Senators bash Chamber of Commerce over plan to sue FTC

Senate Democrats Elizabeth Warren and Sheldon Whitehouse took a hit at the Chamber of Commerce for its opposition of the Federal Trade Commission's (FTC) proposal to ban non-compete clauses.

The Chamber had previously threatened to sue the FTC should it go through with the proposal. However, that threat “represents exactly the type of ‘frivolous litigation’” that the Chamber claims to oppose, they said.

“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,” they said.

Pushing through with their threat would mean that the Chamber owe its member companies – and those members’ customers and workers – “an explanation for undermining” the Chamber’s stated values by “opposing this business-, worker-, and consumer-friendly policy”.

The FTC proposed the new rule that would ban employers from imposing non-compete clauses on their employees back in January. This could increase workers’ wages by $300 billion a year, according to the FTC.

The proposed rule essentially prohibits all non-compete agreements except those entered as part of the sale of a business and requires employers to rescind all non-compete agreements currently in place, and to do so within 180 days of the date of the final rule publication.

However, in an op-ed posted on the Wall Street Journal, Suzanne P. Clark, Chamber president, said the FTC’s intent to trigger Section 5 of the FTC Act to ban unfair methods of competition undermines its commitment to “preserving innovation in a free market,” reported CBS. 

Section 5 prohibits ″unfair or deceptive acts or practices in or affecting commerce″⁣ for everyone engaged in commerce.

“This assertion is absurd,” said Warren and Whitehouse.

“These noncompetes do nothing but stifle competition for workers, businesses seeking to hire them, and entrepreneurs starting their own businesses. They depress competition, and make our economy less innovative and dynamic.”

This is backed up by the Federal Reserve Bank of Minneapolis, they said, which found that “non-compete contracts limit our economy’s potential” by making it more difficult for employers and entrepreneurs to recruit new workers or start new businesses.

Questions

Now, the senators are requesting the Chamber to answer to the following questions no later than March 13, 2023:

1. How did the Chamber determine that it would oppose the non-compete rule, and that it would sue to stop it?

a. Does this opposition represent the view of each of your member companies?

b. Specifically, does it represent the views of your small business members?

2. Which Chamber members have donated to the Chamber’s efforts to challenge this rule?

a. Please provide a list of all corporations participating in this effort and the amount of money pledged from each.

3. Does the Chamber provide any guidance for member organizations regarding the use of abusive or unenforceable noncompete agreements?

4. Which of the Chamber of Commerce’s large corporate members use non-compete agreements?

5. How many of the Chamber’s small business members use such agreements?

“The Chamber owes its member organizations, and the American public, an explanation for its intention to oppose this rule and defend a deeply exploitative and unfair method of competition that harms workers and businesses,” they said in the letter to Clark.