House Republicans' letter states that the FTC is exceeding its delegated authority and lacks congressional authority in federal statute to initiate this type of rulemaking.
On Feb. 14, U.S. House Judiciary Committee Chairman Jim Jordan (R-Ohio) sent a letter to Federal Trade Commission (FTC) Chair Lina Khan expressing opposition to the proposed rule that could potentially prohibit the use of certain noncompete agreements. The letter was also signed by Reps. Darrell Issa (R-California), Thomas Massie (R-Kentucky) and Scott Fitzgerald (R-Wisconsin).
The letter states that the FTC is exceeding its delegated authority and lacks congressional authority in federal statute to initiate this type of rulemaking. It goes on to state that such a rule would result in tens of millions of contracts becoming unenforceable. The letter calls the proposed rule a “power grab" that would have significant adverse effects on the American economy.
The FTC's proposed rule would ban any “contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker's employment with the employer." The rule would apply to employees, independent contractors, interns, volunteers, apprentices and other types of workers.
Furthermore, the proposed rule would prohibit the use of any agreement that is crafted so broadly as to effectively preclude a worker from working in the same field after the conclusion of employment with a particular employer. However, the proposal does include a limited exception that would permit the use of noncompete clauses between a seller and buyer of a business if the person restricted by the agreement is an owner, partner or member with at least a 25% ownership interest in the entity.
The Big “I" has joined with the U.S. Chamber of Commerce and other business groups to express concerns about the proposed rule and call for a delay in the public comment period. As it currently stands, comments on the proposed rule are due March 20. The Big “I" intends to submit comments expressing concerns and seeking changes, and will continue to monitor any developments. Stay tuned to the News & Views e-newsletter for more information.
Raaed Haddad is Big “I" director of Federal Government Affairs.