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21 Apr 2023
John Binder

NextImg:Chamber of Commerce, Wall St. Lobby Against Ban on Non-Compete Clauses

The United States Chamber of Commerce, the nation’s largest multinational corporations, and big banks are together lobbying against a proposed rule by the Federal Trade Commission (FTC) to ban companies from imposing wage-cutting non-compete clauses on American workers.

In January, as Breitbart News reported, the FTC proposed the rule to ban companies from imposing non-compete clauses on their employees. An estimated 30 million Americans in the workforce today are beholden to such clauses, which prevent them from working for a competing employer or starting a competing business.

Comments filed by the Chamber of Commerce, along with nearly 300 business groups representing big banks and a multitude of multinational corporations, look to squash the rule by suggesting that non-compete clauses “serve vital business and employee interests.”
The Chamber states:

Most importantly, noncompetes serve pro-competitive interests. Courts, scholars, and economists all have found that noncompetes encourage investment in employees and help to protect intellectual property. In every sector of the economy, employers rely on noncompetes to protect investments in their workforce, to protect trade secrets and other confidential information, and to structure their compensation programs. [Emphasis added]

Noncompetes are also often used as part of contractual arrangements between the employer and the employee that result in additional compensation to the employee, in the form of added pay, retention bonuses, stock awards, deferred compensation or as part of a severance package. Noncompetes are also essential to the sale of a business. [Emphasis added]

Likewise, during a House Energy and Commerce subcommittee hearing this week, Rep. Greg Pence (R-IN) claimed that imposing non-compete clauses on U.S. employees is an “American free market” principle.

On the other hand, FTC Chair Lina Kahn has said the rule will score higher wages for U.S. employees — increasing earnings by nearly $300 billion annually — by generating more competition for workers among employers.

In February, Sen. Marco Rubio (R-FL) filed legislation to ban non-compete clauses for Americans holding lower-wage, entry-level U.S. jobs.

“Non-compete agreements that arbitrarily restrict entry-level, low-wage workers from pursuing better employment opportunities are completely unnecessary,” Rubio said.

Americans overwhelmingly support banning companies from imposing non-compete clauses on their employees. An Ipsos poll from January found that 61 percent of all Americans support the proposed FTC rule and 66 percent of American job-holders support the rule.

Meanwhile, more than 4-in-10 Americans said that such a rule would spur them to look for another job in the near future.

John Binder is a reporter for Breitbart News. Email him at Follow him on Twitter here