Signage is seen on the Chamber Of Commerce Constructing within the Manhattan borough of Recent York City, Recent York, U.S., April 21, 2021.
Andrew Kelly | Reuters
A serious business advocacy group has pledged to sue the Federal Trade Commission if it acts on a proposal to ban noncompete clauses in employee contracts — a difficulty that has bipartisan support amongst lawmakers.
The U.S. Chamber of Commerce, which represents some 3 million businesses, is ready to sue if the FTC continues to push for a proposal that prohibits corporations from imposing noncompete clauses on employees, President and CEO Suzanne P. Clark told reporters Thursday. The organization is the biggest U.S. business trade group and spent near $60 million lobbying lawmakers through the first three quarters of last 12 months, in keeping with non-partisan campaign finance watchdog Open Secrets.
The Chamber called the proposal “blatantly illegal” and blind to established state laws where “noncompete agreements are a vital tool in fostering innovation and preserving competition.” The change would potentially increase wages by roughly $300 billion a 12 months for employees, in keeping with the FTC.
The organization has also vowed to lobby Congress to limit among the FTC’s regulatory activities through the appropriations process, said Neil Bradley, executive vice chairman, chief policy officer and head of strategic advocacy for the U.S. Chamber.
Banning noncompete agreements is “clearly authority that (the FTC doesn’t) have and nobody has ever thought that that they had,” Bradley said. “Those are things that we are able to attempt to forge bipartisan agreement on to get appropriations writers to limit the authority.”
The agency’s premise — that it might eliminate noncompetes under Section 5 of the FTC Act, which bans unfair methods of competition — is something most legal observers don’t think is feasible, Bradley said.
“Because of this states have regulated it. And until Congress changes that, it’s really vital if … you suspect within the rule of law, that at a minimum, federal agencies abide by the law. And this isn’t abiding by the law irrespective of the way you write it,” Bradley said.
Lifting noncompetes could also threaten business innovation, said Clark, by endangering “secret-keeping” amongst former employees who freely transition to a different company.
The U.S. Chamber isn’t any stranger to difficult federal agencies it feels have overreached their authority in court. It has filed a lawsuit against the FTC previously 12 months, in addition to the Securities and Exchange Commission and the Consumer Financial Protection Bureau.
But its mission to counter the FTC’s power might face an uphill battle within the House where the chamber has fallen out of favor with Republican leadership, including recent House Speaker Kevin McCarthy, R-Calif, after it backed so-called woke policies. This past summer, McCarthy said he wouldn’t even meet with the group if he won the speakership, in keeping with Axios.
The proposal to ban noncompetes has also been taken up before within the Senate. A bill introduced by Sen. Chris Murphy, D-Conn., in 2021 to eliminate them under certain conditions attracted bipartisan support from Republican cosponsors, Sens. Todd Young of Indiana and Kevin Cramer of North Dakota.
On the time, Young said that lifting noncompete clauses would supply Americans the “utmost flexibility to seek out and secure employment” through the pandemic.
“Non-compete agreements stifle wage growth, profession advancement, innovation, and business creation,” he said.
Bradley said working with Congress to limit the FTC’s authorities shall be an “uphill challenge” with President Joe Biden in office and with Democrats in command of the Senate.
“We will work all angles we’re not putting all of our eggs within the appropriations … basket,” he said. “We’re already in litigation, and we will be in future litigation against the FTC.”