FTC Slates Workshop on Noncompete Clauses

By John Eggerton
published

The Federal Trade Commission is considering whether to put restrictions on noncompete clauses. 

Those are the clauses "that limit the ability of an employee to join or start a competing firm after a job separation," as the FTC explains. 

The clauses are fairly standard in on-air talent and other media contracts given the investment TV stations and networks make in cultivating that talent. 

The commission has scheduled a Jan. 9 workshop on "whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts."

Among the topics for discussion, according to the FTC, are:

  • "What impact do non-compete clauses have on labor market participants?
  • "What are the business justifications for non-compete clauses?
  • "Is state law insufficient to address harms associated with non-compete clauses?
  • "Do employers enforce non-compete agreements contained in standard employment contracts? How routine is such enforcement?
  • "Are there situations in which non-compete clauses constitute an unfair method of competition (UMC) or an unfair or deceptive act or practice (UDAP)? How prevalent are these situations?
  • "Should the FTC consider using its rulemaking authority to address the potential harms of non-compete clauses, applying either UMC or UDAP principles? What “gap” in existing state or federal law or regulation might such a rule fill? What should be the scope and terms of such a rule? What is the statutory authority for the Commission to promulgate a rule?
  • "Should the FTC consider using other tools besides rulemaking to address the potential harms of non-compete clauses, such as law enforcement, advocacy, or consumer/industry guidance?
  • "What additional economic research should be undertaken to evaluate the net effect of non-compete agreements? Should additional economic research on the empirical effects of non-compete agreements focus on a subset of the employee population? If so, which subset?"
John Eggerton
John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.