An alliance of 50 unions, consumer advocates and progressive groups threw its support behind the US Federal Trade Commission’s proposed ban on non-compete employment agreements — while business organizations led by the US Chamber of Commerce questioned the agency’s authority to issue the rule.
(Bloomberg) — An alliance of 50 unions, consumer advocates and progressive groups threw its support behind the US Federal Trade Commission’s proposed ban on non-compete employment agreements — while business organizations led by the US Chamber of Commerce questioned the agency’s authority to issue the rule.
Almost 25,000 public comments were posted to the agency during the response period that ends Wednesday, among the most the agency has received for a proposed rule change.
The dueling comments highlight the fault lines in the debate and expected litigation if the FTC moves to finalize the regulation, which would ban clauses that prohibit employees from working for rivals and which has the backing of President Joe Biden. A group of more than 60 congressional Democrats — led by Senator Elizabeth Warren of Massachusetts and Representative Pramilia Jayapal of Washington — also submitted a comment Wednesday supporting the proposal.
Supporters called on the agency to strengthen the proposed rule by outlawing training repayment programs, lengthy notice periods and liquidated damages clauses that force workers to pay large sums if they leave a job before a certain period of time. As proposed, the FTC rule says it would apply provisions that have the same effect as a non-compete but doesn’t explicitly outlaw the other contract terms.
“The FTC cannot waste this opportunity to eliminate pernicious non-compete and similar coercive labor contracts,” the groups said.
Signatories include labor unions Service Employees International Union, UFCW International Union, AFL-CIO, and International Brotherhood of Teamsters, who collectively represent 4.5 million workers; and the Consumer Federation of America, comprising nearly 300 consumer-oriented nonprofits representing 50 million people, among others.
Attorneys general for Washington DC, New Jersey and California offered similar support for the FTC’s non-compete proposal, but urged the agency to ensure any rule wouldn’t preempt state laws that offer greater worker protections. The letter was signed by the Democratic attorneys general of 17 states plus DC.
On the opposite side, 280 business groups led by the Chamber of Commerce, the nation’s biggest corporate lobby, strongly opposed the FTC rule, arguing that non-competes lead to greater employee investment and help protect intellectual property.
“Non-competes serve vital business and employee interests,” the business groups said. “Unfortunately, the commission ignored or downplayed this evidence.”
(Updates to add state AG, congressional comments.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.