Senior living operators might want to send US District Judge Ada Brown a thank you note.
Her decision earlier this week to block the Federal Trade Commission’s overreach on noncompete agreements isn’t just a reprieve. It also could be a shield against regulatory overreach past, present and future.
From an operator’s perspective, the FTC’s attempt to outright ban noncompetes was more than a little heavy handed. It was more like trying to swat a fly with a sledgehammer.
Sure, there are bad actors who have abused those agreements. But does that mean the entire field should be stripped of a tool that helps communities protect their businesses, employees and, ultimately, their residents?
Judge Brown clearly didn’t think so. She noted that the FTC had “exceeded its statutory authority” and called its rule “arbitrary and capricious.”
That doesn’t mean operators should get too comfortable. The FTC is considering an appeal and may challenge noncompetes on a “case-by-case” basis. But this ruling gives operators something valuable: time and leverage.
Noncompetes have faced a lot of criticism lately. Opponents argue those agreements restrict an individual’s basic right to seek better opportunities and improve their livelihoods, trapping employees in jobs with limited career growth, lower wages and less bargaining power. Fair points.
But let’s face it: noncompete agreements have a vital role to play in senior living. Communities are not just flipping burgers here; they are providing care for people’s loved ones. Those agreements safeguard the intellectual property and sensitive information that communities have spent time and resources developing.
If a key employee can walk out the door and take that hard-earned knowledge and connections to a competitor down the street, that’s not just bad business — it’s bad for the residents.
Beyond immediate relief, this ruling delivers a notable strategic advantage. In the wake of the Supreme Court’s Chevron deference reversal, limiting how much regulated entities must bow to federal agencies’ interpretations, Judge Brown’s decision reminds us that senior living communities have the power to push back against overreach.
Judge Brown has given the sector breathing room and leverage to fight back when bureaucrats overstep. This is more than just a legal victory — it’s a reminder that operators don’t have to accept every ruling handed down from on high.
John O’Connor is editorial director for McKnight’s Senior Living and its sister media brands, McKnight’s Long-Term Care News, which focuses on skilled nursing, and McKnight’s Home Care. Read more of his columns here.
