ABC Denounces FTC’s Blanket Ban on Noncompete Clauses

WASHINGTON, April 23-Associated Builders and Contractors today issued the following statement opposing the Federal Trade Commission's final rule to ban noncompete clauses. The FTC voted3-2 to issue the final rule today.

"The final rule to ban all noncompete agreements nationwide-except existing noncompetes for senior executives-is a radical departure from hundreds of years of legal precedent," said Ben Brubeck, ABC vice president of regulatory, legal and state affairs. "Ultimately, this vastly overbroad rule will invalidate millions of reasonable contracts-including construction project contracts-around the country that are beneficial for both businesses and employees."

As ABC argued in its comments submitted April 19, 2023, in opposition to the FTC's unprecedented proposal to ban noncompete agreements:

• The FTC lacks the statutory and constitutional authority to issue this rulemaking
• Noncompete agreements are appropriately regulated at the state level
• The proposed rule violates the Administrative Procedure Act
• A blanket ban on noncompete agreements will harm the construction industry overall, especially small businesses

ABC members have valid business justifications for utilizing noncompete agreements, such as protecting confidential information and intellectual property. This new rule will have a harmful effect on their companies as well as their employees, forcing companies to rework their compensation and talent strategies.

ABC joined the U.S. Chamber of Commerce and 280 business groups in submitting comments urging the FTC to rescind the proposed rule on April 17, 2023.