Active Stocks
Sat May 18 2024 12:49:03
  1. Tata Motors share price
  2. 952.95 0.76%
  1. Power Grid Corporation Of India share price
  2. 316.85 1.12%
  1. Tata Steel share price
  2. 167.90 0.39%
  1. ITC share price
  2. 436.50 -0.02%
  1. State Bank Of India share price
  2. 821.30 0.42%
Business News/ News / FTC Issues Non-Compete Ban as Chamber Lawsuit Looms
BackBack

FTC Issues Non-Compete Ban as Chamber Lawsuit Looms

The US Federal Trade Commission is poised to vote Tuesday to adopt a near-total ban on non-compete provisions that prohibit workers from switching jobs within an industry, a rule the Chamber of Commerce vowed to immediately challenge in court.

FTC Issues Non-Compete Ban as Chamber Lawsuit LoomsPremium
FTC Issues Non-Compete Ban as Chamber Lawsuit Looms

(Bloomberg) -- The US Federal Trade Commission is poised to vote Tuesday to adopt a near-total ban on non-compete provisions that prohibit workers from switching jobs within an industry, a rule the Chamber of Commerce vowed to immediately challenge in court.

The high-stakes legal showdown comes three years after President Joseph Biden signed an executive order encouraging the FTC to limit non-compete agreements, which affect roughly one in five Americans. 

The antitrust and consumer protection agency released the text of its final rule Tuesday afternoon before opening debating in an open meeting of the FTC’s five commissioners. The proposal would ban most new non-compete agreements except for those for senior executives. Existing non-competes with lower-level workers would become unenforceable six months after the rule goes into effect. The agency estimated that it would increase US earnings by at least $400 billion over the next 10 years.

The Chamber of Commerce, the nation’s largest business lobby, earlier told reporters it plans to sue over the rule as soon as Wednesday.

The FTC first proposed a non-compete ban in January 2023, arguing the restrictions unfairly block workers from switching jobs and undermine labor competition. The proposal has the backing of labor organizations AFL-CIO and the Service Employees International Union, Democratic senators and attorneys general from California, Illinois and 17 other states. Of the 26,000 public comments the FTC received about the proposal, the agency said that 25,000 of them were in support of a ban.

Read more: FTC Proposes a Ban on Non-Compete Contracts for Employees 

But business groups oppose the ban, arguing that it’s overly broad and limits the ability of companies to protect confidential information.

Tuesday’s vote is expected to fall along partisan lines with the FTC’s three Democrats in favor and the agency’s Republicans opposed. The meeting marks the first occasion that the FTC’s five members have met publicly since Republicans Melissa Holyoak and Andrew Ferguson joined the agency following their confirmation last month. 

In a call with reporters Monday, the Chamber’s Chief Policy Officer Neil Bradley said the FTC doesn’t have the authority to issue the rule.

The rule “opens up a Pandora’s box where this commission or future commissions could be literally micromanaging every aspect of the economy," Bradley said. “Agencies can’t exercise authority that Congress hasn’t given them. Congress has not given the FTC the ability to write regulations with respect to competition."

Chair Lina Khan and the agency’s Democrats, however, maintain that the FTC does have authority to issue rules defining unfair methods of competition.

The last time the FTC issued a standalone rule defining an unfair method of competition was in 1968, known as the Men and Boy’s Tailored Clothing Rule. The rule, repealed in 1994, required clothing companies to provide equal treatment in promotions to all sellers.

(Updates to include details on the final rule beginning in third paragraph.)

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed - it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 24 Apr 2024, 12:21 AM IST
Next Story footLogo
Recommended For You