USCIB filed a submission with the Federal Trade Commission (FTC) April 19, opposing its proposed rule to ban employers from utilizing non-compete clauses in employment contracts, a practice that violates Section 5 of the Federal Trade Commission Act, according to the FTC.
USCIB’s submission argues not only that the FTC lacks rule-making authority to even issue the proposal, but the proposed rule makes improper assumptions regarding the applicability of state law versus a federal blanket ban and that trade secrets safeguards serve as a substitute for non-competes. The proposed rule would ban non-competes for high income workers or workers with access to confidential information, which is a an essential tool for companies to protect intellectual property, trade secrets and other confidential information. The submission makes the strong case that non-competes should continue to be allowed on a case dependent basis.
“USCIB challenges the lack of evidence and methodologies used to support the FTC’s proposed rulemaking on non-competes clauses and is alarmed about the deleterious impacts a blanket ban would have on U.S. industries,” said USCIB Vice President for International Investment and Trade Policy Alice Slayton Clark. “Not only does it break with longstanding legal precedent such as the consumer welfare standard and fact-specific inquiry, but it will irreparably harm U.S. companies that rely on non-competes to safeguard intellectual property rights and trade secrets.”
The FTC has received over 15,000 comments on its proposal, showing the broad impact it would have on companies and workers. To read the full submission, click here.