July 28, 2020

Warren and Murphy Urge FTC to Protect Workers By Restricting Non-Compete Agreements During the COVID-19 Pandemic

In a historically weak labor market, non-compete agreements leave millions of workers who have lost jobs unable to seek employment elsewhere FTC should issue a Commission Rule to restrict non-compete agreements and reduce obstacles facing millions of struggling Americans

Text of Letter (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Chris Murphy (D-Conn.) sent a letter to Federal Trade Commission (FTC) Chairman Joseph Simons urging the FTC to take immediate action to protect workers suffering undue harm from the imposition and enforcement of employers' non-compete agreements during the coronavirus disease 2019 (COVID-19) pandemic, and to finalize a rule the FTC discussed earlier this year that would restrict these agreements, protecting workers and helping foster competition. 

These non-compete clauses are restrictive covenants imposed by employers on workers, and unfairly limit workers' ability to find new employment. They are rarely the result of meaningful negotiation between employer and employee and have severe negative impacts on workers: they limit competition in the labor market; reduce the ability of workers to seek quality employment; reduce job mobility; and make it harder to start, grow, and recruit for start-ups by imposing restrictions on potential entrepreneurs and employees. The COVID-19 pandemic has exacerbated the problems created by non-compete agreements.

The FTC discussed imposing limits on non-compete agreements earlier this year, but since the passage of a March 11 deadline for comments, has taken no action on a rule.

"In this historically weak labor market, non-compete agreements become even more poisonous, leaving millions of workers who have lost jobs due to the pandemic unable to seek employment elsewhere, and potentially unable to start their own company after the crisis subsides. Fortunately, having held a workshop and completed a period for public comment, the FTC is well-positioned to issue a Commission Rule to reduce these obstacles facing millions of struggling Americans," the senators wrote. 

Non-compete agreements give employers undue power in the employer-employee relationship, allowing them to cut wages, decrease benefits, or subject workers to inhospitable environments without fear of their employees leaving for a competitor.

"The threat of non-compete agreements both during and after the economic crisis precipitated by the COVID-19 pandemic has put millions of workers in an untenable position. We urge the FTC to immediately move forward with its Commission Rule to restrict non-compete agreements, and we ask that the agency pursue emergency action to limit the enforcement of non-compete agreements during and after the COVID-19 public health emergency," the senators wrote. 

Senators Warren and Murphy have requested a response no later than August 4, 2020.

In March 2019, Senator Warren joined a bipartisan call for an investigation into non-compete agreements. In April 2018, along with Senators Chris Murphy (D-Conn.) and Ron Wyden (D-Ore.), Senator Warren introduced the Workforce Mobility Act, which would prohibit the use of non-compete agreements. Senator Warren's other work to increase labor market competition and lower barriers to Americans' access to good jobs includes introducing the End Employer Collusion Act with Senator Cory Booker (D-N.J.), which would prohibit no-poach agreements among employers.