Advocacy News – March 3, 2023
The Michigan Chamber, along with over 250 other organizations, sent a letter to Congress earlier this week asking the body closely examines the Federal Trade Commission’s (FTC) proposed rule to impose a nationwide ban on almost all noncompete clauses.
This sweeping rule, if implemented, would invalidate millions of contracts around the country that courts, scholars and economists have found entirely reasonable and beneficial for both businesses and employees. Accordingly, we are asking Congress to examine whether the FTC has the constitutional or statutory authority to issue such a rule or whether the FTC is improperly usurping the role of Congress.
If the FTC can regulate noncompete agreements without authorization from Congress, there is no aspect of employment or commercial arrangements that it doesn’t have the authority to regulate or ban arbitrarily.
In a recent survey of MI Chamber members, nearly 77% of respondents indicated their company utilizes contract clauses such as non-competes, non-solicits or forfeiture provisions in equity award agreements, severance agreements and/or employment agreements. Over 95% indicated they utilize non-competes in employment agreements. The FTC’s proposed rule would invalidate these agreements, which are an important tool in fostering innovation and preserving competition.
The Michigan Chamber will be submitting comments on the FTC’s proposed rule by the deadline of Monday, March 20. If you wish to make your company’s voice heard, you may still submit comments. For more information, view the FTC’s full regulatory proposal.
More Resources:
- MI Chamber Article from Feb. 15, 2023: FTC and Congress Considering a Ban on Non-Competes; We Need to Know How This Impacts Your Business
- US Chamber Summary Document: FTC Rulemaking & Non-Competes
- US Chamber Blogs: Americans Deserve a Transparent and Accountable FTC; What Does the FTC Want to Ban Next?; and The FTC Fails to Show Its Work on Non-Compete Math Calculations
Please contact Wendy Block, senior vice President of Business Advocacy and Member Engagement, with any questions at wblock@michamber.com.