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Michigan AG backs proposed rule to axe non-compete clauses in employment contracts

FTC says 1 in 5 are bound by a non-compete clause

Man signing contract. (Photo by Cytonn Photography/Pexels)

A proposed rule that would eliminate most non-compete clauses in employment contracts has the support of the Michigan’s top lawyer.

Michigan Attorney General Dana Nessel sent a letter to the Federal Trade Commission chair this week in support of a proposal FTC rule to end non-compete clauses, joining 18 other states in supporting the proposal.

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In January, the FTC proposed the Non-Compete Clause Rule, which would bar employers from preventing workers from working for or establishing a competing business within a certain time period after leaving a job.

The FTC says one in five American workers are bound by a non-compete clause.

The FTC proposes preventing employers from entering into non-compete clauses with workers and requiring employers to rescind existing non-compete clauses. The Commission estimates that the proposed rule would increase American workers’ earnings between $250 billion and $296 billion per year.

“Post-employment restrictions like these have an adverse effect on workers, especially low-wage workers and those who are part of the ‘gig economy’ and tend to change jobs often,” Nessel said. “Non-compete statutes are also often misused for anti-competitive purposes that do not protect legitimate business interests. I stand firmly with my colleagues in supporting the FTC’s proposed rule to provide workers with additional protections in this area.”

In filing the comment letter, AG Nessel joined the attorneys general of California, Colorado, Delaware, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, and Washington.

The open comment period for the proposed rule opened on April 19.


About the Author
Ken Haddad headshot

Ken Haddad has proudly been with WDIV/ClickOnDetroit since 2013. He also authors the Morning Report Newsletter and various other newsletters, and helps lead the WDIV Insider team. He's a big sports fan and is constantly sipping Lions Kool-Aid.

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