Senate Is Breathing On Chamber Of Commerce’s Neck Over FTC Suit‍

On Tuesday, two prominent senatorial Democrats challenged the largest business lobby group in the United States regarding its threat to sue the Federal Trade Commission over a proposal to outlaw noncompete provisions.

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The U.S. was contacted for specific information by Sens. Sheldon Whitehouse of Rhode Island and Elizabeth Warren of Massachusetts. announcing its intention to sue the FTC to stop the idea, the Chamber of Commerce. Over 3 million firms are represented by the enormous lobbying group.

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The letter from the senators to Chamber of Commerce CEO Suzanne Clark states: "The Chamber's description of noncompete agreements as a tool for 'fostering innovation and preserving competition' is demonstrably false, and represents exactly the kind of Washington insider doublespeak that big business has been using for years to justify anti-worker and anti-consumer policies.

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In a joint statement, Warren, a senator who sits on the Senate Banking Committee, and Whitehouse, a senator who sits on the Senate Finance and Budget committees, said that noncompete agreements are "legal contracts" that forbid employees from taking similar jobs with new employers or starting their own businesses.

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According to the FTC, noncompete provisions, which apply to 1 in 5 American workers, are illegal since they forbid employees from beginning employment with a rival company until a certain period of time has elapsed. The agreements, which are typically signed when employees begin a new employment at a company, have been dubbed exploitative by the agency.

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According to the FTC, the new regulation that prohibits businesses from enforcing noncompete provisions could raise pay for workers by $300 billion annually.

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At least ten states already forbid noncompete provisions. According to a 2021 study, a restriction in Oregon helped improve salaries for lower-paid workers by 2% to 3%.

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The Chamber, however, described the idea as "blatantly unconstitutional" in a statement issued immediately after the FTC made the proposal public in early January. According to the Chamber, Congress has not granted the agency the authority to implement the rule change.

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In January, Clark declared that the Chamber will file a lawsuit to challenge the planned policy. A few days later, the CEO of the Chamber reaffirmed her views in a Trade Algo op-ed.

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According to the Consumer Compliance Handbook, Section 5 of the FTC Act forbids "unfair or deceptive acts or practices in or affecting commerce" for anyone engaged in commerce, including banks. In the op-ed, Clark claimed that the FTC's intention to invoke Section 5 of the FTC Act to prohibit unfair methods of competition undermines its commitment to "preserving innovation in a free market."

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In their letter to Clark, Warren and Whitehouse disputed that assertion.

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The senators argued that the claim was ludicrous. These noncompete agreements only serve to impede competition among employers, job seekers, and entrepreneurs launching new ventures.

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The senators cited a November 2022 policy statement on Section 5 that outlines the FTC's authority over "coercive, exploitative, collusive, abusive, deceptive, predatory" conduct that extends beyond competition as justification for the agency's oversight.

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Additionally, Warren and Whitehouse argued that it would be beneficial for firms if noncompete agreements were outlawed. They claimed in their writing that the agreements lower salaries, halt market expansion, and force workers into poorer positions or out of the labor field altogether.

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Notwithstanding the Chamber's dire forecasts and vows to sue to repeal the statute, the senators argued that the proposed regulation by the FTC would benefit employees, small businesses, and the overall economy and that the agency had the legal authority to implement it.

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Warren and Whitehouse gave the Chamber until March 13 to explain why it decided to oppose the noncompete regulation, list any fundraisers that helped with that effort, and list which of its members had noncompete agreements in place.

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A request for comment from Trade Algo was not immediately answered by the US Chamber of Commerce.

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