Attorneys general from 17 states and the District of Columbia issued a letter in support of the Federal Trade Commission’s proposed new rule to ban noncompete clauses in employment contracts. Michigan Attorney General Dana Nessel commented that these “post-employment restrictions… have an adverse effect on workers, especially low-wage workers and those who are part of the ‘gig economy’ and tend to change jobs often.”
Noncompetes are agreements that prohibit employees from working for a competitor company after they have left their current employment. The proposed rule has raised concern among some in the staffing industry, but the attorneys general argue that it will benefit workers, especially low- and middle-wage workers. In addition, the letter stated that research has found that bans on noncompetes have resulted in gains in wages and job mobility, greater gender and racial equality, and increased entrepreneurship, particularly among women. Noncompetes also restrict entry into the healthcare industry, inflating prices and decreasing wages, the letter said.
As enforcement of noncompetes varies by state, the attorneys general representing states that do and don’t enforce noncompete agreements argued that the proposed national rule would allow for greater competition and fairness in
