Butzel Pushes Back on FTC’s Proposed Regulation of Non-Compete Agreements
You might recall that in March 2020, Butzel signed a letter in which over twenty law firms from across the United States urged the Federal Trade Commission (FTC) that the federal government should not interfere in state non-compete laws. That letter can be found here. More recently, Butzel signed a similar letter to the FTC (and this time, to the White House, too) following President Biden’s July 9, 2021 Executive Order encouraging the FTC to consider promulgating rules to regulate the use of non-compete clauses. The second letter can be found here. Out of concern that the FTC may proceed with promulgating such rules, the second letter addressed several common misconceptions about the purpose, use, enforcement, and impact of non-competes, and further examined the regulation of such agreements already taking place across the country. It also included recommendations for a fair and reasonable approach that the FTC could take with respect to non-competes that would further the objectives of the Executive Order.
Consistent with the President’s Executive Order, earlier this month, it hosted a two-day workshop “to discuss efforts to promote competitive labor markets and worker mobility,” consisting of panels, presentations, and Q&A addressing “issues affecting labor markets and the welfare of workers, including: labor monopsony; the increased use of restrictive contractual clauses in labor agreements, including non-competes and non-disclosure agreements . . . the role of other federal agencies in ensuring fair competition in labor markets . . . .”
Butzel has now signed another letter addressing several issues raised at the FTC’s workshop. Those issues included whether non-competes constitute contracts of “adhesion”—i.e., “take it or leave it” agreements, whether non-competes harm lower income workers who are poorly positioned to negotiate, and whether antitrust laws adequately protect workers who are often subject to such agreements. Overall, this third letter sought to rebut many misconceptions associated with these issues, and further reaffirmed the position that the federal government need not regulate non-compete and similar agreements already governed by state law.
Butzel’s Non-Compete/Trade Secret team continues to closely monitor this situation and will keep you up to date on any further developments.