FTC Proposes Rule to Help PA Workers Trapped in Non-Competes
Thursday, April 20, 2023
The Federal Trade Commission has proposed a new rule which seeks to aid Pennsylvania workers who are stuck in noncompete agreements with low-paying jobs.
Under the proposed rule, workers would gain the freedom to move and join different employers within the same industry, maximizing their ability to earn.
Samuel Jones, regional director for Restaurant Opportunities Center United, said the issue affects people in Pennsylvania who border other states with higher minimum wages. He called it a cruel practice meant for employees in more advanced fields of work.
"I think that's the critical piece," Jones asserted. "Folks don't even know what a noncompete is, and they shouldn't be applicable to this type of position."
Some companies argued a noncompete clause is necessary to safeguard their intellectual property and prevent employees from disclosing trade secrets to competitors. However, it has been reported by the Federal Trade Commission the use of noncompete treaties has resulted in reducing an employee's income by 4%, denying them more than $250 billion in accumulated income.
Noncompete agreements affect nearly one in six workers, prohibiting them from working for competing businesses or pursuing entrepreneurship in their field. To prevent agreements holding back workers, the Restaurant Opportunities Center United is taking action by submitting more than 200 public comments to the FTC during its public comment period on the rule.
Teófilo Reyes, chief program officer for Restaurant Opportunities Centers United, shared what they are hearing from workers across the state.
"We have workers who complain that they've been prevented from starting their own business," Reyes reported. "We know workers who commented that they were just stuck in low-wage jobs and couldn't get hired into higher-wage jobs because of these noncompetes."
States such as California, North Dakota, Oklahoma and Washington, D.C., have already banned noncompete contracts with a few exceptions.
The FTC will review the comments it receives and may make changes, in a final rule, based on the information and on the commission's further analysis of the issue.
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