Retailers Disappointed in FTC Non-Compete Ban

The Retail Industry Leaders Association (RILA) issued the following statement in response to the Federal Trade Commission (FTC)’s vote to ban non-compete agreements:

“The FTC’s ban on non-compete agreements goes too far,” said Evan Armstrong, RILA vice president, workforce. “RILA members do not use non-compete clauses for front-line hourly workers. Retailers typically use non-compete clauses only for executives, senior business leaders, or highly skilled employees who have access to confidential business information and trade secrets. While retailers appreciate that the final rule carves out existing non-compete agreements for senior executives, banning existing non-competes for all employees that do not meet the narrow definition of “senior executive” and all future non-competes for all workers regardless of level is excessive and an over-reach for the FTC.”

The final rule will supersede state law and ignores the FTC’s traditional case-by-case evaluation of these agreements and eliminates their benefits to employees and employers.

RILA filed comments with the Federal Trade Commission (FTC) explaining that the proposed rule banning non-compete agreements is not appropriate under the regulatory authority of the FTC and does not reflect the realities of the retail industry. RILA’s comments also point out several constitutional concerns with the proposed rule.

“The ban is beyond the FTC’s legal authority. Congress has never delegated such immense power to the FTC to regulate the national economy through rulemaking,” said Kathleen McGuigan, RILA executive vice president & deputy general counsel.  “The FTC can evaluate anticompetitive conduct on a case-by-case basis, but this final rule clearly goes beyond the FTC’s current authority.”  
 

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RILA is a trade association of the world’s largest, most innovative, and recognizable retail companies and brands.  RILA members include more than two hundred retailers, product manufacturers, and service suppliers, who together employ over 42 million Americans and account for $2.7 trillion in annual sales and hundreds of thousands of stores, manufacturing facilities, and distribution centers domestically

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