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FTC Moves to End Anticompetitive No-Hire Agreements

By  |  January 6, 2025

The Federal Trade Commission (FTC) has taken action against Planned Building Services Inc., a New Jersey-based building services contractor, alleging that its use of no-hire agreements with property owners has restricted workers’ rights and harmed market competition. The FTC’s proposed consent order, announced Monday, would require Planned and its affiliates to cease implementing such agreements, which are believed to suppress employees’ ability to seek higher wages and better working conditions.

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    The FTC’s unanimous 5-0 decision targets Planned’s practice of including no-hire clauses in its service contracts with building owners. These agreements, according to the FTC, prevent building owners from hiring Planned employees without facing financial penalties, further limiting workers’ ability to negotiate for better employment terms. The FTC’s complaint, which involves Planned’s operations in New York and New Jersey, suggests that these restrictions have a particularly negative impact on low-wage workers, such as janitors, concierges, and maintenance technicians.

    “Planned’s anticompetitive practices have unfairly restrained low-wage workers from seeking higher pay, better benefits, and new job opportunities,” said Henry Liu, Director of the FTC’s Bureau of Competition, per the commission’s announcement. “Today’s action further underscores the FTC’s commitment to stopping unfair business practices that restrict workers’ economic freedom.”

    The impact of these no-hire provisions is twofold, according to the FTC. Not only do they limit workers’ mobility in the labor market, but they also prevent building owners from freely switching to competing service providers without facing penalties. These restrictions ultimately harm consumers by limiting competition among contractors and stifling investment in improved services.

    The proposed consent order mandates that Planned immediately cease enforcing or even discussing the no-hire clauses with current or potential customers. If finalized, the order would prevent the company from using such agreements in the future.

    This action follows a broader effort by the FTC, which has taken similar steps in collaboration with the New York and New Jersey state attorneys general to combat the use of no-hire clauses in various industries. According to Bloomberg, this is the second time the commission has targeted such practices in recent months.

    Source: Bloomberg