FTC May Restrict Worker “Non-Compete” Clauses
Need to tackle this “head on,” commissioner says
The Federal Trade Commission is weighing putting restrictions to the use of “non-compete” clauses in employment contracts that attempt to stop workers from switching jobs within the same industry.
Three of the five FTC commissioners expressed concern regarding the non-compete agreements, with some wanting the commission to issue a rule immediately to limit their use.
“I strongly support the FTC undertaking such an endeavor,” FTC Commissioner Rebecca Kelly Slaughter said at a commission event last week. “We need not wait for legislation to tackle this head-on.”
Many states already ban non-competes and others have passed laws limiting their use, particularly among low-wage workers.
Corporations argue that non-competes protect their investment in worker training and curb the loss of trade secrets and proprietary information. Critics argue their main purpose actually holds wages down by limiting workers’ ability to sell their skills to the highest bidder.
Earlier this Congress, Senator Marco Rubio of Florida introduced the “Freedom to Compete Act,” legislation that would protect entry-level, low-wage workers from non-compete agreements. The Senate Small Business and Entrepreneurship Committee held a hearing, but no further action has been taken by Congress.
- That Congress would follow through with action on the Freedom to Compete Act introduced by Senator Rubio.
- About issues of fairness both to low-wage earners and companies who invest in them with the banning of non-compete clauses in employment agreements.
- About areas such as high-tech and other advanced industries where non-compete clauses may be necessary to protect corporate secrets.