Federal Trade Commission Chair Lina Khan’s proposal to prohibit companies from imposing non-compete agreements on employees encountered more opposition, this time from a member of the new Republican majority in the US House.
(Bloomberg) — Federal Trade Commission Chair Lina Khan’s proposal to prohibit companies from imposing non-compete agreements on employees encountered more opposition, this time from a member of the new Republican majority in the US House.
Representative Victoria Spartz of Indiana said in a Friday letter to Khan that the rule raised constitutional questions and “should have congressional authorization.”
Spartz, who sits on the House Judiciary Committee and Antitrust Subcommittee, acknowledged “a lack of competition in many sectors of our economy,” but said that “a blanket approach” was inappropriate.
The FTC declined to comment Friday night.
On Thursday, the US Chamber of Commerce threatened to sue the FTC if it followed through with the ban, asserting that it had overstepped its authority.
The regulation would prohibit employers from entering into or enforcing non-compete clauses with employees or independent contractors. The FTC argues that such agreements limit innovation and suppress wages. Khan is carrying out tougher antitrust enforcement as a centerpiece of President Joe Biden’s economic policy to keep labor markets competitive.
“Non-competes are bad for workers and undermine labor competition,” Khan told reporters at a press conference earlier this month announcing the proposed rule. “When one set of workers are locked in place, that reduces churn overall.”
About one in five Americans is bound by a non-compete agreement, a March 2022 Treasury Department report found.
House Republicans could insert language in an appropriations bill that would prevent the FTC from getting funding if it proceeded with the rule. That maneuver, however, wouldn’t get past the Democratic-controlled Senate.
The legal challenges, which could drag on for years, present more of a peril.
“If this rule goes forward, we will challenge in court their authority to even make it,” Chamber President Suzanne Clark said at a virtual press conference Thursday.
–With assistance from Leah Nylen and Anna Edgerton.
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