NAM Opposes FTC Ban on Noncompete Agreements
The NAM is opposing the Federal Trade Commission’s proposed ban on all noncompete agreements, pushing back on a move that would damage the manufacturing industry. We talked to NAM Vice President of Infrastructure, Innovation and Human Resources Policy Robyn Boerstling about the NAM’s reasoning on this crucial issue.
What noncompetes do: As Boerstling put it, manufacturers use noncompete agreements only for select workers handling their most sensitive information.
- That information might include the details of the company’s most sophisticated processes and strategies, which cannot be allowed to fall into competitors’ hands.
- Not only do these employees handle the keys to a company’s success, Boerstling added, but they are the recipients of significant investments in time, compensation and training.
The potential damage: Banning noncompetes would force companies to revamp their human capital operations completely, argued Boerstling.
- It would mean that trade secrets or other essential information might walk out the door and be exploited not only by competitors, but also by foreign adversaries.
- Manufacturers would be forced to put in place burdensome controls or silo parts of their operations from each other, which would result in less training for employees and less efficiency across various divisions.
- In a highly competitive industry—not to mention during significant economic uncertainty—that is a high price to pay, Boerstling pointed out.
Why not something else? Noncompete agreements are a critical tool for protecting manufacturers’ intellectual property, and alternatives like nondisclosure agreements are not sufficient, said Boerstling.
- In fact, in IP cases, courts look specifically at whether a company has employed noncompete agreements in deciding whether that company has taken reasonable steps to protect their property and processes.
FTC in the wrong: The FTC is wrong to put forth this blanket ban on a number of counts, said Boerstling.
- First, the rulemaking concerns an issue of “vast economic and political significance” that is beyond the scope of the FTC Act.
- Second, the regulation of these agreements has been handled successfully at the state level, a situation that works well for manufacturers.
- Third, the FTC is being too simplistic by striking at all noncompetes at once. Complex technical industries require noncompetes for good reason, as their sophisticated IP is the core of their business.
- Last, this ban is set to be retroactive, which is sure to cause confusion for both employers and employees.
What the NAM wants: The NAM objects to the FTC’s proposal in its current form and asks that it be withdrawn until the FTC can propose a more tailored approach that allows for sensible exemptions, said Boerstling.
Related
Manufacturers Unveil Competitiveness Agenda Ahead of Midterm Elections
“Competing to Win” offers a path for bringing the country together around policies, shared values and a unified purpose
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
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The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org
