ANALYSIS: Noncompete Ban Exposes Spat Over ‘Retroactive’ Laws

One of the first lawsuits challenging the Federal Trade Commission’s noncompete ban is poised to spark a fresh debate over the meaning of the word “retroactive.”

The FTC’s final rule, issued April 23, will ban nearly all noncompete agreements and void existing ones, except for those with senior executives. The Chamber of Commerce sued the next day, and among its many arguments is the allegation that the FTC’s retroactive rulemaking raises “serious doubts” under the US Constitution’s Fifth Amendment.

The Fifth Amendment doesn’t explicitly bar retroactive laws, but court precedent has long established that the retroactive application of a ...