WASHINGTON, D.C. (April 24, 2023) – Littler’s Workplace Policy Institute® (WPI™), the government affairs and advocacy arm of Littler, the world’s largest employment and labor law practice representing management, filed extensive commentary on the Federal Trade Commission (FTC)’s proposed rule to ban virtually all non-compete agreements. The comment period closed on April 19, 2023.
In its comments, WPI gives a voice to the employers who would see significant changes to their workplaces and business strategies if the millions of contracts they have in place with employees were invalidated. WPI calls for the FTC to abandon the proposed rule and provides a detailed analysis in arguing that the agency lacks the legal authority to promulgate such a rule and that the proposed rule is unlawfully broad, relies upon research that has significant shortcomings and violates the Administrative Procedure Act.
“The FTC’s proposed rule is fundamentally flawed,” said James A. Paretti, Jr., Littler shareholder and member of WPI. “It is at best a solution in search of a problem and would upset centuries of precedent under federal and state law. As zealous advocates of the employer community, we urge the Commission to withdraw the rule.”
On behalf of both large and small employers, WPI articulates why the proposal is unworkable as a practical matter. This includes its failure to distinguish among different categories of workers and non-compete agreements; the vague and overly broad functional test it would apply to confidentiality, non-solicit, and other agreements; and its fundamental failure to demonstrate how the current system of state-based regulation of non-competes is insufficient.
“This rule would represent a sea change in the restrictive covenant landscape,” said Michael J. Lotito, Littler shareholder and co-chair of WPI. “In addition to generally being faulty, both legally and practically, the implementation of this rule would put small businesses, who most benefit from non-compete agreements, at a major disadvantage.”
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