More guidance is needed to comply with the rule, set to take effect Sept. 4, to prevent further costs to businesses.
05/28/2024 3:45 P.M.
1.5 minute read
ACA International renewed its advocacy in opposition to the Federal Trade Commission’s rule that would ban employers’ noncompete agreements by joining hundreds of national and state associations in a request to delay the action.
Joining the organizations in their request letter (PDF) to the Federal Trade Commission (PDF), led by the U.S. Chamber of Commerce, builds on ACA’s advocacy last year opposing the rule in its proposed stage.
As a refresher, the FTC’s rule, set to take effect Sept. 4, would prohibit employers from:
- Entering into or attempting to enter into a noncompete with a worker;
- Maintaining a noncompete with a worker; or
- Representing to a worker, under certain circumstances, that the worker is subject to a noncompete.
It applies to “independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.”
It would also preempt state laws with less restrictive noncompete requirements.
The organizations say that a stay of the rule would be prudent due to the impending effective date and lack of guidance from the FTC on key components of it.
Their request also notes the FTC has already stayed its CARS Rule pending litigation and the Securities and Exchange Commission acted to stay its Climate Disclosure Rule.
“Although the Noncompete Rule’s legal fate remains in question, it is already imposing significant costs and uncertainty on the U.S. economy,” the letter states. “Businesses are identifying existing noncompetes and notifying employees and former employees that their noncompetes may no longer be enforceable. Companies are incurring substantial legal costs as they explore other tools to attempt to protect their investments, and workers are losing training opportunities and bargaining power to negotiate compensation.”
The complete letter (PDF) is available on ACA’s Policymakers website.
Related Content from ACA International:
Partnering on Advocacy: ACA Joins Hundreds of Groups Against FTC Noncompete Rule
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