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Attorneys general again call for end to excessive use of noncompete agreements

March 13, 2020

A coalition of attorneys general from 16 states, the District of Columbia and Puerto Rico again called on the Federal Trade Commission to stop the excessive use of noncompete agreements in the workplace.

“Low-wage workers are vulnerable to exploitation when employers require noncompete clauses in employment contracts,” Maryland Attorney General Brian Frosh said in a statement. “The FTC should take action to protect them.”

Attorneys general had previously addressed noncompetes in July, and in November had asked the FTC to curb the excessive use of such agreements. However, the FTC again asked for public comment on noncompetes in January of this year.

A noncompete is an agreement in an employment contract that limits employees from taking a new job or starting their business in the same industry within a geographic area for a certain period of time after leaving their current position. Nearly 25% of US workers are covered by noncompetes and 53% of those are low-wage workers, according to Frosh’s office.

The attorneys general argue noncompetes harm workers by restricting job mobility and depressing wages; harm consumers by stifling entrepreneurship, innovation and price competition; are overused and unjustified for low-wage workers.

Justifications for such agreements — such as protecting trade secrets and ensuring return on investment in training — are not persuasive, particularly in regard to low-wage workers, the attorneys general argue. Low-wage workers rarely, if ever, have access to trade secrets, are not intensively trained and are unable to freely negotiate their contracts.

“Noncompete agreements block low-wage workers from finding jobs that offer them better benefits and higher pay,” Washington DC Attorney General Karl Racine said. “We are urging the FTC to crack down on these harmful contracts that give too much power to employers and deny fair competition in our marketplaces.”

In addition to Maryland and Washington DC, attorneys general taking part in the effort represent California, Delaware, Hawaii, Illinois, Iowa, Maine, Massachusetts, Nevada, New Jersey, New Mexico, New York, Pennsylvania, Puerto Rico, Rhode Island, Virginia and Washington.

“Noncompete agreements are already unenforceable in California,” California Attorney General Xavier Becerra said. “It’s time for the federal government to catch up and help put an end to anticompetitive practices that depress wages and hurt consumers. Employers should look to attract workers through wages, benefits, and quality of work, not one-sided provisions that block access to better opportunities.”

Here is a link to their comments.