Federal Trade Commission

The Biden Administration plans to issue an executive order calling on the Federal Trade Commission (FTC) to adopt rules to limit the use of noncompete clauses in employment agreements. According to Axios, White House Press Secretary Jen Psaki told reporters that “roughly half of private sector businesses require at least some employees to enter noncompete agreements, affecting over 30 million people. This affects construction workers, hotel workers, many blue-collar jobs, not just high-level executives. [President Biden] believes that if someone offers you a better job, you should be able to take it. It makes sense.” Indeed, in 2016, then Vice President Biden went on the record that “no one should have to sit on the sidelines because of an unnecessary non-compete agreement.” While the intervening years have not seen any federal action on non-competes, a number of states have enacted legislative changes to narrow the scope and availability of noncompete agreements.
Continue Reading Biden to Ban Non-Competes?

As we previously covered, a group of 18 state attorneys general in July filed comments with the Federal Trade Commission (“FTC”), asking the FTC to incorporate labor concerns when reviewing corporate mergers and to use its enforcement powers under the Sherman Act to stop the use of non-compete, non-solicit, and no-poach agreements in many situations. Many of those same attorneys general recently sent another letter to the FTC, this time urging it to use its rulemaking authority “to bring an end to the abusive use of non-compete clauses in employment contracts.”

In the most recent letter, the attorneys general endorsed the arguments presented in a March 20, 2019, petition submitted to the FTC by various labor unions, public interest groups, and legal advocates, requesting that the FTC initiate rulemaking to classify abusive worker non-compete clauses as an unfair method of competition and per se illegal under the FTC Act for low wage workers or where the clause is not explicitly negotiated. As they did in their previous letter, the attorneys general contend that non-competes “deprive workers of the right to pursue their ambitions and can lock them into hostile or unsafe working environments.” The attorneys general also argue that the arguments in support of non-compete clauses are unpersuasive and that employers can use other “less draconian” ways to recoup their investment in job training, methods of business, and other intangibles. The attorneys general further argued that non-competes burden businesses seeking to hire new employees, which in turn inhibits innovation and drives up consumer costs by suppressing competition.
Continue Reading State Attorneys General Keep Pressure on FTC to Regulate Non-Competes

Academics and advocacy groups—including nonprofit organizations and several major labor unions—have filed a petition with the Federal Trade Commission asking the agency to initiate the rulemaking process and ban non-compete agreements. The petitioners advocate regulations “to prohibit employers from presenting a non-compete clause to a worker (regardless of whether the worker is classified as an ‘employee’ or an ‘independent contractor’), conditioning employment or the purchase of a worker’s labor on the worker’s acceptance of a non-compete clause, or enforcing, or threatening to enforce, a non-compete clause against a worker.”
Continue Reading Labor Unions, Advocacy Groups, and Academics Ask Federal Trade Commission to Issue Rules Banning Non-Competes

This post originally appeared on the Workplace Class Action blog

Seyfarth Synopsis: True to his word, the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice has announced the first of a number of anticipated no-poach enforcement actions. While this was a civil proceeding, the Department of Justice has said that in some cases it may treat the conduct as criminal. Many executives and HR professionals are unaware that the antitrust laws apply to the employment marketplace. Thus, if they have not done so already, employers should consider the implementation of compliance programs to make sure that appropriate employees are aware of these developments and risks.
Continue Reading DOJ Announces First of a Number of Anticipated No-Poach Enforcement Actions – What Should Employers Do Now?