The FTC's controversial proposal to ban all forms of noncompete agreements in employment agreements will not only meet with strong criticism, but it may also have serious adverse economic effects. According to the former Secretary of Labor, the rule would preempt laws in 47 states that currently allow some form of noncompete agreements. More importantly, the FTC's own evaluation of the potential effects of the ban include discouraging worker job training programs and at best delivering an increase of less than 3% in hourly workers wages while freeing up CEOs and other top executives to receive perhaps more than 9% compensation increases. Further, the ban would endanger capital investment by increasing the risk that trade secrets, expertise and competitive power would more readily move from company to company.
Did Congress ever intend for the FTC to regulate employment or to propose new laws (as opposed to enforcing a specific set of laws passed by Congress that regulate competition)? There is no support for such an intent in the legislative history, past FTC practice or Supreme Court case law.
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