ASA Comments on FTC Non-Compete Clause Rule

ASA, along with the Small Business Legislative Council (SBLC), offered comments to the Federal Trade Commission (FTC)’s proposed non-compete clause rule.  ASA and the SBLC understood the motivations behind the FTC’s decision to issue the proposed rule.  However, we have serious concerns about the impact that the proposed rule would have on America’s small businesses, in particular their continued ability to protect their confidential information and business relationships and, in turn, their willingness to recruit and trust new high level talent. To implement a total ban on non-competes would be to overlook the fact that, when used with specific types of employees, including those whose job it is to develop business relationships or confidential information or trade secrets, narrowly tailored non-competes play a legitimate role in preventing unfair competition and encourage businesses to invest in their employees and take a chance on new hires.  For these reasons, we urged the FTC to reconsider issuing any new rules in this area. To the extent that a new final rule is to be issued, it should be reasonably tailored to permit the continued use of appropriately drafted non-competes with certain groups of employees. Further, any such rule should provide clarity as to businesses’ continued ability to use other types of agreements – such as non-disclosure and non-solicitation agreements – to protect their interests with respect to those employees for whom non-competes will no longer be permitted.