Associated Builders and Contractors issued a statement on April 23 opposing the Federal Trade Commission’s final rule to ban non-compete clauses. The FTC voted 3-2 to issue the final rule on April 23.
“The final rule to ban all non-compete agreements nationwide — except existing non-competes for senior executives — is a radical departure from hundreds of years of legal precedent,” said Ben Brubeck, ABC Vice President of Regulatory, Legal and State Affairs. “Ultimately, this vastly overbroad rule will invalidate millions of reasonable contracts — including construction project contracts — around the country that are beneficial for both businesses and employees.”
As ABC argued in its comments submitted on April 19, 2023, in opposition to the FTC’s unprecedented proposal to ban non-compete agreements:
- The FTC lacks the statutory and constitutional authority to issue the rule.
- Non-compete agreements are appropriately regulated at the state level.
- The proposed rule violates the Administrative Procedure Act.
- A blanket ban on non-compete agreements will harm the construction industry overall, especially small businesses.
ABC members have valid business justifications for utilizing non-compete agreements, such as protecting confidential information and intellectual property. The new rule will have a harmful effect on their companies as well as their employees, forcing companies to rework their compensation and talent strategies.
ABC joined the U.S. Chamber of Commerce and 280 business groups in submitting comments urging the FTC to rescind the proposed rule on April 17, 2023.
