Business groups representing employers are unhappy with the Federal Trade Commission’s ban on new non-compete agreements and have already filed suit seeking a ban.
The U.S. Chamber of Commerce, joined by the Business Roundtable and the Texas Business Association, submitted the following statement: lawsuit On Wednesday, in federal court in Texas, the FTC argued that it issued it in excess of its legal authority. rule. The committee that enforces the antitrust law is Historic new regulations completed The vote the day before was 3-2.
A non-compete agreement prohibits a worker from taking a job at a competing company for a set period of time, effectively locking the worker in their current position. Business groups are understandably angry with the FTC. Banning non-competes would shift more bargaining power to workers, forcing employers to improve wages and working conditions or risk losing talent to competitors.
The FTC announced that the rule will go into effect 120 days after publication in the Federal Register. The court could ask the judge to grant an injunction to stop the non-compete from taking effect while the case proceeds.
“Business groups are understandably upset with the FTC. Banning non-competes would give workers even more bargaining power.”
Conservatives often choose to challenge progressive federal policies in Texas, where they are more likely to find justices who share their aversion to the regulatory state, a process known as “forum shopping.” It’s a legal practice. The chamber filed the lawsuit in the Eastern District of Texas, which is under the jurisdiction of the U.S. Court of Appeals for the Fifth Circuit. extreme right wing Federal Circuits and their locations regulation disappears.
Many legal observers expect the case to eventually reach the U.S. Supreme Court, where a 6-3 conservative majority tends to side with the companies in controversial decisions.
The FTC asserted that it is on solid footing for issuance of this rule. Commission Chair Lina Khan said in an interview with CNN on Wednesday:we have clear legal authority” and ban the agreement.
Academics, politicians, and policymakers, including President Joe Biden, have viewed noncompete agreements as a way to force workers to stay in poor, low-paying jobs rather than move on to better jobs. I’ve been criticizing it for many years. The FTC also says it stifles innovation by preventing people from starting their own businesses.
The commission’s rules make existing non-compete clauses unenforceable (except those that apply to senior executives who are unlikely to be forced to sign them) and allow employers to enter into new non-compete clauses. prohibited.
When the ban was first proposed last year, it proved popular among Americans. An Ipsos poll at the time found that three in five respondents supported such regulation, including 66% of employed people. Ta.
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Given the public approval of such a ban, it is not surprising that many critics oppose the FTC’s move primarily on procedural grounds, rather than defending the use of the agreement itself. . Republican Andrew Ferguson, one of the two FTC commissioners who voted against the rule, said he was “sympathetic” to the ban’s goals, but said the FTC would usurp Congress’s authority. He claimed that
on wednesday lawsuit, the Chamber also argued that employers need to protect the time and money they invest in employee training, and that non-competes are legitimate and necessary. A ban on contracts would create an “immediate and significant” “burden”, the lobby group argued.
“Companies will be forced to rely on other tools to protect their investments and face significant legal costs,” the report said. “And the entire economy will suffer because startups and small businesses will not be able to prevent established companies from hiring talented employees and accessing sensitive information.”
The Student Borrower Protection Center, a nonprofit advocacy group that has supported the ban, said the Chamber of Commerce and other groups went to Texas for a reason: to win the policy outcomes they wanted. I have high hopes for the judge.”
“The Chamber understands that in a democracy, courts should not be the ultimate policy makers, but the Chamber cannot wait for the federal judiciary to block policies that put people above corporate profits. ,” the advocacy group said in a statement.
