The U.S. Chamber of Commerce is suing to block the Federal Trade Commission’s (FTC) vote adopting a near-total ban on noncompete agreements, the likes of which prevent employees from switching companies within an industry.
The FTC voted 3-2 on Tuesday to ban any new noncompete provisions for all workers, requiring that companies throw out many existing agreements. Some may remain in effect for senior executives.
In response, U.S. Chamber of Commerce President and CEO Suzanne P. Clark issued a statement torching the decision saying that the ban “is not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive.”
“This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy,” Clark continued.
Clark added that the Chamber intends to “sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked.”
The rule is slated to go into effect in 120 days after it’s published in the Federal Register, however, mounting legal challenges may delay the action or potentially halt the move altogether.
The FTC estimates that around 18% of the U.S. workforce is covered by noncompete provisions, equivalent to approximately 30 million people.
American business groups argue that noncompete agreements are necessary for protecting proprietary information and intellectual property, however, the ban would not impact other methods like nondisclosure agreements.
Leave a Reply