The Khan Cleaver Strikes Again

April 24, 2024

The move by the Democratic majority on the Federal Trade Commission to outlaw all noncompete agreements that forbid job switching is yet another example of Chair Lina Khan’s supreme confidence in her brand of medicine. Whenever delicate surgery is required she elbows the specialists aside and takes a meat cleaver to the problem.

Noncompete agreements may be too expansive and arguably shouldn’t reach to lower-compensation jobs such as hairstylists. But noncompetes also protect years of sweat equity and venture capital in intellectual property, which is why noncompetes are so popular in Silicon Valley and Wall Street. This is one reason why New York Gov. Kathy Hochul last year nixed legislation that would have banned all noncompetes in her state, arguing that innovative firms have a right to attach them to highly compensated positions.

You may agree or disagree with Gov. Hochul, but at least she acted with the moral authority of someone who has stood before the voters. Khan is unelected and does not possess the legal authority to upend state policies nationwide and impose one rule on the whole economy, scrapping 30 million contracts when the final rule goes into effect in four months.

The U.S. Chamber of Commerce believes Chair Khan and her majority lack the authority to enact such economywide policies and will file a lawsuit to test that proposition. The larger goal for FTC is to establish dominance over all business. Neil Bradley, who heads strategic advocacy for the Chamber, struck at the purpose of this rule: “If they can issue regulations with respect to unfair methods of competition, then there’s really no aspect of the U.S. economy they couldn’t regulate.”

Or control.