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Chairman Williams, Meuser, Ellzey, and Bean Pen Letter to FTC Regarding New Rule Surrounding Non-Compete Clauses

WASHINGTON, D.C. – Today, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, along with Reps. Meuser (R-PA), Ellzey (R-TX), and Bean (R-FL), wrote to Federal Trade Commission (FTC) Chair Lina Khan regarding a new proposed rule from the FTC that would ban non-compete clauses in employment contracts. Chairman Williams issued the following statement.

“Time and time again, this Administration has failed to consider Main Street’s best interests when imposing new rules and regulations,” said Chairman Williams. “This proposed rule from the FTC will stifle the innovation coming from our entrepreneurs. Without non-compete clauses, large corporations can easily poach talent away from trailblazing small businesses. I am eager to hear from Chair Khan, and I hope she rescinds this rule that will harm Main Street.”


Read the full letter here.

Read excerpts from the letter below:

“The House Committee on Small Business (Committee) writes to inquire about the Federal Trade Commission’s (FTC) notice of proposed rulemaking on the Non-Compete Clause Rule. The proposed rule would ban the use of non-compete clauses in employment contracts. This rule would impose significant costs on small businesses and pose a serious risk of loss and potential closures. It appears that the FTC may not have properly considered small entities during this rulemaking process.

“The Committee is concerned that the FTC underestimated the costs and impact of this proposed rule on small businesses when certifying this rule will not have a significant economic impact on a substantial number of small entities. The FTC estimates that 2.94 million small firms will be impacted by the proposed rule, but maintains the costs are limited to updating contractual practices—only costing small businesses between $317.88 to $563.84 per entity. As the Small Business Administration’s Office of Advocacy noted, the FTC has ignored significant implications for small businesses—failing to include the costs of hiring additional legal resources or hiring and retaining additional workers.

“Small businesses—producing 16.5 times more patents than large companies—drive American innovation. Banning non-compete agreements, which drive ingenuity by safeguarding competitive information such as client lists, training techniques, or intellectual property, could make it more challenging for small businesses to prevent their workers from being poached by large corporations with more resources.”