Navigating the Business and Legalities of Dentistry

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Over the past few months, we’ve been covering the Federal Trade Commission’s (FTC) Non-Compete Clause Rule. The rule intended to ban non-compete agreements for most employees nationwide. In this newest update, however, Judge Ada Brown of the Northern District of Texas issued a broad order invalidating the final rule. As of August 20th, 2024, the noncompete ban is blocked. For employers and employees, this means noncompete agreements can continued to be upheld and issued.

Events Leading Up to this Decision
We shared a timeline of events regarding the FTC’s Non-Compete Clause Rule, as it was first introduced earlier this year on our blog. The newest decision blocking the FTC’s attempted ban comes in the wake of a longstanding debate about using noncompete agreements in healthcare. Critics argue that the agreements stifle competition and patient access to care. Healthcare organizations in favor of noncompetes strive to protect their investments in the clinicians and care teams they employ. An estimated one in five Americans is subject to a noncompete agreement from their employer. However, that number is much higher in dentistry. The American Dental Association states that upwards of 35% of dentists are subject to a noncompete agreement.

In reaching her decision invalidating the final rule, Judge Brown found that the FTC exceeded its statutory authority. She also concluded that the Final Rule failed to meet the Administrative Procedure Act’s “arbitrary-and-capricious standard.” She stated The Rule “fails to consider the positive benefits of non-compete agreements, and disregards the substantial body of evidence supporting these agreements.

What's Next for Noncompetes? 
With Judge Brown blocking the rule, the FTC faces a choice. The agency can appeal the decision, potentially bringing the case to the Fifth Circuit Court of Appeals. If the appeal is unsuccessful or if the case continues to face legal hurdles, it might eventually be taken up by the U.S. Supreme Court. The outcome of any appeal could set a significant precedent for the scope of the FTC's regulatory power.

Stay Up-to-Date and Compliant with Marti Law Group
Our team is dedicated to staying current as issues like this one evolve. And, we’re committed to keeping our clients informed, too. Reach out to us to learn how working with Marti Law Group can help you protect your practice–and set it up for long term growth and success.