The proposed new rule would prohibit the use of noncompete agreements and would apply to employees, independent contractors, interns, volunteers, apprentices, and other types of workers.
In January, the Federal Trade Commission (FTC) proposed a new rule that would prohibit the use of noncompete agreements. The rule would apply to employees, independent contractors, interns, volunteers, apprentices, and other types of workers.
As the FTC's proposal works its way through the rulemaking process, it is talking to stakeholders and seeking feedback. Wes Bissett, Big “I" government affairs senior counsel, recently participated in a publicly broadcast FTC forum examining the proposed rule to ban noncompete clauses.
During his allotted time, Bissett noted that the value of insurance agencies is rooted in the goodwill, customer relationships and confidential knowledge they develop over many years, and that the proposed rule will erode that value. He went on to point out that this is a subject that should be addressed by Congress and states and recommended four revisions if the FTC moves forward with a final rule.
Those revisions were:
- Eliminating the 25% ownership interest threshold that restricts the applicability of limited exemption for business sales.
- Making clear that other forms of employment agreements can be used such as non-solicitation and no-business agreements.
- Adding an exception based on worker earnings.
- Applying the regulation on a prospective basis only and not affecting existing non-competes.
Also this week, the Big “I" and more than 250 organizations sent a letter to all members of Congress opposing the FTC's proposed rule to ban most noncompete clauses. The letter argues that the FTC lacks the constitutional or statutory authority to issue a rule of this kind and attempting to do so directly usurps the proper role of Congress.
The letter points out that the FTC's proposal is unprecedented and states that “the FTC has not attempted to promulgate a competition rule for decades, across administrations of both parties." It goes on to encourage members of Congress to curb FTC's overreach by exercising their oversight and appropriations authority.
The Big “I" has been following this issue closely since the proposal was released in January. In February, the Big “I" and nearly 100 other trade associations urged the FTC to extend the deadline for comments submitted in relation to the agency's proposal. Unless the March 20 deadline is extended, the Big “I" will be submitting comments to the FTC later this month.
Nathan Riedel is Big "I" vice president of political affairs.