FTC’s noncompete ban expected to face legal challenges
WASHINGTON (NEXSTAR) – About 30 million Americans can’t leave their jobs and go to work for a competing company because of something called a ‘noncompete’ agreement.
“We’re talking about security guards, hairdressers, we’re talking about truckers, and a host of other people,” U.S. Federal Trade Commission Director of Public Affairs Douglas Farrar said.
Farrar says that’s not right.
“This is a real restriction on Americans’ economic freedom,” Farrar said.
The FTC voted 3-2 on Tuesday to ban noncompete clauses for most workers. Farrar says the new rule will spur competition, higher wages and new business growth.
“We’re going to see 8,500 new businesses formed every year. We’re going to see $524 put back in the pockets of most working Americans,” Farrar said.
But businesses are not happy with the rule. One of the largest business organizations, the U.S. Chamber of Commerce, is already suing the FTC.
The Chamber’s Chief Policy Officer Neil Bradley says the FTC lacks the authority to enforce this rule. He says noncompetes are important for businesses that invest in their workers.
“The last thing you want them to do is to be able to take everything you invested in them and then walk it across the street and deliver it to your competitor,” Bradley said.
Bradley says the FTC should have left this to lawmakers.
“One day just three people decide that they are and that’s the new law of the land? That’s incredibly problematic,” Bradley said.
The rule is set to take effect in August. Bradley says the Chamber is asking the court to block the rule before then.
Farrar says it’s “crystal clear” that the FTC has the authority to enforce this rule. He says the Commission looks forward to presenting its case in court.
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