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Chamber of Commerce Plans to Sue to Overturn FTC Non-Compete Ban

The U.S. Chamber of Commerce is blasting the FTC’s new ban on non-compete clauses.

Soon after the Federal Trade Commission (FTC) imposed the ban on Tuesday (April 23), the business lobbying group said it would sue to block the measure.

“The Federal Trade Commission’s decision to ban employer non-compete agreements across the economy is not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive,” Suzanne P. Clark, the Chamber’s CEO and president, said in a news release.

She argued that non-compete agreements have typically been governed by state laws, and that the FTC’s decision “sets a dangerous precedent for government micromanagement of business and can harm employers, workers and our economy.”

The commission voted 3-2 Tuesday to ban non-compete agreements that restrict employees from working for competitors or launching competing ventures after leaving their jobs. 

The ruling, set to impact an estimated 30 million workers across various industries, marks a major shift in labor regulations in the United States. 

Non-compete agreements have been criticized for hindering job mobility and preventing competition in the labor market. The FTC estimates that roughly 18% of American workers are bound by such agreements, from entry-level positions to executive roles.

“It is profoundly unfree and unfair for people to be stuck in jobs they want to leave because non-competes preclude another firm from fairly competing for their labor,” Rebecca Slaughter, a Democratic commissioner on the FTC, said earlier this week.

The new rule prevents businesses from implementing new non-compete agreements for all workers. In addition, they must inform current and former employees that existing non-compete agreements will not be enforced. However, a notable exception would still allow these agreements to remain in place for senior executives.

Earlier this month, the FTC announced it now has a more robust set of tools to deal with scammers who impersonate government agencies and businesses.

The new rule lets the agency file federal court cases seeking to recover money for victims of scams and impose civil penalties on fraudsters, targeting scammers who use impersonation fraud. This includes government seals or business logos, spoofed or lookalike government or business emails and web addresses, or terms that falsely imply government or business affiliations.