Attorney General Ellison leads fight to classify non-compete clauses as unfair and illegal
Abusive non-compete clauses currently prevent 30 million Americans — especially low-income ones — from getting better jobs, pursuing higher ambitions, and leaving hostile or unsafe work environments
November 18, 2019 (SAINT PAUL) — Minnesota Attorney General Keith Ellison has led a coalition of 19 state attorneys general in encouraging the Federal Trade Commission (FTC) to start rulemaking to classify non-compete clauses in employment contracts as an unfair method of competition and per se illegal for low-wage workers. In the letter to the FTC, Attorney General Ellison and the coalition highlight the damage these clauses do to workers, other businesses, and the economy.
“Non-compete clauses are another way the economy is stacked against people just trying to afford their lives — especially low-income workers,” Attorney General Ellison said. “There’s no good reason a barista, home-health aide, or a sandwich-maker shouldn’t be able to change jobs and employers whenever it makes sense for them to. Non-compete clauses keep them from doing that and keep wages down for abusive employers and entire industries that take advantage of workers.
“They also other hurt businesses trying to compete fairly in the market and hurt the economy at large by holding back innovation. I led this coalition of attorneys general to ask the federal government to start taking steps to put an end to this abusive practice,” Attorney General Ellison concluded.
About 30 million Americans — one in five workers — are currently restricted by non-compete clauses. Non-compete clauses in employment contracts prevent workers in many sectors of the economy from getting better jobs, starting their own businesses, and leaving hostile or unsafe work environments. By stifling mobility, they also depress wages. Employers who use these clauses often claim they need them to protect their interests, but there are many other ways they can do so that are less harmful to their employees and to other businesses. This can include by using intellectual-property law, nondisclosure agreements, or simply by making their workplace an environment where workers want to stay.
In the letter, the attorneys general ask the FTC to use its rulemaking authority to limit the use of non-compete clauses because the FTC is in the best position to curb the practice nationwide and to make sure that every worker and business throughout the country are protected from the abusive use of non-compete clauses. A rulemaking preventing the use of such clauses will curb a pervasive, noncompetitive practice and encourage all employers to retain workers by becoming a better place to work — not by threatening the worker or a new employer with a lawsuit.
Signing the letter that Attorney General Ellison led are attorneys general of California, Delaware, the District of Columbia, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.
A copy of the letter is available on Attorney General Ellison’s website.