Organizations representing advertisers, tech companies, broadcasters and other businesses registered their opposition to a Federal Trade Commission proposal to ban noncompete agreements, which prevent people who leave a job from working for their former employer's competitors.
“We strongly oppose the proposal because noncompetes serve vital business and employee interests and because the FTC lacks legal authority to issue the proposed rule,” the Association of National Advertisers, NetChoice, Chamber of Commerce and dozens of other business groups say in comments filed this week with the agency.
Their filing comes in response to a proposal by the FTC to declare the use of noncompetes an unfair business practice.
Chair Lina Khan argued in a recent essay in The New York Times that noncompetes drive down salaries, and make markets less competitive. “If employers know their workers can’t leave, they have less incentive to offer competitive pay and benefits, which puts downward pressure on wages for everyone,” she wrote.
“Rather than encouraging dynamism and new ideas, they can enable stale incumbents to lock out new rivals,” Khan added.
The business organizations counter that noncompete agreements “encourage investment in employees and help to protect intellectual property.”
The opponents add that the agreements are often a component of contracts that result in higher compensation to employees.
The National Association of Broadcasters also weighed in the proposal, arguing in a separate filing that a ban on noncompetes should include exceptions for on-air employees like news anchors, as well senior executives and some sales staff.
“Non-compete provisions are a critical tool broadcasters employ to permit them to invest substantially in on-air talent for news, sports, weather, and other programming,” the organization writes.
“Broadcasters heavily promote their on-air talent, both in broadcast advertisements and in other media, such as billboards, signs, and social media,” the broadcasters organization adds. “These investments are not only essential to developing a broadcaster’s brand in this highly competitive environment, but they also benefit the employee by raising their profile and generating substantial goodwill in the market.”