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I admit I’ve kind of been working myself into a lather recently over on DealLawyers.com about the potential implications of the FTC’s proposed ban on non-competes for M&A. Obviously, the proposed rule’s potential impact on other aspects of corporate life is far greater, so maybe it’s time for me to start frothing at the mouth here too.

Or maybe not. This recent blog from Bryan Cave says that I really need to chill out, because there’s a long way to go and a lot of uncertainty for the FTC to navigate before anything like this proposal could go into effect:

The Proposed Rule’s future is anything but certain. First, the Proposed Rule will be subject to a 60-day comment period, during which stakeholders (including employers) will weigh in on the Proposed Rule and suggest changes. From there, the FTC will review and, as it deems appropriate, incorporate feedback into any final rule it adopts—although, it should be noted, the FTC could decide not to implement any rule at all based on feedback received. The Proposed Rule sets the “compliance date” for all employers as 180 days after publication of any final rule.

Even if a final rule is adopted, it would almost certainly be subject to challenges in court. Indeed, in a statement voting against the Proposed Rule, Commissioner Christine S. Wilson noted that “the Commission’s competition rulemaking authority itself certainly will be challenged,” going so far as to opine the Proposed Rule “is vulnerable to meritorious challenges” because the FTC does not have the authority to implement such sweeping changes without authorization from Congress.

I’d be very surprised if the FTC didn’t move forward with this, because the agency seems to be on a mission here when it comes to banning non-competes. However, the legal arguments for challenging the FTC’s authority to enact such a ban seems fairly strong, and the anti-regulatory agency zeigeist currently prevailing in the judicial branch suggests that the FTC will face an uphill fight in the event of a challenge to a final rule.

Any victory that business representatives may ultimately achieve in court could turn out to be largely symbolic, since this WSJ article says that companies are already beginning to rethink their use of non-competes. That kind of response suggests that the FTC’s action may have prompted some companies to recognize that they’ve overused non-compete provisions – and whatever you think of non-competes with senior execs, it’s pretty hard not to conclude that Corporate America’s gone a little wacko when it comes to their use among lower-level employees.

– John Jenkins