Non-Competes — PIA National Opposes Proposed FTC Ban

The Federal Trade Commission (FTC) wants to ban non-compete agreements. PIA National says that’s not a good idea and — along with the Council of Insurance Agents & Brokers (CIAB) and other industry organizations — is opposing the planned ban.

The U.S. Chamber of Commerce considers the proposed ban a clear overreach. Here’s what the ban does:

  • It prohibits employers from entering into non-compete contracts with employees
  • All currently existing non-compete agreements will be canceled immediately

There is one exception. A non-compete agreement of someone selling a business that has a restricted party owning 25% interest in the business can be kept in place.

PIA National’s Lauren Pachman is the association’s counsel and director of regulatory affairs. She said these rule changes will be a huge strain on many independent agency owners.

“Independent agencies use non-compete clauses and agreements to protect against the theft of their business assets in part because, for many of them, it would be prohibitively expensive for them to rebuild their businesses after such a theft,” Pachman said. “If finalized as proposed, the ban would invalidate millions of private contracts and have a substantial but unpredictable effect on employer/worker relationships in nearly every industry across the United States.”

Pachman and the PIA also noted that a lot of litigation will come up and the courts will eventually decide if the FTC has the legal power to issue such a ban.

The FTC is defending its decision and says, “This research has also shown that, by suppressing labor mobility, non-compete clauses have negatively affected competition in product and service markets in several ways.”

Whether it suppresses anything or not, the FTC consultation period ran through April 19th. In that time the FTC received 17,000 comments on the changes. A huge percentage were negative.

Pat Gallagher is the chairman and CEO of Arthur J Gallagher. He and other insurance spokespeople are among the 17,000 criticizing the FTC move and says it’s a clear overreach.

“With the FTC in terms of our view of that, we do view that as a negative in our world, in particular in smaller plug-in acquisitions. One of the things that we’re doing, of course, is taking new geographies on board with smaller players. We expect that when we buy that entrepreneur that they give the rest of their career to Gallagher and we capitalize that investment for them,” he said. “And of course, we use non-competes.”

The U.S. Chamber of Commerce sums it up and called the proposal “blatantly unlawful.” The chamber totally disagrees with the FTC’s contention that the ban will increase wages by $300 billion a year and improve the career opportunities for 30 million people. 

Source link: Insurance Business America —

About PIA Western Alliance

The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.


More Industry News