Reminder: Make Your Voice Heard On FTC Non-Compete Rule

As Connecting the Dots has reported several times over the last months, the Federal Trade Commission (FTC) has proposed a new regulation that would make it illegal for an employer to:

• Enter into or attempt to enter into a non-compete with a worker;
• Maintain a non-compete with a worker; or
• Represent to a worker, under certain circumstances, that the worker is subject to a non-compete agreement.

The public has until April 19 to comment on the proposed rule.

The proposal has sparked widespread concern among the business community on how a national ban on non-competes could impact their businesses’ investment in employees and affect the protection of sensitive information and intellectual property.

Manufacturers use non-compete agreements only for select workers handling their most sensitive information. That information might include the details of a company’s most sophisticated processes and strategies, which cannot be allowed to fall into competitors’ hands. Not only do these employees handle the keys to a company’s success, but they are the recipients of significant investments in time, compensation and training. By signing a non-compete agreement, they may, for example, agree not to share any sensitive information while serving in their integral role or not to work for a competitor in the near future where they could share that information.

Banning non-compete agreements would force companies to revamp their human capital operations completely. Trade secrets or other essential information could be exploited not only by competitors, but also by foreign adversaries. Manufacturers would be forced to put in place burdensome controls or silo parts of their operations from each other, which would result in less training for employees and less efficiency across various divisions.

As such, MSCI encourages individual member companies that could be impacted by this proposed rule to make their voices heard. Click here to learn how to submit a comment letter. As noted above, the new deadline for comments is April 19, 2023. The U.S. Chamber of Commerce provides information here and here that can be used in these letters.