The D.C. attorney general joined contemporaries in 18 states in supporting the Federal Trade Commission’s proposal to ban employers from imposing noncompete clauses on employees.
The FTC in January introduced a measure that could make it easier for people to switch jobs and “deepen competition for labor across a wide range of industries,” The Associated Press reported.
In a news release, D.C. Attorney General Brian Schwalb said that noncompetes harm workers, businesses and the economy.
“Non-competes, even if not legally enforceable, deter employees who lack the resources to litigate against their employers from seeking better job opportunities,” Schwalb said, adding they “disproportionately harm women and people of color.”
What is a noncompete?
A noncompete is a contractual condition that frequently prevents employees from taking a new job or starting their own business, often in a particular industry or geographic area. It also restricts workers from working at rival companies.
The Society for Human Resource Management said that well-crafted noncompetes are “valuable tools” that can “protect the employer from significant harm.”
Advocates for the FTC’s proposed rule said that noncompete agreements “contribute to wage stagnation because one of the most effective ways to secure higher pay is switching companies,” The Associated Press reported. Opponents, meanwhile, said that noncompete clauses facilitate retention and encourage companies to promote workers and invest in training.
Noncompete agreements are often associated with large corporations and highly paid employees, but the D.C. attorney general’s office said noncompetes have spread across industries and cover workers across all income levels and sectors, including health care, technology and fast food.
Some examples, according to the D.C. attorney general’s office website, include: a fast-food restaurant could prohibit its employees from working for any competing business during and after employment; a hospital could prevent its nurses from working at any other hospital within a 10-mile radius for two years after employment; or a gym could stop its trainers from starting their own physical fitness business within three years.
‘Non-competes are anticompetitive’
Scwalb said that noncompetes adversely affect low- and middle-income workers and stifles “entrepreneurship and innovation.”
“The research is clear: non-competes are anticompetitive,” Schwalb said in a statement.
As of October, it is illegal for employers in D.C. to impose noncompete clauses and policies on many employees. The law prevents employers from imposing a noncompete on most D.C. workers who make under $150,000 or medical specialists who make under $250,000.
Attorneys general from New Jersey, California, Colorado, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Pennsylvania, Rhode Island and Washington state joined Schwalb in his support of the ban. You can read their letter of support to the FTC here.
The FTC’s extended public comment period for the proposed new rule ended April 19.
