WASHINGTON, D.C. – The Federal Trade Commission (FTC) should begin work on a rule banning the use of non-compete clauses in employment contracts, 25 consumer advocates and labor groups said today in a letter to the agency. Tens of millions of workers are vulnerable to economic disempowerment through employers’ use of, or threat to use, non-compete clauses.
“Employers’ use of non-compete clauses inflict real and substantial harms on the American worker and the overall U.S. economy without any legitimate justification,” the letter reads. “By limiting worker’s mobility, non-competes drive down wages, reduce the formation of new businesses and keep workers stuck in unsafe or hostile workplaces. These one-sided contracts can also unfairly restrain competition in downstream markets by allowing dominant firms to hold on to specialized workers—think of monopolistic hospitals and surgeons. Instead of retaining workers through coercive non-compete clauses, employers should maintain a loyal workforce by offering good wages, regular raises and promotions, and fair treatment.”
“President Biden made clear in his executive order on competition that federal action on non-competes was a part of his administration’s approach to keep labor markets fair and open,” said Matt Kent, competition policy advocate for Public Citizen and author of the letter. “The FTC must follow through and start the process. Banning this pervasive anti-worker practice is urgent and will only become more challenging as we approach the uncertainty of the 2024 election cycle. It would be a tragedy for FTC to waste the moment. The time to issue a proposed rule is now.”