The Federal Trade Commission (FTC) Chairman Andrew Ferguson sent letters to several large health care employers and staffing firms on Wednesday, suggesting they review employment contracts for any noncompete agreements that are overly broad or anticompetitive. According to Fierce Healthcare, the letters, which were sent to an undisclosed number of unnamed companies, were intended as a broad warning rather than a suggestion that the recipients had engaged in illegal conduct.
This comes after the FTC issued a final rule to promote competition by banning noncompetes nationwide, which has since been challenged in federal court. The FTC believes the ban will protect the fundamental freedom of workers to change jobs, increase innovation and foster new business formation.
“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” said FTC Chair Lina M. Khan. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”
As the blanket ban on noncompetes languishes in the courts, the FTC has put a new call for the public to guide its “case by case” enforcement of these harmful employer agreements. Stating their interest in better understanding the scope of current and recent noncompete agreements, the FTC is calling for employees, employers and “market participants in the health care sector in particular” to participate.
Meanwhile, the FTC continues to encourage health care employers who didn’t receive the letter to review their current agreements for compliance.
“If your company is currently using noncompetes that are unfair or anticompetitive under the FTC Act, I strongly encourage you to discontinue them immediately and to notify relevant employees of the discontinuance,” said FTC Chairman Andrew Ferguson.
As commissioners outline this new, narrower plan to address noncompetes on a case-by-case basis they argue that some of these employer restraints can “unjustifiably” limit worker movement, prevent the formation of new businesses, raise prices and reduce worker earnings.
“These concerns may be especially significant in health care markets, where noncompete agreements may limit employment options for nurses, physicians and other medical professionals and thereby restrict patients’ choices of who provides their medical care,” the FTC wrote. “These harms may be particularly acute in rural areas where medical services are already stretched thin.”
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