AZ Small Biz Advocates Warn Against FTC’s Harmful Noncompete Proposal

February 7, 2023 Last Edit: May 8, 2025

‘Despite the FTC’s cavalier attitude, the need to protect intellectual property is real’

AZ Small Biz Advocates Warn Against FTC’s Harmful Noncompete Proposal

PHOENIX (Feb. 7, 2023) – The Federal Trade Commission’s (FTC) new proposal on noncompete clauses is “harmful to intellectual property, employee retention, and investment,” writes NFIB State Director Chad Heinrich and Arizona Chamber of Commerce President and CEO Danny Seiden. In an op-ed for the Phoenix Business Journal, the small business advocates argued that the FTC’s proposal would not only undermine intellectual property protections businesses rely upon, but federalism itself.

CLICK HERE to read the full op-ed. Excerpts are below.

“We believe employers and workers should be able to enter contracts that include noncompete clauses. These agreements protect intellectual property or other confidential information that could cause economic and sometimes reputational harm if it fell into the wrong hands. […] “Not everyone agrees with us. […] It’s a legitimate debate and one we’re happy to have. But where should this debate take place: at the state Capitol where the legislative process adheres to a set of rules and norms, or inside a Beltway bureaucracy where appointed officials can seemingly make up the rules as they go along? Based on a Notice of Proposed Rulemaking it issued in January, the Federal Trade Commission would say the latter. […] “The proposed rule stretches the agency’s mission to the point of absurdity and seeks to unilaterally reinterpret the section of the Federal Trade Commission Act on ‘unfair methods of competition,’ never mind what the pesky legislative branch or the 50 states might have to say on the subject. […] “Despite the FTC’s cavalier attitude, the need to protect intellectual property is real. It’s the stuff that differentiates a business from its competitors, that gives it a leg up in the marketplace, and that creates value for customers. […] “[T]he FTC’s tromping into an area of policymaking that should be left to the states, which aren’t subjects in the kingdom of Washington, D.C. Let Arizona be Arizona and let California be California. We’re more than willing to argue our case in front of our elected state legislators and governor, and we’re certain our opponents are just as willing to do the same. […] “Our organizations will file public comments providing an Arizona perspective on why this proposal is so harmful to intellectual property, employee retention, and investment, and we hope the Arizona congressional delegation will voice its displeasure to the Biden administration and FTC.“

CLICK HERE to read the full op-ed.

Background: The FTC issued a notice of Proposed Rulemaking in January that would prevent “employers from entering into noncompete clauses with workers and requiring employers to rescind existing noncompete clauses.” That means “an employer that entered into a noncompete clause with a worker prior to the compliance date must rescind the noncompete clause no later than the compliance date.” Furthermore, the rule would “supersede any state statute, regulation, order, or interpretation,” undermining state laws on the subject.

Topics:

Competition

State:

Arizona

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