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The Federal Trade Commission issued an ICBA-opposed final rule prohibiting companies from enforcing noncompete agreements.
Application: The rule exempts banks but applies to bank holding companies, affiliates, and subsidiaries. Further, the FDIC may choose to apply the FTC Act to banks.
Joint Letter: ICBA and other groups expressed opposition to the rule. In a joint letter last year, the groups said:
Noncompetes serve vital business and employee interests by encouraging investment in employees and helping to protect intellectual property.
The FTC’s own economist said noncompetes allow firms to reduce recruitment and training costs, offer higher wages to new employees, and promote innovation.
The FTC lacks the statutory authority to issue the rule because the FTC Act does not authorize the agency to adopt generally applicable substantive rules defining unfair methods of competition.