Minnesota Attorney General Keith Ellison, along with 18 of his U.S. counterparts, has petitioned the Federal Trade Commission to start treating employment non-compete contracts as illegal when applied to lower-wage workers.
Ellison is the lead signatory on a Nov. 15 letter sent to FTC Chair Joseph Simons. Neighboring Wisconsin AG Joshua Kaul also signed the missive.
“Using non-competes, employers have bound a wide range of workers—including baristas, engineers, journalists, home health aides, physicians and sandwich makers—and deprived them of their freedom to use their labor as they choose,” the letter states.
About 30 million U.S. workers—one in five—currently is bound by a non-compete clause, the letter states. It asks the FTC for new rules classifying non-competes as illegal and unfair methods of competition for low-wage workers.
In an interview Thursday, Ellison said the effort is a continuation of his congressional attempt to ban anti-competitive “covenants” for fast-food and retail-chain workers. His 2018 bill would have treated covenants as violating federal antitrust law. But Ellison said he couldn’t even get it heard.
“I couldn’t get anywhere with my bill,” he said. He suggested that frustration was part for the reason he left office last year and ran for Minnesota attorney general.
“I saw some members of the attorney generals’ group suing over these matters involving Jimmy John’s and a few others,” Ellison said. “So I thought it would be great to be in a position to really go after some of these agreements that I really am opposed to, particularly for working people.”
Put simply, he said, non-competes suppress wages. In years past, Ellison said, if a fast-food restaurant wanted to retain a good employee, they’d offer a raise. Now many write contracts that block workers from finding better-paying jobs in the same industry.
“It’s just outrageous to me,” Ellison said. “It’s exactly opposite from what these free-market fundamentalists say we should be doing.”
There are better ways for businesses to protect themselves and recoup investments in worker training, Ellison says in the FTC letter. For instance, they can offer term contracts, which exchange job security for a pledge to remain on the job long enough to recoup training expenses.
Similarly, businesses can protect their trade secrets and intellectual property with non-disclosure agreements that don’t prohibit people from freely seeking exploring the job market, the letter says.
Urging the FTC to adopt new rules could prove more effective than what Ellison called the “whack-a-mole” approach of filing individual lawsuits. “We want a prophylactic rule that will apply to all workers,” he said.
Attorneys general in California, Delaware, the District of Columbia, Illinois, Iowa, Maine, Massachusetts, Maryland, Michigan, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington also signed the letter.
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