February 27, 2023

How Could The FTC’s Non-Compete Rule Affect The Metals Industry?

As Connecting the Dots reported earlier this year, the Federal Trade Commission (FTC) has proposed a new rule that, if implemented, would ban non-compete agreements for all employees and independent contractors with no exceptions except in cases between a buyer and seller of a business.

How could this proposed regulation affect the metals and broader manufacturing industry?

While supporters may argue it will enable workers to move from company to company more easily, according to IndustryWeek report, the proposal probably will “do little to free up new workers in manufacturing since non-compete clauses for manufacturing workers are often highly specialized to certain industries” and broader agreements generally have been considered either unenforceable or difficult to enforce since the premise is that an employee “always has the right to work.”

At the same time, the National Association of Manufacturers and the U.S. Chamber of Commerce have argued the FTC lacks the statutory authority to regulate non-compete agreements and its proposed regulation will have a significant negative impact on U.S. workers and the nation’s economy.

As such, MSCI already has joined other business organizations to send a letter, available here, to the FTC requesting an extension to the FTC’s comment period for the proposed regulation. As reminder, the FTC’s proposed rule 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 U.S. Chamber of Commerce has more information on this rule here and here.

Interested in making your voice heard on this matter? Click here to learn how to submit a comment letter to the FTC. The deadline is March 20, 2023.

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