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Healthcare Groups Urge FTC to Delay Noncompete Ban Amid Legal Challenges
Various medical organizations, such as the American Hospital Association (AHA) and the Federation of American Hospitals (FAH) for health facilities, have partnered with other business organizations to call the Federal Trade Commission (FTC) to hold pending its recent ban on noncompete clauses.
This new regulation was proposed by the FTC, and the final version of the regulation is expected to come into force in September. This would prevent most employers from using noncompete clauses in employment contracts. The move claims to reduce competition and innovation.
The healthcare groups, including the US Chamber of Commerce and other associations of commerce, also joined and filed the case in the federal court of Texas and challenged the FTC regarding their jurisdiction over the issuance of such a broad base ban. To support this argument, the authors posit that the letter of the law prohibits the agency from regulating noncompete agreements without an amendment to the laws enacted by Congress.
The FTC’s rule to define what constitutes a security is already in legal turbulence, and current legal battles include federal lawsuits that have been filed in Texas. The companies for which the rule could be a disadvantage include industrial giants such as the U. S. Chamber of Commerce, the Business Roundtable, and the Longview Chamber of Commerce, among others, which are all plaintiffs in the case seeking to prevent the implementation of the rule.
The claims against the agency stem from their assertion that the FTC’s power under the Federal Trade Commission Act means that they cannot ban noncompete clauses since they are a prevalent feature in businesses today.
These concerns were conveyed in a letter signed by the various healthcare associations containing their grievance over the ban, which they claimed, if implemented, would greatly affect the efficiency of the healthcare sector, especially in the aspect of noncompete agreements formulated to safeguard trade secrets and patients’ privacy.
They called on the FTC to postpone the rule’s enforcement until all the pending lawsuits are addressed, saying that the observed disturbances in business activities and reconsideration of the rule in the light of the US healthcare sector called for such a course of action.
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