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NAM to FTC: Noncompete Rule Would Harm Manufacturers

The NAM is urging the Federal Trade Commission to extend the comment period on its recently proposed rule to ban noncompete agreements in the workplace, citing the rule’s broad economic impact and significant legal implications. 

The background: On Jan. 5, the FTC proposed a rule that would prohibit employers from imposing noncompete agreements on workers, calling such clauses “an unfair method of competition” and saying they prevent the forming of new businesses and result in lower wages for all workers.

What the NAM is doing: The NAM opposes the proposed change, and the association joined a coalition of other business groups this week requesting that the public comment period, which runs through March 20, be extended by 60 days.

  • The reason: the proposal would have far-reaching legal consequences for manufacturers, including risks to intellectual property.
  • “A sufficient comment period is needed to ensure the regulated community can fully assess [the rule’s] effects,” the coalition told FTC Secretary April Tabor. “Moreover, there are significant legal questions that must be addressed by commenters.”
  • “Among the issues raised by the FTC action is whether the Commission has the legal authority to issue such a rulemaking, the rule’s potential preemption of the numerous state laws and regulations on this issue, and how such preemption will alter the regulated community’s legal obligations.”

Working for manufacturers: The NAM is exploring all possible avenues, including congressional oversight and litigation, to mitigate the impacts of the proposed rule. Litigation is contingent on financial support from NAM members, as all of the NAM’s activities in the courts are funded outside of member dues.

To discuss the noncompete ban’s impact on your company, please contact NAM Director of Labor and Employment Policy Brian Walsh or NAM Deputy General Counsel for Litigation Erica Klenicki

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