The Federal Trade Commission’s public comment period on its proposal to ban incomplete agreements closed on Wednesday, just as major business groups intensify their campaign against it.
In a series of letters this week to the Federal Trade Commission, which proposed the restrictions in January, the US Chamber of Commerce and a leading human resources group asked the agency to step down or scale back its proposal and questioned the legal authority behind it.
Labor unions and consumer advocates have joined the other side, arguing in favor of preventing employers from limiting where their employees can take jobs or start businesses after they leave. The lobby crossfire comes as well More than 26,000 public comments have been collected by the Federal Trade Commission About the proposal over the past several months.
Imperfect policies can range from a ban on working for a competitor or even within the same geographic area. And the periods covered by it vary, depending on what state courts deem enforceable, anywhere from six months to five years.
The outcome of the battle could affect large segments of the American workforce. Currently, nearly 30% of private employers use non-compete agreements for all of their workers, said Evan Starr, an economic researcher at the University of Maryland. Companies that use the policies often cite the need to protect trade secrets and other sensitive information from competitors looking to poach talent.
The Federal Trade Commission, which estimates banning non-professionals could boost worker earnings by about $300 billion a year and expand employment for 30 million Americans, is now turning to a review of the input flow. An FTC spokesperson declined to provide a timeline for the process, but said the agency could adjust its proposal based on feedback or request more comments.
For workers, laymen usually work as they did with Will Medina, a 32-year-old sales executive in Phoenix who found himself beleaguered by one nearly a decade ago.
Medina said that after he graduated from college, the PR agency where he was interning offered him a job — but with the stipulation that he would not be able to work with any of their clients for four years if he left. After about five years, “burnt out” and looking for exit opportunities, Medina discovered that the terms severely limited his job search.
His business owner was a multicultural agency in the area, he said, and had already developed business relationships with many local businesses as the city was well suited for the business.
He said, “After I read it all after I left, I was like, ‘What the hell did I fall into?'” “
After his resignation, Medina tried freelancing, but many of his acquaintances were still in contact with his former employer. Eventually, he accepted an entry-level sales role at a local newspaper, which he said required a 20% pay cut and a new roommate to defray his rent.
“I didn’t want to deal with any kind of lawsuit or anything like that,” Medina said. “[My former employer] He has been known to sue or send a cease and desist. I was pretty well okay with, “I’m not going to be able to do this industrial stuff for a while.”
Chamber of Commerce, one of the most powerful business lobbies in the country, I organized a coalition of industry groups that sent in a letter to the Federal Trade Commission on Monday urging the agency to “withdraw the proposed rule, and return to the authority granted to it by Congress.”
Signed by more than 280 organizations—ranging from the National Retail Federation and the American Hotel and Restaurant Association to trade groups of mortgage bankers, rooftop owners, and store owners—the letter said non-competes “promote pro-competitive interests more effectively than alternatives.” Like trade secret laws.
The groups argued that the policies “encourage investment in personnel and help protect intellectual property,” thus promoting innovation and attracting investment.
which room threatened in January to sue the Federal Trade Commission On her suggestion, he declined to comment.
On Wednesday, the Association for Human Resource Management (FTC) sent a nine-page letter, which it provided to NBC News, calling the proposed rule “broad” and a threat to worker training and development. The group, which represents 325,000 HR professionals and executives worldwide, said the restrictions “will hinder SHRM members’ ability to balance the needs of workers and employers and will reduce the contractual capabilities of reasonable and compliant parties” and called for narrower changes instead.
A few brand-name companies, such as howling And Microsoft, or supported bans on non-competitors or retracted their use internally. In 2024, a Yelp executive was barred from starting work for the company for a year and a half due to an incompetence he signed as a Groupon employee.
Major labor and consumer organizations have also joined the debate. Dozens of groups, including the AFL-CIO, the International Brotherhood of Teamsters, and the Consumer Federation of America, have lent their support behind the FTC’s proposal in Their own message to the agency Wed. “Companies use non-compete clauses as a substitute for other means of employee retention, such as good working conditions, higher wages, and the opportunity for future increases and promotions,” the letter states.
Among the thousands of comments posted to the FTC’s online forum over the past few weeks, more people who identified themselves as employees expressed support for the proposed ban than criticism, with many people preferring to share similar frustrations as the city’s.
“People traditionally think of noncompete people as something for high-level executives with access to classified information or people with access to trade secrets,” said Terry Gerstein, director of the State and Local Law Enforcement Project at Harvard Law School. But in fact it was used indiscriminately throughout the economy.”
Critics of noncompetes argue that they eliminate wages, and nearly a dozen states already restrict or prohibit their use. Colorado recently banned non-compete for workers earning below a certain level, and California banned them entirely. up to 73 bill Hanging out this year in the state role, most are looking to tighten the rules around conventions.
In the five years after Oregon banned enforcement of its incompetence law in 2008 for employees who earned less than the median US household income for a family of four, workers’ hourly wages grew 6%, Starr’s research found, and their job mobility rose, too. by 17%.
“There are many things companies can do to protect themselves without imperfect agreements,” Starr said. If the FTC adopts new limits, he said, “we will definitely see more reliance on non-disclosure, non-solicitation.” [agreements] and more types of perks like higher wages, better benefits, etc.”
Non-disclosure and non-solicitation agreements allow employers to seek damages from employees who attribute trade secrets or certain company information. But unlike non-competitors, they do not proactively restrict workers’ ability to transfer jobs.
Several individual business owners have expressed their opposition to the proposed ban on the FTC’s online forum.
“This rule will negatively impact small business and economic growth and is not a result of legislation but of bureaucracy,” writes Mimi Steiger, owner of Total Marshall Arts & Fitness in Northport, Florida.
Another commenter, Bruce Fearon, wrote in support of non-competitors in the area, noting that his medical practice focuses on lymphatic diseases and requires him to invest heavily in training new hires. “There is absolutely no incentive for me to teach anyone anything I know and practice, just to have them move into the neighborhood and compete against me,” Verone argued.
Neither Steiger nor Verson responded to requests for interviews.
For now, companies still have ways of coercing employees — especially those with low and moderate incomes — to stay, out of non-disclosure and non-solicitation agreements. “Training reimbursement” rules, for example, require workers to compensate employers for development programs they undertake if they leave within a certain time frame.
last week The Federal Trade Commission proposed the ban Those too.