how our government should work.


SBE Council Joins Business Allies in Amicus Brief Supporting Legal Challenge to OSHA’s “Worker Walk Around Rule”

On July 3, SBE Council joined eight business organizations in an amicus brief supporting a U.S. Chamber of Commerce challenge to OSHA’s “walk around rule.” The brief was filed in the U.S. District Court for the Western District of Texas.  As noted in the brief, the walk around rule undermines workplace safety, is a significant and unlawful change to existing statute, directly conflicts with the National Labor Relations Act, and exceeds OSHA’s statutory authority.

The new walk around rule gives union organizers, activists, plaintiffs’ attorneys, and business competitors access to workplaces to “assist” OSHA inspectors during routine inspections if only two employees request such. Moreover:

● The rule redirects OSHA inspections away from health and safety – and puts OSHA inspectors in the middle of labor disputes.

● The rule provides no limitations on how many representatives can join the inspection and provides no guidance on how inspectors are to prioritize, approve, or manage employee requests.

● Finally, the rule violates workers’ right to choose their workplace representatives in a free and fair representation election as required by federal labor law.

The rule went into effect on May 31, 2024.


Getting Spectrum Policy Right for Small Business Growth

SBE Council chief economist Ray Keating looks at the benefits of expanding broadband for small business, and the importance of spectrum. On the policy front, he writes: “Congress needs to take action by extending FCC spectrum auction authority coupled with a clear and defined spectrum pipeline.”

Legislative & Policy Update compiled by SBE Council staff.

News and Media Releases