April 24, 2023

MSCI Joins Comment Letter Asking FTC To Abandon Proposed Non-Compete Rule

As readers are well aware, the Federal Trade Commission (FTC) has proposed a rule to ban non-compete agreements for all employees and independent contractors. Under the proposed regulation, there would be no exceptions except in cases between a buyer and seller of a business.

The Metals Service Center Institute (MSCI) opposes this rule and on April 17 joined a comment letter to the FTC with the U.S. Chamber of Commerce and nearly 300 other organizations from 45 states outlining why the FTC should abandon this proposed rule. As the letter explained, non-compete agreements serve vital business and employee interests and also serve pro-competitive interests.

The letter also noted:

  • Employers rely on non-compete agreements to protect investments in their workforce and their intellectual property;
  • Employees often receive additional compensation in exchange for agreeing to a non-compete;
  • The FTC lacks the statutory authority to issue the proposed rule or any other competition rule; and
  • Without express authorization from Congress, the FTC also lacks the constitutional authority to promulgate such a rule.

It is likely the industrial metals community would be adversely affected by the new rule if it were to go into effect. According to a new survey by the National Association of Manufacturers (NAM):

  • Approximately 70 percent of manufacturers use non-compete agreements;
  • As proposed, 66 percent of manufacturers think the ban would cause a disruption to their operations;
  • The majority of manufacturers, about 89 percent, told NAM they use non-compete agreements that last from six months to two years; and
  • Approximately half of manufacturers polled said a ban would have a negative impact on their investment in training and related programs.

Stay tuned to Connecting the Dots for additional news as the FTC reviews the public comments on the proposed rule and determines its next step.

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