Both Parties Can Make Needed Government Regulation Even Better

The Federal Trade Commission is proposing a new rule that would end so-called “no compete clauses” embedded in millions of workers' employment contracts.

These clauses were always problematic. They intentionally restricted competition and directly harmed workers' rights. Worse, they began to appear in work contracts for low-wage jobs. According to the Minneapolis Fed, this worked to lower already low wages.

Some states have taken action to mitigate or ban non-compete clauses for all workers, but the FTC's proposed regulatory ban would take on non-competes nationwide.

Is a regulatory approach the right one? The R Street Institute's Eli Lehrer thinks the much better path is through legislation…not FTC decree. Not only could a future administration undo a regulatory ban, but there's also likely to be a long court fight over whether the FTC has the power to issue such a rule at all:

At a minimum, given that recent Supreme Court decisions have sharply limited the ability of unelected regulators to issue new policies with the effect of major laws, courts will take these challenges seriously.

The way around this? Get Congress to act:

A ban on non-competes has bipartisan support. Sens. Chris Murphy (D-Conn.) and Todd Young (R-Ind.), and Reps. Scott Peters (D-Calif.) and Mike Gallagher (R-Wis.) have introduced legislation. Therefore, it's something that Congress could end up passing even on a riven political landscape. It would also allow more voices from across the political and economic spectrum, through their representatives, to contribute to the dialogue and legislation. And a statute would offer degrees of democratic consent, certainty, stability and sensitivity that a mere rule lacks.

Perhaps, though bills introduced in the last Congress that would have banned non-compete clauses failed to go anywhere.

Maybe the FTC proposal will revive and give real substance to new legislation. If not…then a rule might be the only way, at least in the near term, to end non-competes, and let workers take more control of their labor, time and talent.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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