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Bloomberg: Labor Groups Petition U.S. FTC to Ban Non-Compete Clauses

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The U.S. Federal Trade Commission finds itself under increasing pressure to ban non-compete clauses, with unions, advocacy groups and politicians complaining that the agreements hobble workers’ rights and fair competition.

The AFL-CIO, the Service Employees International Union, and Public Citizen, among other organizations, are urging the agency — in a petition — to issue a new rule prohibiting employers across industries from requiring that their workers sign agreements limiting them from going to work for a competitor.

The petition, which was spearheaded by the Washington-based antitrust advocacy group Open Markets Institute, cites estimates that one out of every five U.S. workers — or about 30 million — is bound by such an agreement. The non-compete agreements suppress employees’ ability to negotiate for raises, escape from unsafe or discriminatory workplaces, or start competing businesses of their own, according to the petition, which is being filed Wednesday.

“Many workers are signing on the dotted line and not really reading the fine print, because it’s not really up for negotiation anyway,” said Wayne State University law professor Sanjukta Paul, who is among a group of scholars that also signed the petition.

The petition named companies such as Amazon.com Inc., which it said required temporary warehouse workers to agree to broad non-compete clauses and fast-food chain Jimmy John’s Franchise LLC, which restricted new hires from working for any competing restaurant within three miles.

Senators Weigh In

The FTC, which has a mandate to enforce antitrust and consumer protection laws, should declare worker non-compete clauses to be an unfair method of competition and classify them as illegal under the FTC Act, the groups said in the petition. That would make companies that violate the rule liable and subject to FTC enforcement.

On Wednesday, seven Democratic U.S. senators are sending a letter to FTC Chairman Joseph Simons asking the agency to use its tools, including rule making, “to combat the scourge of non-compete clauses rigging our economy against workers.”

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In America today, wealth and political power are more concentrated than at any point in our country’s history.

The Open Markets Institute, formerly the Open Markets program at New America, was founded to protect liberty and democracy from these extreme -- and growing -- concentrations of private power.

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