Today, AFSA joined a coalition letter commenting on the FTC’s proposed rule to ban noncompete agreements. AFSA, with the U.S. Chamber of Commerce and 280 other organizations express concerns regarding the proposed rule. The letter highlights the following two main problems:
- Noncompetes serve vital business and employee interests. The letter states that “courts, scholars, and economists all have found that noncompetes encourage investment in employees and help to protect intellectual property. In every sector of the economy, employers rely on noncompetes to protect investments in their workforce, to protect trade secrets and other confidential information, and to structure their compensation programs.” The proposed rule would harm competition and employees.
- The FTC lacks legal authority to issue the proposed rule. The letter points out that “Section 5 of the FTC Act empowers the Commission to pursue individual enforcement actions against ‘unfair methods of competition,’ and Section 6(g) provides narrow authority to develop internal procedural rules.” However neither of these provisions would allow the FTC to adopt substantive rules that define unfair methods of competition.