AHA, FAH urge 5th Circuit to vacate FTC noncompete rule

The AHA and Federation of American Hospitals yesterday filed a friend-of-the-court brief in the U.S. Court of Appeals for the 5th Circuit, urging the court to vacate nationwide the Federal Trade Commission’s noncompete rule. The rule would ban, as an unfair method of competition, contractual terms that prohibit workers from pursuing certain employment after their contract with an employer ends.     

“The Commission’s treatment of the hospital labor market underscores why the Final Rule was not supported by relevant evidence, lacked a reasonable explanation, and did not consider proffered alternatives,” the brief notes. “Both the AHA and FAH explained to the Commission that the Rule could create significant distortions in the health care labor market because the Commission lacks the statutory authority to apply the rule to nonprofit hospitals.”   

In August, a Texas federal court ruled in favor of AHA and blocked the rule from taking effect, following a friend-of-the-court brief AHA filed weeks earlier. In 2023, the AHA had urged the FTC to withdraw the rule, saying, “The proposed regulation errs by seeking to create a one-size-fits-all rule for all employees across all industries, especially because Congress has not granted the FTC the authority to act in such a sweeping manner.”