WASHINGTON – Today, Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) sent a letter to Lina Khan, Chair of the Federal Trade Commission, to express concerns with the agency’s proposed “Non-Compete Clause Rule” which would impose a ban on non-compete clauses in employment contracts. Chairwoman Foxx contends that the FTC’s decision to issue this proposed rule—outside of its legal authority—will result in America’s workforce having fewer opportunities for skills-development in the modern economy.
In the letter, Foxx writes: “This proposed rule would impose a sweeping ban on non-compete clauses in employment contracts. A ban on non-compete clauses exceeds the FTC’s authority and inappropriately meddles in labor and employment issues in which the FTC lacks expertise and enforcement experience. Such a far-reaching ban could also reduce companies’ investment in their employees. … If an agency seeks to decide an issue of major national significance, its actions must be supported by clear congressional authorization. The FTC cannot demonstrate clear congressional authority for its rulemaking since it was granted no such authority under federal law.”
Foxx continues: “Because Congress created the FTC to regulate consumer policy, the agency has scant experience enforcing non-compete clauses or regulating employment. Former Commissioner Wilson noted in her dissent that until January 2023 the agency ‘had announced no cases (and therefore had no experience and no evidence) to conclude that non-compete clauses harm competition in labor markets.’ It is difficult to understand how the FTC, without congressional authorization or expertise on employment issues, could assert that nearly all employment contracts containing non-compete clauses are unenforceable and are an unfair method of competition.”
Foxx concludes: “Congress created the FTC to promote competition and protect consumers. In this proposed rule, the FTC flagrantly overreaches beyond its congressionally delegated authority. By attempting to ban non-compete clauses, the FTC wades into a policy area outside of its jurisdiction and expertise. The proposed rule would greatly decrease investment by employers in their workforce at a time when American workers need more skills. I strongly urge the FTC to reconsider this rulemaking.”
