In an op-ed recently published in The Hill, HR Policy’s Ani Huang highlighted the unnecessary overreach of the FTC’s recently proposed ban on non-compete agreements. Meanwhile, a bipartisan group of senators reintroduced legislation that would similarly prohibit such agreements, reinforcing the reality that the debate over non-competes will not stop with the FTC’s rulemaking.
“An axe where a scalpel is called for:” In her op-ed, Ms. Huang argues that “executives have the sophistication, market experience, and wage information to effectively advocate for themselves, without the potential power imbalance during negotiations that an hourly worker might experience.” Accordingly, while a prohibition on non-competes may be appropriate for certain groups of lower-level workers, the FTC should exempt executives and other individuals with access to sensitive and proprietary information from any such ban. The op-ed also highlighted the potential negative ramifications a blanket ban may have on companies’ talent and compensation strategies.
Workforce Mobility Act reintroduced: Meanwhile, a bipartisan group of senators led by Sens. Chris Murphy (D-CT) and Todd Young (R-IN) reintroduced the Workforce Mobility Act, which, like the FTC rule, would ban all non-compete agreements except in limited cases of business sales. A separate bill is also expected to be reintroduced this Congress by Rep. Mike Garcia (R-CA), which would prohibit non-competes only for non-exempt employees (employees subject to FLSA overtime pay requirements). Both bills stalled in previous Congresses.
Non-compete restrictions not going away: While there has been much speculation that the FTC’s proposed rule will eventually be invalidated through legal challenge, federal legislative movement on non-competes and strong opposition to them on both sides of the aisle makes it clear that the debate over their usage is here to stay. Even if the FTC rule were to be negated eventually, we can expect an attempt in the current Congress to push through restrictions on non-competes (which could carry over to the next Congress as well).
Outlook: While previous legislative efforts to restrict non-competes have failed to gain significant traction, there is already more momentum this time around given the FTC’s rulemaking and the increased current public attention as a result. Add in the rare showing of bipartisan support on the issue, and it is likely that a non-compete bill makes significant progress in this Congress.