Two FTC Commissioners Would Support a Rule Banning Noncompete Agreements

January 10, 2020

The Federal Trade Commission's two Democratic members say they support the agency moving forward with regulations to ban noncompete clauses that attempt to prevent workers from switching jobs within the same industry.

The FTC “need not wait for legislation to tackle this head-on,” said Commissioner Rebecca Kelly Slaughter.  “I strongly support the FTC undertaking such an endeavor.”  Commissioner Slaughter’s comments at an FTC conference reflect those of her Democratic colleague, Commissioner Rohit Chopra, and attorneys general from California, Illinois and 17 other states who have also urged the FTC to adopt rules on noncompetes.  Slaughter also said she favors increasingly considering the use of noncompetes as a factor when the FTC conducts merger reviews.

Noncompete agreements are on the radar of the GOP Commissioners, but Republican Commissioner Noah Phillips has concerns about the FTC’s authority to issue a rule.  While Phillips said he has issues with a rulemaking, he acknowledged noncompetes raise competition concerns.  He noted in POLITICO that the FTC might want to consider bringing enforcement actions challenging some egregious examples, such as noncompetes in states where they are explicitly barred. 

Outlook:  Any FTC rule limiting or banning noncompete agreements will have to wait until a Democrat wins the presidency and creates a Democratic majority at the FTC.  However, several states have already banned or limited noncompete agreements and more states are likely to pass similar legislation this year.  A key issue for many companies will be whether such a ban would include agreements with high-level corporate executives.