Federal Trade Commission Cracks Down On Non-Compete Agreements

In three separate actions and with a recent proposed rulemaking, the Federal Trade Commission (FTC) challenged the use and enforceability of non-compete agreements (NCAs). First, the FTC took action against three separate companies with regard to their use of NCAs. Generally, the FTC complained that the NCAs used were overly broad, applied to lower wage and unskilled workers, and were used in concentrated markets. The FTC labeled the applicable NCAs as "coercive and exploitative" and said that the NCAs "negatively affect competitive conditions." As for the basis of its legal authority, the FTC argues that NCAs are a "method of competition" pursuant to 15 USC § 45, subjecting them to FTC scrutiny.