A unilateral decision from the Federal Trade Commission had leftists celebrating the setting of a “dangerous precedent” in government overreach.
As of Tuesday, with the issuance of a final rule from the FTC, noncompete clauses for millions of workers across the country were considered nullified and unenforceable by a vote of 3-2. Further, under the direction of President Joe Biden-appointed FTC Chair Lina Khan, the practice of entering a noncompete was summarily banned.
“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism,” claimed Khan in a statement on the rule that had initially been proposed in Jan. 2023, “including from the more than 8,500 new startups that would be created a year once noncompetes are banned.”
“The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market,” she continued as the federal agency estimated new business growth of 2.7% per year, thousands more patent applications and an average increase in earnings by over $500 annually, all over the course of the next 10 years.
Harkening back to his own comments during the 2023 State of the Union address, Biden reacted to the rule that supposedly gets Americans “a better deal” by arguing noncompetes were used “to prevent their workers from changing jobs even if that job will pay a few dollars more, or provide better working conditions. Workers ought to have the right to choose who they want to work for.”
Folks, my Administration has announced two new big steps to get American workers a better deal. Let me explain:
First, the @FTC is cracking down on “non-compete agreements,” contracts that employers use to prevent their workers from changing jobs even if that job will pay a few… pic.twitter.com/IEu5K8wkos
— President Biden (@POTUS) April 23, 2024
The president’s party, including the radical socialists among them, cheered the determination with shoutouts to their preferred intersectional talking points, notably without mention of the retention of existing noncompetes for senior executives — defined as policy-makers earning over $151,164 per year.
Banning noncompetes is life-changing for millions of workers.
This action will allow people to switch jobs or start a business, boosting wages, spurring innovation & lowering health care costs.
Massachusetts workers stand to gain $2 billion in higher pay.
A big Biden win! https://t.co/PEu6Mbl4nj
— Elizabeth Warren (@SenWarren) April 23, 2024
Can you believe we live in a world where a Starbucks worker can’t seek other barista jobs because of a so-called “non-compete” clause? Outrageous! I applaud the Federal Trade Commission for banning non-compete clauses. Once again, Chair Khan is delivering for working people. https://t.co/lGbDgNHg6L
— Bernie Sanders (@SenSanders) April 23, 2024
Bosses use non-compete agreements to hold workers back. To hold women back. To hold Black and brown people back. So we fought to end them for years.
And what happens when we fight? We WIN!
For
THIRTY
MILLION
WORKERS! https://t.co/oVGjPGpBUR— Rep. Jamaal Bowman Ed.D. (@JamaalBowmanNY) April 23, 2024
Neither the Republican appointees to the FTC, Andrew Ferguson and Melissa Holyoak who both voted against the rule, nor U.S. Chamber of Commerce leadership were so enthused about three unelected bureaucrats making such a sweeping declaration that impacted millions of employment agreements across the nation.
President and CEO Suzanne P. Clark laid out in a statement, “The Federal Trade Commission’s decision to ban employer noncompete agreements across the economy is not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive.”
“Since its inception over 100 years ago, the FTC has never been granted the constitutional and statutory authority to write its own competition rules. Noncompete agreements are either upheld or dismissed under well-established state laws governing their use,” she continued. “Yet, today, three unelected commissioners have unilaterally decided they have the authority to declare what’s a legitimate business decision and what’s not by moving to ban noncompete agreements in all sectors of the economy.”
“This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy,” warned Clark as executive vice president Neil Bradley echoed her sentiment.
“If they were to start exercising that authority, you’re really opening a Pandora’s box. There’s literally no limitations on what people one day can decide is an unfair method of competition,” argued Bradley who posted to X, “Whatever your view of noncompetes, it should disturb everyone that 3 unelected FTC officials decided that under a law enacted 100+ years ago, noncompetes are now suddenly illegal.”
“No vote of Congress, just 3 [people] declaring that a long used business contract is retroactively banned,” he added.
Whatever your view on noncompetes, it should disturb everyone that 3 unelected FTC officials decided that under a law enacted 100+ years ago, noncompetes are now suddenly illegal
No vote of Congress, just 3 ppl declaring that a long used business contract is retroactively banned https://t.co/SdDeLiOiFE
— Neil Bradley (@NeilBradleyDC) April 24, 2024
As the Chamber of Commerce vowed to file suit against the FTC over the rule, it’s worth reminding that previous outcry over the potential of the decision warned that eliminating noncompetes would be akin to opening the door for “corporate espionage.”
Rusty Brown, Freedom Foundation southern director and former Department of Labor policy advisor during President Donald Trump’s administration, had argued that employees hired for the purpose of union activism would make inroads without noncompetes indicating their, “entire job is to go in there and help organize the workforce…How is that any different than corporate espionage, which carries millions of dollars in penalties in prison?”
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Author: Kevin Haggerty
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