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noncompete clauses
Trump-Appointed Judge Strikes Down FTC Ban on Noncompete Agreements
"Thirty million workers who were trapped by these agreements will now stay trapped thanks to this ruling," an expert said.
Aug 21, 2024
A U.S. District Court judge in Texas on Tuesday struck down a Federal Trade Commission ban on noncompete agreements that was set to go into effect nationwide in September, drawing condemnation from workers' rights advocates who supported the ban.
Judge Ada Brown, who was appointed to the federal bench by then-President Donald Trump in 2019, ruled that the FTC didn't have the authority to issue substantive rules such as the noncompete ban, which was issued following a 3-2 vote of the agency's commissioners in April.
Noncompetes bar workers from getting jobs with competitors or leaving to start their own company. Commissioners in the majority, including FTC Chair Lina Khan, said the agreements suppress wages, stifle entrepreneurship, and distort labor markets. Advocates have long argued that the agreements are anti-worker.
The FTC has estimated that 30 million U.S. workers are subject to noncompete agreements. Had the rule gone into effect—voiding most existing agreements and prohibiting new ones—workers would have collectively increased their earnings by hundreds of billions of dollars over the next decade, the agency said.
"We are disappointed by Judge Brown's decision and will keep fighting to stop noncompetes that restrict the economic liberty of hardworking Americans, hamper economic growth, limit innovation, and depress wages," Victoria Graham, an FTC spokesperson, told The Washington Post.
Bharat Ramamurti, a former deputy director of the National Economic Council who's now a senior adviser at the American Economic Liberties Project (AELP), an anti-monopoly advocacy group, said on social media that "30 million workers who were trapped by these agreements will now stay trapped thanks to this ruling."
30 million workers who were trapped by these agreements will now stay trapped thanks to this ruling. The FTC estimated that banning noncompetes would empower workers and raise wages by nearly $200 billion over the next decade, which is why big business lobbyists fought it. https://t.co/G79l9l5UWs
— Bharat Ramamurti (@BharatRamamurti) August 20, 2024
Ryan LLC, a tax services firm based in Dallas, sued to block the FTC regulation as soon as it was issued in April. The U.S. Chamber of Commerce and the Business Roundtable later joined the case, which is in a jurisdiction friendly to their interests. If the case is appealed, which Graham said the FTC is "seriously considering," it would go to the U.S. Court of Appeals for the 5th Circuit—the most right-wing, pro-business appeals court in the country.
Tuesday's ruling, though momentous, didn't come as a surprise. Judge Brown signaled her intent to side with the plaintiffs last month when she partially blocked the FTC rule and placed a temporary injunction on it.
Similar cases involving the FTC noncompete ban have recently appeared in federal courts in Florida and Pennsylvania, with different and less consequential outcomes, raising the possibility that the matter will be taken up by the U.S. Supreme Court.
The Supreme Court's right-wing majority would make a ruling favorable to the FTC unlikely, so congressional action could be necessary to institute a ban on noncompete clauses, experts say.
Banning noncompetes is popular among the general public and has some bipartisan support, with a number of prominent Republicans having come out in favor of a ban or narrower reforms, such as prohibiting such agreements for low-wage workers.
Khan, an antitrust leader beloved of progressives, received 21 confirmation votes from Republicans in 2021, and parts of her agenda are supported by the GOP.
Khan is far from universally loved among Democrats. She's recently been the target of Democratic megadonors such as LinkedIn founder Reid Hoffman, who's pushed Vice President Kamala Harris, the Democratic presidential nominee, to sack Khan if elected. However, even Hoffman has indicated support for the noncompete ban.
HuffPost reporter Daniel Marans on Saturday wrote that the noncompete ban was "Khan's most ambitious initiative" and cited expert opinion that even if the rule didn't hold up, it was part of a broader push that could ultimately lead to reform.
"Even if the FTC rule is overturned, there are still many other efforts afoot to undermine the use of these agreements," Lee Hepner, senior legal counsel at AELP, told Marans. "It's a multi-pronged strategy."
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Trump Judge Partially Blocks FTC Ban on Anti-Worker Noncompete Clauses
"We will keep fighting to free hardworking Americans from unlawful noncompetes," the agency said in response to the decision.
Jul 04, 2024
A Trump-appointed federal judge on Wednesday partially blocked a Federal Trade Commission rule banning most noncompete clauses, ubiquitous anti-worker agreements that prevent employees from moving to or starting their own competing businesses.
Judge Ada Brown of the U.S. District Court for the Northern District of Texas issued a preliminary ruling preventing the ban from taking effect against the handful of plaintiffs that sued the FTC over the rule mere hours after it was finalized in April. The plaintiffs include the tax service firm Ryan LLC and the U.S. Chamber of Commerce, the nation's largest corporate lobbying organization.
Researchers at the Revolving Door Project noted Wednesday that Ryan LLC was "represented by [former President Donald] Trump's Labor Secretary, Eugene Scalia, via BigLaw firm Gibson Dunn."
Watchdogs accused the U.S. Chamber, which celebrated Wednesday's decision, of "judge-shopping," a tactic the organization frequently uses to secure favorable legal outcomes. District courts in Texas fall under the purview of the 5th Circuit Court of Appeals, which is dominated by right-wing extremists.
In her Wednesday decision, Brown did not immediately grant the plaintiffs' request for a nationwide injunction against the ban on noncompetes. But the judge signaled she would likely block the rule in its entirety with her final decision in the case on August 30—just days before the ban's scheduled implementation date.
"The court concludes the commission has exceeded its statutory authority in promulgating the noncompete rule, and thus plaintiffs are likely to succeed on the merits," Brown wrote in her 33-page decision.
"The need for judicial reform in Congress has never been more clear as far-right 5th Circuit territory judges have effectively put up a giant neon sign, 'Corporations, Please Sue Here.'"
A spokesperson for the FTC said in response to the ruling that the agency stands by its "clear authority, supported by statute and precedent, to issue this rule."
"We will keep fighting to free hardworking Americans from unlawful noncompetes, which reduce innovation, inhibit economic growth, trap workers, and undermine Americans' economic liberty," the spokesperson added.
The FTC, led by antitrust trailblazer Lina Khan, estimates that roughly 30 million U.S. workers are bound by noncompete agreements that restrict their ability to switch jobs in pursuit of higher wages and better benefits. The commission believes its ban on noncompetes would result in up to $488 billion in wage increases for U.S. workers collectively over the next decade.
Progressive advocacy groups cast Wednesday's decision as the latest attack on workers—and gift to corporations—by a Trump-appointed judge.
"By halting the noncompetes ban, this court is standing in the way of real gains for workers again," said Emily Peterson-Cassin, director of corporate power at Demand Progress. "With the decision overturning Chevron earlier this week, it's a one-two punch against everyday people."
Tony Carrk, executive director of Accountable.US, said in a statement that "the industry-funded U.S. Chamber continues to cost everyday Americans a ton of money with its suing spree against the Biden administration crackdowns on corporate greed, junk fees, and anti-worker barriers."
"The U.S. Chamber's lawsuit holding up the administration's credit card late fee rule is already costing Americans $27 million a day —and now this latest lawsuit could slam the door shut for millions of American workers to begin pursuing better opportunities," said Carrk. "Noncompete clauses could force employees to endure low wages and poor working conditions as the rule drags through the courts. The big bank and Wall Street CEOs on the U.S. Chamber's board have gotten a huge return on their investment while American workers pay the price."
"The need for judicial reform in Congress has never been more clear," Carrk added, "as far-right 5th Circuit territory judges have effectively put up a giant neon sign, 'Corporations, Please Sue Here.'"
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The FTC’s New Ban on ‘Noncompetes’ Helps Workers Reclaim Their Power
By restricting employees from joining competitors or starting their own ventures, noncompetes impede not only individual career and wage growth but also the dynamism of the broader economy.
Apr 29, 2024
Changing jobs can often be the best way to get a raise. But employers frequently force workers to sign “noncompete clauses,” contract stipulations that make it harder for workers to move to better jobs and artificially depress wages.
That will change later this year.
The Federal Trade Commission recently issued a new rule declaring that most noncompete clauses in employment contracts are unfair. The new rule bans employers from requiring workers to sign these agreements and prohibits the enforcement of existing “noncompetes” for workers other than senior executives.
The only leverage non-union workers have with their employers is their ability to quit and take a job somewhere else. But employers have been using noncompete agreements to cut that source of worker power off at the knees.
This is an important step toward fostering fair competition and empowering workers.
Noncompete agreements are employment provisions that ban workers at one company from working for, or starting, a competing business within a certain period of time after leaving a job. They’re ubiquitous. The Economic Policy Institute finds that more than one out of every four private-sector workers are required to sign one as a condition of employment.
These agreements aren’t limited to high-wage workers in knowledge-sensitive occupations and industries. More than a quarter (29%) of private workplaces with an average wage of less than $13.00 per hour used noncompete agreements for all their workers, according to one survey.
The only leverage non-union workers have with their employers is their ability to quit and take a job somewhere else. But employers have been using noncompete agreements to cut that source of worker power off at the knees.
The research on the economic impact of noncompetes is clear: By keeping workers from finding better opportunities, they reduce wages and reduce the formation of new firms. In other words, by restricting employees from joining competitors or starting their own ventures, noncompetes impede not only individual career and wage growth but also the dynamism of the broader economy.
Employers don’t need noncompetes to protect their trade secrets, as they sometimes claim. Intellectual property law already provides significant legal protections for trade secrets. Noncompetes have been unenforceable in California for decades without keeping that state from becoming a leader in tech innovation.
Further, noncompetes are often bundled with other anti-competitive employer practices that harm workers.
For instance, over half of firms surveyed that required noncompetes for at least some of their employees also required workers to agree to mandatory arbitration, rather than the court system, to resolve disputes with their employers. This underscores that the purpose of noncompete agreements is to restrict employees’ options, not protect trade secrets.
Noncompetes are about reducing competition, full stop. It’s in their name.
Noncompetes are bad for workers, bad for consumers, and bad for the broader economy. By banning them, the FTC’s rule will help raise wages for workers and take an important step toward creating an economy that is not only strong but also works for working people.
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Chamber of Commerce Sues to Block FTC Ban on Anti-Worker Noncompete Agreements
"Why does the U.S. Chamber of Commerce hate dynamism in the American economy, where workers are free to move to the best opportunities, and companies are free to recruit the best talent?" asked one economist.
Apr 24, 2024
The powerful U.S. Chamber of Commerce sued the Federal Trade Commission on Wednesday in an effort to block the agency's widely celebrated new rule banning most noncompete clauses, pervasive contract agreements that restrict employees' ability to work for or start a competing business.
The Chamber filed its lawsuit alongside the Business Roundtable and other corporate lobbying groups in a federal court in Texas. The suit came shortly after Ryan LLC, a tax service firm, filed the first legal challenge to the FTC's rule in a separate Texas venue.
"The commission's categorical ban on virtually all non-competes amounts to a vast overhaul of the national economy," reads the Chamber's complaint against the rule, which the FTC finalized in a 3-2 vote on Tuesday.
The agency, led by Biden-appointed Commissioner Lina Khan, estimates that roughly 30 million U.S. workers are subject to a noncompete agreement, limiting their ability to start their own companies or switch jobs in pursuit of better wages and benefits.
"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," Khan said in a statement Tuesday. "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."
"Noncompetes are about reducing competition, full stop. It's in their name."
The Chamber, the largest corporate lobbying organization in the United States, signaled its intent to sue the FTC immediately after the agency finalized its new rule on Tuesday.
"The Federal Trade Commission's decision to ban employer noncompete agreements across the economy is not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive," Chamber president and CEO Suzanne Clark said in a statement following the FTC's vote.
While the organization claims to fight for the interests of businesses small and large, a Public Citizen report published earlier this year found that the majority of the Chamber's legal work supports big corporations.
The Chamber acknowledged in response to questioning from a pair of Democratic senators last year that its corporate members use noncompete clauses—though the group did not specify which members.
"Why does the U.S. Chamber of Commerce hate dynamism in the American economy, where workers are free to move to the best opportunities, and companies are free to recruit the best talent?" asked University of Massachusetts Amherst economics professor Arin Dube in response to the Chamber's pledge to sue over the FTC's rule.
According to the FTC, its ban would boost the average U.S. worker's earnings by $524 a year, increase new business formation by close to 3% annually, and lower national healthcare costs by nearly $200 billion over the next decade.
"Noncompetes are about reducing competition, full stop. It's in their name," Heidi Shierholz, president of the Economic Policy Institute, said Tuesday. "Noncompetes are bad for workers, bad for consumers, and bad for the broader economy. This rule is an important step in creating an economy that is not only strong but also works for working people."
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'Seismic Win for Workers': FTC Bans Noncompete Clauses
Advocates praised the FTC "for taking a strong stance against this egregious use of corporate power, thereby empowering workers to switch jobs and launch new ventures, and unlocking billions of dollars in worker earnings."
Apr 23, 2024
U.S. workers' rights advocates and groups celebrated on Tuesday after the Federal Trade Commission voted 3-2 along party lines to approve a ban on most noncompete clauses, which Democratic FTC Chair Lina Khansaid "keep wages low, suppress new ideas, and rob the American economy of dynamism."
"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," Khan added, pointing to the commission's estimates that the policy could mean another $524 for the average worker, over 8,500 new startups, and 17,000 to 29,000 more patents each year.
As Economic Policy Institute (EPI) president Heidi Shierholz explained, "Noncompete agreements are employment provisions that ban workers at one company from working for, or starting, a competing business within a certain period of time after leaving a job."
"These agreements are ubiquitous," she noted, applauding the ban. "EPI research finds that more than 1 out of every 4 private-sector workers—including low-wage workers—are required to enter noncompete agreements as a condition of employment."
The U.S. Chamber of Commerce has suggested it plans to file a lawsuit that, as The American Prospect detailed, "could more broadly threaten the rulemaking authority the FTC cited when proposing to ban noncompetes."
Already, the tax services and software provider Ryan has filed a legal challenge in federal court in Texas, arguing that the FTC is unconstitutionally structured.
Still, the Democratic commissioners' vote was heralded as a "seismic win for workers." Echoing Khan's critiques of such noncompetes, Public Citizen executive vice president Lisa Gilbert declared that such clauses "inflict devastating harms on tens of millions of workers across the economy."
"The pervasive use of noncompete clauses limits worker mobility, drives down wages, keeps Americans from pursuing entrepreneurial dreams and creating new businesses, causes more concentrated markets, and keeps workers stuck in unsafe or hostile workplaces," she said. "Noncompete clauses are both an unfair method of competition and aggressively harmful to regular people. The FTC was right to tackle this issue and to finalize this strong rule."
Morgan Harper, director of policy and advocacy at the American Economic Liberties Project, praised the FTC for "listening to the comments of thousands of entrepreneurs and workers of all income levels across industries" and finalizing a rule that "is a clear-cut win."
Demand Progress' Emily Peterson-Cassin similarly commended the commission "for taking a strong stance against this egregious use of corporate power, thereby empowering workers to switch jobs and launch new ventures, and unlocking billions of dollars in worker earnings."
While such agreements are common across various industries, Teófilo Reyes, chief of staff at the Restaurant Opportunities Centers United, said that "many restaurant workers have been stuck at their job, earning as low as $2.13 per hour, because of the noncompete clause that they agreed to have in their contract."
"They didn't know that it would affect their wages and livelihood," Reyes stressed. "Most workers cannot negotiate their way out of a noncompete clause because noncompetes are buried in the fine print of employment contracts. A full third of noncompete clauses are presented after a worker has accepted a job."
Student Borrower Protection Center (SBPC) executive director Mike Pierce pointed out that the FTC on Tuesday "recognized the harmful role debt plays in the workplace, including the growing use of training repayment agreement provisions, or TRAPs, and took action to outlaw TRAPs and all other employer-driven debt that serve the same functions as noncompete agreements."
Sandeep Vaheesan, legal director at Open Markets Institute, highlighted that the addition came after his group, SBPC, and others submitted comments on the "significant gap" in the commission's initial January 2023 proposal, and also welcomed that "the final rule prohibits both conventional noncompete clauses and newfangled versions like TRAPs."
Jonathan Harris, a Loyola Marymount University law professor and SBPC senior fellow, said that "by also banning functional noncompetes, the rule stays one step ahead of employers who use 'stay-or-pay' contracts as workarounds to existing restrictions on traditional noncompetes. The FTC has decided to try to avoid a game of whack-a-mole with employers and their creative attorneys, which worker advocates will applaud."
Among those applauding was Jean Ross, president of National Nurses United, who said that "the new FTC rule will limit the ability of employers to use debt to lock nurses into unsafe jobs and will protect their role as patient advocates."
Angela Huffman, president of Farm Action, also cheered the effort to stop corporations from holding employees "hostage," saying that "this rule is a critical step for protecting our nation's workers and making labor markets fairer and more competitive."
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'Victory for American Workers': FTC Proposes Ban on Noncompete Clauses
Sen. Elizabeth Warren noted that "noncompete clauses give companies unfair power over workers, enabling them to cut wages and benefits without fear of workers finding a new job or starting their own business."
Jan 05, 2023
Progressive advocacy groups and lawmakers celebrated Thursday after the Federal Trade Commission proposed a new rule that, if finalized, would prohibit employers from including noncompete clauses in employment contracts, which the agency described as "a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses."
Given the prevalence of noncompete agreements, which prevent roughly one in five U.S. workers from freely changing jobs, the FTC estimates that "the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans."
The American Economic Liberties Project (AELP) called the FTC's 3-1 vote to initiate a rulemaking process to ban the use of noncompete clauses "a victory for American workers and fair, competitive markets."
“Millions of workers, future new business owners, everyday consumers, and the American economy overall will be better off because of the FTC's vote today," AELP executive director Sarah Miller said in a statement. "For too long, coercive noncompete agreements have unfairly denied millions of working people the freedom to change jobs, negotiate for better pay, and start new businesses."
Sen. Elizabeth Warren (D-Mass.) noted that "noncompete clauses give companies unfair power over workers" and commended the FTC for moving to ban them.
Miller, meanwhile, said that Thursday's proposed rule "makes clear that the use of noncompetes to undermine fair competition for workers and prevent new businesses from entering the market is also an illegal practice under the antitrust laws."
"Yesterday's enforcement actions under Section 5 of the FTC Act make clear the FTC means business," she added, referring to the lawsuit the FTC—led by "antitrust trailblazer" Lina Khan—filed Wednesday to force three corporations and two individuals to lift noncompete restrictions they imposed on thousands of workers.
Wednesday's crackdown—which marked the first time the FTC has sued to halt unlawful noncompete clauses—came just weeks after the agency voted 3-1 to issue a new policy statement restoring its commitment to "rigorously enforcing" the long-neglected Section 5 ban on "unfair methods of competition."
"This rule would be an important step in creating an economy that works for everyone."
Thursday's proposal to prohibit noncompete agreements altogether comes less than three weeks after AELP, Demand Progress, Public Citizen, the Economic Policy Institute (EPI), and more than 20 other groups urged the FTC to immediately begin a rulemaking process to eliminate noncompete provisions they described as unjustifiable and "anti-worker."
"Today's vote from the FTC is a step forward toward banning this unfair practice that hurts millions of workers and prevents new businesses from being able to compete on equal ground," Demand Progress Education Fund executive director David Segal said Thursday in a statement. "In a time when millions of Americans are struggling to afford their basic needs, we should be providing more opportunity—not less."
Matt Kent, competition policy advocate for Public Citizen, called the FTC's Thursday move "thrilling."
"The rule was long in the making but the strength of this proposal makes the wait worthwhile," said Kent. "If finalized in this form, the rule would be wide-ranging, applying to independent contractors and requiring an employer to actively inform workers that existing noncompete clauses are no longer in effect."
"The legal backing for the rule is also an exciting and overdue use of the FTC's power to police unfair methods of competition using authority granted by Congress in Section 5 of the FTC Act," he added.
EPI president Heidi Shierholz also praised the FTC's regulatory initiative.
"Why do we need this rule?" Shierholz asked on Twitter. "The only source of power nonunionized workers have vis-à-vis their employers is their ability to quit and take a job elsewhere. So, SURPRISE, employers are using noncompete agreements to cut that source of worker power off at knees."
"Noncompetes are about reducing competition, fullstop," said Shierholz. "That's bad for workers and bad for consumers. This rule would be an important step in creating an economy that works for everyone."
The public has 60 days after the Federal Register publishes the proposed rule to submit comments. The FTC will review the comments and possibly make changes based on citizen input and the agency's further analysis.
After applauding the FTC for "once again taking bold action where necessary to protect competition in the labor markets," Kent urged the agency to "issue a final rule that mirrors the quality of this initial effort."
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Coalition Urges FTC to Ban Employer Non-Compete Clauses, Which 'Keep Workers Stuck'
"Instead of retaining workers through coercive non-compete clauses, employers should maintain a loyal workforce by offering good wages, regular raises and promotions, and fair treatment."
Dec 15, 2022
A coalition of 25 progressive advocacy groups sent a letter Wednesday urging the Federal Trade Commission to immediately begin working on a rule to prohibit the use of non-compete clauses in employment contracts, arguing that such agreements disempower tens of millions of workers.
"Employers' use of non-compete clauses inflict real and substantial harms on the American worker and the overall U.S. economy without any legitimate justification," states the letter to the FTC. "By limiting workers' mobility, non-competes drive down wages, reduce the formation of new businesses, and keep workers stuck in unsafe or hostile workplaces."
"These one-sided contracts can also unfairly restrain competition in downstream markets by allowing dominant firms to hold on to specialized workers--think of monopolistic hospitals and surgeons," the groups wrote. "Instead of retaining workers through coercive non-compete clauses, employers should maintain a loyal workforce by offering good wages, regular raises and promotions, and fair treatment."
The coalition, which includes Public Citizen, AFL-CIO, and the National Employment Law Project, continued:
The FTC has made clear it is contemplating action, but time is running short. It is vital that the FTC begin the rulemaking process to signal to the public, courts, and corporate America that it is committed to fair competition in the labor market. Additionally, further delay in issuing an NPRM [notice of proposed rulemaking] may result in legal jeopardy. An NPRM is only the first step toward prohibiting non-compete clauses--reviewing and responding to comments and developing the final rule will take significant time. Lawmakers have historically depended on the Congressional Review Act to overturn agency actions with which they disagree. Should there be unified control of Congress and the White House following the 2024 election, any agency action completed in the second half of 2024 will be open to repeal.
The country is in the midst of a widespread re-empowerment of labor, [and] the Biden administration has made clear that reviving employer competition for workers' services is a key plank of its policy program. We cannot waste a historic opportunity to use federal authority to eliminate pernicious non-compete clauses. We call on the FTC to begin its important work by issuing a strong rule proposal now.
"President [Joe] Biden made clear in his executive order on competition that federal action on non-competes was a part of his administration's approach to keep labor markets fair and open," Matt Kent, competition policy advocate at Public Citizen and author of the letter, said in a statement, referring to a July 2021 directive from the White House.
"The FTC must follow through and start the process. Banning this pervasive anti-worker practice is urgent and will only become more challenging as we approach the uncertainty of the 2024 election cycle," he added. "It would be a tragedy for FTC to waste the moment. The time to issue a proposed rule is now."
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Democrats Urged to Embrace Agenda to Combat Crisis of 'Corporate Power' in US
"People are ready for a progressive, pro-democracy, pro-worker agenda to take on corporate control. We just need leaders to have the courage to enact it."
Nov 15, 2022
The economic justice group Fight Corporate Monopolies on Tuesday said the Democratic Party must take note of the midterm electoral victories of a number of progressive candidates who have been outspoken about their plans to fight corporate greed, and enact a legislative agenda to combat what the group called a "corporate power crisis" in the United States.
"Legislators have the next two years to enact an economic populist, pro-democracy agenda--one that breaks through partisan divides--that would rebalance power away from monopolies, corporate special interests, and Wall Street," said the organization as it unveiled its Corporate Power Agenda.
The 19 policy recommendations focus on making everyday life more affordable for Americans, strengthening antitrust enforcement, and protecting small businesses from monopolization.
The agenda was released a week after progressives including Reps.-elect Greg Casar (D-Texas), Summer Lee (D-Pa.), Delia Ramirez (D-Ill.), and Sen.-elect John Fetterman (D-Pa.) won midterm races after campaigning on ensuring that "corporations pay their fair share," passing the Protecting the Right to Organize (PRO) Act, and closing "the unnecessary gap between skyrocketing corporate profits and working people's poverty wages."
The election results showed that American voters are demanding their representatives in Congress aggressively fight corporate greed, said Fight Corporate Monopolies (FCM).
"Democrats can seize our massive electoral victories to fight for bold solutions for the majority of voters who want to see politicians break the chokehold corporations have on our political system, economy, and democracy," said Helen Brosnan, the group's executive director. "Small businesses are decimated by monopolies, workers are crushed by corporate bosses, and families are fed up with Wall Street taking home record profits while they struggle--but we've seen that it doesn't have to be this way."
"Small businesses are decimated by monopolies, workers are crushed by corporate bosses, and families are fed up with Wall Street taking home record profits while they struggle--but we've seen that it doesn't have to be this way."
Passing legislation to outlaw price fixing and price gouging--supported by 76% of voters, according to FCM--would "instantly caution executives against collusive behavior that results in higher prices and excess profits, and bar those convicted of price fixing from continuing to work in their industry, introducing further deterrents that are essentially nonexistent today."
The Democrats could also pass the Ending Corporate Greed Act, sponsored by Sens. Bernie Sanders (I-Vt.) and Ed Markey (D-Mass.) to adopt an economy-wide excess profits tax and ensure corporations, whose profit margins hit a 70-year high in 2021, are contributing to the greater good rather than further enriching their CEOs and shareholders.
To show that the party stands with workers over corporations, said FCM, the Democrats should pass the PRO Act to make it easier for workers to unionize and the Workplace Mobility Act, which would free an estimated 30 to 50% of American workers--including many in low-wage jobs--from being forced to sign noncompete agreements.
Policy recommendations for confronting the outsized influence corporations have on policymaking include closing the fundraising loophole that allows candidates and super PACs to coordinate their activities, "allowing corporations and billionaire donors to directly influence elections," and banning stock buybacks, which "skyrocketed over the last two decades, hitting a record of $881.7 billion in 2021."
To stop corporations from buying back their own shares instead of using profits to increase production and worker compensation, Democrats could pass the Reward Work Act, which includes a provision rescinding a 1982 rule that allowed stock buybacks--which had previously been treated as illegal market manipulation.
The Corporate Power Agenda also focuses heavily on confronting monopolization, which according to FCM has affected 75% of U.S. industries in the past two decades.
"Monopolization is happening in big markets, like search engines, online commerce, airlines, seeds and chemicals, and social networks," said the group. "It's happening in small markets as well, in hospitals, prison phone services, syringes, portable toilets, funeral caskets, mixed martial arts, and so on."
"At the same time, politicians at the federal and state level have stood by and cheered on these monopolies as they've amassed power over our economy and our lives," added FCM.
The trend toward corporate concentration has left Americans feeling that "society and politics are out of their control," said the group, as households struggle to cope with the rising cost of goods and services while earning take-home pay that is "up to 30% lower than it should be."
To confront corporate monopolies, FCM called on Democrats to:
- Adopt an "abuse of dominance standard," which would revive traditional antitrust enforcement to protect businesses and workers from the abuses of dominant corporations, potentially modeled on the 21st Century Antitrust Act in New York, which was sponsored by state Sen. Michael Gianaris;
- Fund antitrust agencies at the federal and state level;
- Push the federal government to enforce the Robinson-Patman Act, which "outlaws the producers of goods from behaving anticompetitively and protects American businesses and workers from monopolists," but which has not been meaningfully enforced by regulators since the 1970s;
- Ban megamergers like recent ones between T-Mobile and Sprint, Time Warner and AT&T, and Live Nation and Ticketmaster, by passing the Prohibiting Anticompetitive Mergers Act;
- Rein in private equity profiteers by passing the Stop Wall Street Looting Act;
- Stop giving big businesses tax breaks that disadvantage local competitors; and
- Stop passing bailouts for giant corporations.
Nidhi Hegde, director of strategy and programs at the American Economic Liberties Project, said the agenda "will enable elected leaders who ran on fighting for working families to make it a reality at the federal, state, and local level."
"People are ready for a progressive, pro-democracy, pro-worker agenda to take on corporate control," said FCM on social media. "We just need leaders to have the courage to enact it."
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Biden Applauded for Executive Order Targeting 'Insidious' Anti-Worker Practices
The president's new order takes aim at a "growing trend of employers requiring workers to sign away their rights."
Jul 09, 2021
Among the 72 initiatives packed into the far-reaching executive order President Joe Biden signed Friday are steps that labor advocates welcomed as important victories for U.S. workers, including a provision calling for the limitation of noncompete clauses that drive down wages by preventing employees from quitting for better-paying jobs.
"The measures encouraged by this EO represent a wish list progressives and other pro-competition advocates have been promoting for years, and in some cases decades."
--David Segal, Demand Progress Education Fund
Presented as an effort to promote competition in an economy increasingly dominated by a handful of massive corporations, Biden's sweeping order calls on the Federal Trade Commission (FTC)--now headed by antitrust law expert Lina Khan--to "ban or limit non-compete agreements," which the consumer advocacy group Public Citizen described as "insidious" ploys to restrict worker mobility and suppress wages.
Biden echoed that message in a speech on Friday, declaring that corporations use noncompete clauses "for one reason: to keep wages low."
Analysts estimate that tens of millions of private-sector workers are currently under some form of noncompete clause preventing them from leaving their jobs to work for--or start--a competing business within a certain period of time.
HuffPost labor reporter Dave Jamieson noted that while noncompete clauses have "traditionally been used to protect closely guarded business secrets in high-income fields... they have proliferated so much in recent years that they touch all income levels, even low-wage service work."
"In many cases, noncompete clauses are only 'agreements' in theory, since not signing one means not getting the job," Jamieson observed.
Heidi Shierholz, director of policy at the Economic Policy Institute (EPI), said Thursday that "noncompetes are ubiquitous, harmful to wages and to competition, and part of a growing trend of employers requiring workers to sign away their rights."
Biden's decision to take aim at noncompete clauses as part of a broader effort to tackle corporate concentration won applause from unions and progressives advocacy groups, who said the president's order is an important step toward reversing the decades-long trend of stagnant wages and declining worker power.
"We support President Biden's focus on workers and consumers as we seek a more competitive economy," Lee Saunders, president of the American Federation of State, County, and Municipal Employees, said in a statement. "A successful economy must serve the people who produce the goods and services that improve our lives."
Barry Lynn, executive director of the Open Markets Institute, said he is "especially pleased to see the administration move to protect America's most powerless workers and farmers."
"We hope the Biden administration stays on this path and truly stands with the people against those who seek to monopolize all opportunity, wealth, and power for themselves alone," Lynn added.
Other elements of Biden's executive order that seek to empower workers include a provision encouraging the FTC and Justice Department to "strengthen antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with one another."
"This EO sends a clear and unambiguous message that corporate concentration throughout our economy is a crisis-level problem."
--Alex Harman, Public Citizen
In recent years, major corporations--from Google and Apple to McDonald's and Burger King--have entered so-called "no poaching" pacts agreeing not to hire each other's workers, deals that critics say serve to drive down wages and benefits.
The president's order also urges the FTC to prohibit "unnecessary" occupational licensing restrictions, which can hinder workers from moving across state lines to find better-paying jobs in their field.
"The measures encouraged by this EO represent a wish list progressives and other pro-competition advocates have been promoting for years, and in some cases decades," David Segal, director of the Demand Progress Education Fund, said in a statement.
"From a ban on non-compete agreements that suppress wages and keep employees tied to jobs they would rather leave, to pushing for importation of cheaper prescription drugs from Canada--and from helping people switch between banks to addressing anti-competitive behavior in online marketplaces, these initiatives would improve the wellbeing of workers, small and mid-sized businesses, and consumers across essentially all major sectors of the American economy," Segal added.
Alex Harman, the competition policy advocate for Public Citizen, hailed Biden's order as "the most significant executive action against corporate monopolies in generations."
"This EO sends a clear and unambiguous message that corporate concentration throughout our economy is a crisis-level problem," said Harman. "That clarion call has been absent for decades, as administrations of both parties have let antitrust and antimonopoly enforcement fall into disrepair and decay."
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