WASHINGTON, D.C.— Stephen Hall, Better Markets’ Legal Director and Securities Specialist, issued the following statement on the filing of Better Markets’ Comment Letter to the Federal Trade Commission (FTC) in response to the Commission’s proposed rule to prohibit non-compete clauses in employment contracts.
“All too often companies bury unfair “non-compete clauses” in their fine-print, take-it-or-leave-it employment contracts with workers. Non-compete clauses, which restrict workers’ ability to work for certain competing businesses for a period of time following employment, have deprived tens of millions of American workers of the fundamental freedom to seek gainful employment elsewhere when their present employment relationship ends.
“In its Notice of Proposed Rulemaking, the FTC seeks to ban non-compete clauses, including for senior executives, with few exceptions. The new rule would deem these restrictive clauses an ‘unfair method of competition,’ thus prohibiting them nationwide.
“Our comment letter submitted to the FTC highlights the many ill effects that non-competes have on workers and labor markets, as well as the many benefits that a nationwide ban would bring. As explained in our letter, by restricting workers’ job mobility and freedom of movement, these contract clauses obstruct the smooth functioning of labor markets, resulting in lower wages and diminished worker and firm productivity. They also cause negative spillover effects, adversely affecting workers not subject to non-compete clauses, inhibiting entrepreneurial growth, competition, and innovation. In short, non-competes interfere with fair and competitive labor markets, shackle and commodify American workers, and unduly empower corporations to prioritize their own private gain over the basic freedoms and prosperity of Americans.
“We applaud the FTC for this important proposal, and we look forward to seeing the benefits it will provide to American workers.”
The full comment letter is available here.
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.