PA Chamber joins coalition challenging FTC ban on noncompete agreements

On Wednesday, the Pennsylvania Chamber of Business and Industry said it supported the U.S. Chamber’s suit against the Federal Trade Commission (FTC) over its recent ruling banning noncompete agreements.

The U.S. Chamber filed suit against the FTC, alleging the commission’s action would set a dangerous precedent that would allow government to micromanage businesses and would ultimately harm employees, employers and the economy. The PA Chamber released a statement in support of the US Chamber’s lawsuit.

“The FTC has neither the statutory authority nor a sensible reason to attempt to ban noncompete agreements,” Pennsylvania Chamber of Business and Industry President and CEO Luke Bernstein said. “Employers will often seek to include these agreements in employment contracts to protect their proprietary information or justify significant investments they make in recruitment. Noncompete agreements already have limits and may be deemed unenforceable if found to be unduly restrictive. This kind of administrative micromanagement, however, sets an alarming precedent for America’s job creators, and the PA Chamber fully supports the U.S. Chamber’s efforts to block the FTC’s extreme overreach and prevent this unnecessary and unlawful rule from taking effect.”

The PA Chamber previously co-signed a letter to the FTC that urged the commission to withdraw its proposed rule and revert to the authority granted to it by Congress.

On Tuesday, the FTC issued a final ruling that essentially banned noncompetes for all employees except senior executives. The commission said the ban would protect the fundamental freedom of workers to change jobs and estimated the ban would generate more than 8,500 new businesses each year while raising worker wages, lowering health care costs and boosting innovation.

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina M. Khan said. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”