Tuesday, April 23, 2024

FTC bans noncompete agreements for workers (WaPo)

Proud day.  My late mentor, USDOL Chief Administrative Law Judge Nahum Litt (1979-1995) empowered me to work to expose non-competition agreements and fake "alternative dispute resolution" and immoral mandatory cramdown arbitratation agreements, which disfavor workers, demanding they waive their sacred Seventh Amendment right to civil jury trial, which Justice William Rehnquist said is intended by our founders as a "bulwark against oppression.".  The U.S. House of Representatives voted to ban forced arbitration in 2019 and 2022.  Waiting on the Senate. Meanwhile, FTC voted 3-2 today, April 23, 2024, to ban such non-competition agreements. Naturally, those corporate oligarchs who control the United States Chamber of Commerce want to keep non-competition agreements, as well as forced arbitration, among its anti-worker tools: the Chamber is planning a lawsuit. Fun fact: The Chamber of Commerce of the United States (a/k/a "Chamberpot") was founded as an anti-labor organization by President William Howard Taft.  CoC's lawsuit belongs in the dustbins of history, See, Judge James L. Guill & Edward A. Slavin, Jr., "A Rush to Unfairness," American Bar Association Judges' Journal (1989). From The Washington Post:

FTC bans noncompete agreements for workers 

The new rule requires companies with active noncompete agreements to inform workers that they are void

April 23, 2024 at 3:02 p.m. EDT
Rep. Pramila Jayapal (D-Wash.), left, with Federal Trade Commission Chair Lina Khan in July. (Shuran Huang for The Washington Post)
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The Federal Trade Commission on Tuesday banned noncompete agreements for most U.S. workers with a new rule that will bar employers from enforcing clauses that restrict workers from switching employers within their industry, which the agency said suppresses wages and gums up labor markets.

The FTC voted 3 to 2 Tuesday to issue the rule it proposed more than a year ago. The new rule makes it illegal for employers to include the agreements in employment contracts and requires companies with active noncompete agreements to inform workers that they are void. The agency received more than 26,000 comments about the rule after it was proposed some 16 months ago. The rule will take effect after 120 days, although business groups have promised to challenge it in court, which could delay implementation.

Scholars cite a body of research that shows the agreements suppress worker pay and entrepreneurship while also imposing costs on firms wanting to hire workers bound by the agreements. A Labor Department study published in June 2022 estimated that 18 percent of Americans are bound by noncompete agreements, while other research suggests it could be closer to 5o percent. They are used in a wide range of industries, including technology, hairstyling, medicine and even dance instruction, while imposing restrictions on both high- and low-wage earners.

The FTC estimates that banning noncompete agreements could create jobs for 30 million Americans and raise wages by nearly $300 billion per year.

“I think the FTC has done a real public service here by compiling all this evidence, making a really strong case for a complete ban and establishing a new gold standard for policymaking in this area,” said Sandeep Vaheesan, legal director at the Open Markets Institute, which proposed a noncompete ban to the agency in 2019. “No employee or professional should be made to sign one of these contracts.”

Business groups opposed to the rule, such as the U.S. Chamber of Commerce, have said that the contracts are necessary to protect proprietary information and training, and justify investing in workers who might otherwise immediately jump to a competitor. The Chamber has argued the rule represents a “radical expansion” of the FTC’s authority and has vowed the challenge the rule in court.

Noncompete agreements have been prohibited in three states — California, North Dakota and Oklahoma — for more than a century. In recent years, 11 states and Washington, D.C., have passed laws that prohibit the agreements for hourly wage workers or those who fall below a salary threshold.

But the patchwork nature of the legal landscape has made bans difficult to enforce. Some legal experts said that companies include noncompete clauses in employee contracts regardless of state prohibitions, knowing workers and competitors will be wary of litigation.

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