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America June 5, 2024 5 mins read

Rep. Matt Gaetz Backs FTC in Fight Over Noncompete Clause Ban

America ı By Rochdi Rais

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Matt Gaetz FTC Noncompete Clause Ban

Rep. Matt Gaetz threw his support behind the Federal Trade Commission on Tuesday in a court battle over the agency's new rule banning employee noncompete clauses, arguing that Congress has repeatedly affirmed the commission's authority to make competition rules.

Gaetz, a Florida Republican who has praised the Biden administration's antitrust enforcement efforts, filed an amicus brief in Texas federal court supporting the FTC as it defends against a challenge of the rule from tax preparation company Ryan LLC and the U.S. Chamber of Commerce.

The brief argued that the rule barring the use of employment clauses preventing workers from moving to a competitor fits "squarely within" the statutory rulemaking authority granted by Congress to the commission over a century ago when it passed the FTC Act.

In a statement Tuesday, Gaetz said he believes noncompetes are a bipartisan issue and said his brief highlights that Congress thought hard about the role the FTC should play in helping "create a level playing field in the American economy."

"The FTC noncompete rule is a reasonable exercise of the FTC's delegated authorities and I believe it is helpful for American workers, such as those who were let go from their jobs due to workplace vaccine mandates and then doubly injured when they were prohibited from job hunting," Gaetz said.

While many Republicans still object to what they call a heavy governmental hand in regulatory enforcement, some prominent Republican lawmakers like Gaetz and Sen. J.D. Vance, R-Ohio, have praised the FTC for standing up to consolidation in big business and other antitrust issues.

In Tuesday's brief, Gaetz argued that the noncompete rule is the result of an "extensive economic and legal inquiry" into the harms caused by the clauses that included considering some 26,000 public comments. The brief also said the challenge of the rule is more than just an academic inquiry into the commission's authority because more than 30 million American workers are subject to noncompete clauses that reduce their wages by $30 billion each year.

"Just as our forebearers toward the end of the 19th century began to recognize that uncontrolled economic individualism had led to private restraints that tolerated neither individualism nor freedom, amicus similarly recognizes that noncompete agreements are often coercive private restraints masquerading as freedom of contract," the brief said.

The FTC voted 3-2 along party lines to implement the new rule on April 23, deeming the use of noncompete clauses in employment contracts an unfair method of competition and thus unenforceable. Set to take effect in September, the rule bars noncompetes moving forward and requires employers to tell current and former employees that existing agreements are no longer enforceable.

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Rochdi Rais
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Rochdi Rais

Rochdi Rais is the Fractional Head of Growth and financial and legal writer at USA Herald. He has been writing and editing financial, legal and U.S. news for years with over +4000 articles published during his career.

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