MSCI Asks FTC To Delay Noncompete Rule Implementation
The Metals Service Center Institute (MSCI) has joined the U.S. Chamber of Commerce and dozens of other organizations from across the United States in sending a letter to members of the Federal Trade Commission (FTC) asking that they delay the effective date for the commission’s new regulation regarding noncompete agreements. The rule is being challenged in court, and MSCI and its allies argued a delay is necessary to allow that lawsuit to be heard.
As Connecting the Dots readers are aware, in April 2024, the FTC voted 3-2 to approve this regulation, which bans nearly all new noncompete agreements, or provisions in contracts that prohibit workers from pursuing certain employment after their term of service with an employer ends. In addition to barring companies from using these provisions in the future, the regulation requires that employers throw out existing noncompete agreements and then notify current and former workers that those previous contracts will not be enforced. The rule does not apply to existing agreements with executives who earn more than $151,164 annually and who are in policymaking positions, and it does not apply to nonprofit organizations.
The regulation also exempts:
- Relationships between franchisors and franchisees;
- Non-compete clauses entered into as a result of a bona fide sale of a business entity or, substantially, of all of a business’s assets; and
- Agreements where a cause of action already has accrued.
“Although the noncompete rule’s legal fate remains in question, it is already imposing significant costs and uncertainty on the U.S. economy,” MSCI and its allies argued. “Businesses are identifying existing noncompetes and notifying employees and former employees that their noncompetes may no longer be enforceable. Companies are incurring substantial legal costs as they explore other tools to attempt to protect their investments, and workers are losing training opportunities and bargaining power to negotiate compensation.”
Click here to read the full letter and stay tuned to Connecting the Dots as this story develops.