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MI AG Nessel Encourages FTC to Curb Abusive Non-compete Clauses

LANSING – Michigan Attorney General Dana Nessel and 18 other Attorneys General submitted a letter to the Federal Trade Commission late last month to encourage the commission to limit the use of abusive non-compete clauses in employment contracts. These clauses continue to negatively impact low-income laborers while limiting job mobility and opportunities for advancement for all affected laborers.

“Nearly 12 percent of all workers with an annual income of $40,000 or less and no college degree are bound by a non-compete clause which limits their professional growth and fosters an anticompetitive approach to business,” said Nessel. “We are calling on the FTC to do the right thing and take action on these clauses that have negatively impacted Michigan’s workforce and unfairly burdened workers with little to no bargaining power.”

Non-compete clauses in employment contracts prevent workers in many industries from moving from one business to another, or from starting their own business. Due to a non-compete agreement, for example, a barista – employed by a big chain coffee shop – could be barred from leaving to work at a local artisan shop where the schedule and/or management is better.

An estimated one in every five workers — 30 million Americans — are currently restricted by non-compete clauses. Employers use these clauses instead of less harmful ways to protect their interests such as nondisclosure agreements, better compensation and benefits for employees or simply creating a workplace environment where workers want to stay.

In their letter, the Attorneys General assert that by taking action and using its rulemaking authority, the FTC would curb a pervasive, non-competitive practice and encourage all employers to retain workers by becoming better places to work—instead of using scare tactics.

Nessel joins the Attorneys General of California, Delaware, the District of Columbia, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin in submitting these comments.

A copy of the letter is available here.