U.S. targets non-compete clauses that block workers from getting better jobs (updated)

O-I Glass

05/01/2023 17:18

(Adds comment from Chamber, supporter)
    By Diane Bartz
       WASHINGTON, Jan 5 (Reuters) - The U.S. Federal Trade
Commission, which enforces antitrust law, proposed a rule that
would ban companies from requiring workers to sign noncompete
provisions as well as some training repayment agreements, which
companies use to keep workers from leaving for better jobs, the
agency said on Thursday.
    Noncompete agreements "block workers from freely switching
jobs, depriving them of higher wages and better working
conditions, and depriving businesses of a talent pool that they
need to build and expand," said FTC Chair Lina Khan in a
statement.
    The proposed rule is the latest sign from the Biden
administration of its support for labor, including backing a
measure to make it harder for an employer to classify a person
as an "independent contractor," which generally means fewer
benefits and legal protections.
        The agency estimated that if the rule goes into effect,
wages to U.S. workers would rise by $300 billion per year and an
estimated 30 million Americans would have better career
opportunities.
    The rule, which could be months away from taking effect,
would also require companies with existing noncompete agreements
to scrap them and to inform current and past employees that they
have been canceled.
    It would also stop companies from requiring workers to
reimburse them for certain kinds of training if they leave
before a certain period of time, a strategy that some companies
began using when noncompete provisions garnered tougher
scrutiny. The training repayment would be banned if it "is not
reasonably related to the costs the employer incurred for
training the worker," the proposed rule said.
        The U.S. Chamber of Commerce indicated that it opposed
the proposed rule.
  
        "Today’s actions by the Federal Trade Commission to
outright ban noncompete clauses in all employer contracts is
blatantly unlawful," said Sean Heather, their antitrust expert
who said that the provisions "are an important tool in fostering
innovation and preserving competition.”
  
    Sarah Miller, executive director of the American Economic
Liberties Project, welcomed the rule, noting that "coercive
noncompete agreements have unfairly denied millions of working
people the freedom to change jobs, negotiate for better pay, and
start new businesses."
    FTC Commissioner Rebecca Slaughter said in 2020 that surveys
have estimated that 16% to 18% of all U.S. workers are subject
to noncompete provisions. Meanwhile, nearly 10% of American
workers surveyed in 2020 were covered by a training repayment
agreement, said the Cornell Survey Research Institute.
    The move comes a day after the agency announced that two big
glass container makers and a security company agreed to drop
noncompete requirements. 
    Ardagh Glass S.A. and O-I Glass Inc, the two largest U.S.
glass container makers, had noncompete provisions that affected
more than 1,700 workers. Ardagh typically barred former workers
from being employed by another similar company for two years
while O-I Glass said the company had to give written consent for
former workers to take new jobs in the industry, the FTC said.
 (Reporting by Diane Bartz; Additional reporting by Daniel
Weissner, Editing by David Gregorio and Diane Craft)
 ((Diane.Bartz@thomsonreuters.com; 1 202 898 8313;))