In yet another call for non-compete reform, a group of unions, nonprofits and professors have asked the Federal Trade Commission to put an end to non-compete agreements across the United States. The call was led by a group known as the Open Markets Institute. It was joined by the AFL-CIO, the Service Employees International Union (SEIU) and other labor organizations, public interest groups and legal scholars. The petition calls on the FTC to use its power to issue a federal rule to ban the use of non-competes nationwide.
In the petition, the signatories called non-competes unjust contracts that “deprive tens of millions of workers of the freedom to accept a job, take new opportunities, or to start a business in the same line of work or industry after they leave their current job.” In support of its request, the petition cites non-competes used by Amazon to prohibit warehouse workers from working for competitors anywhere in the U.S. for 18 months after leaving.
While it appears unlikely the FTC would take such a drastic step, continuing calls for non-compete reform, especially for lower wage workers, is likely to continue. Companies would be advised to think more carefully about the types of employees they require to sign non-competes. Overuse of non-competes, particularly when trade secrets and confidential information are not at risk, runs the risk of causing legislators at the state and federal levels to begin to regulate this area. A company may also face an undesirable public relations predicament if the spotlight is shined on its overuse of non-competes, as is the case with Amazon based on the petition now before the FTC.
Benjamin Fink is known for his work in noncompete, trade secret and competition-related disputes. A shareholder at Berman Fink Van Horn, Ben concentrates his practice in business and employment litigation.