Re: Request to Stay and Delay Implementation of the Noncompete Rule

Dear Commissioners: On behalf of the undersigned organizations, we request that the Commission stay the effective date of the Non-Compete Clause Final Rule (89 Fed. Reg. 38,342-38,506, “Noncompete Rule”) to allow for judicial review.

Under Section 705 of the Administrative Procedure Act, agencies “may postpone the effective date of action taken by it, pending judicial review” when “justice so requires.” We strongly encourage you to exercise this power on the Noncompete Rule as FTC and other agencies recently have on other rulemakings. The Commission already elected to stay its CARS Rule pending litigation. Similarly, the Securities and Exchange Commission acted to stay its Climate Disclosure Rule, and the National Labor Relations Board delayed the effective date of the Joint Employer Rule.

A stay would be a prudent step. The impending effective date of the Noncompete Rule and lack of Commission guidance on key pieces of it – such as what it means to be in a policymaking position or how the Commission will apply its “functional” test – is creating substantial uncertainty for businesses and employees around the country. In delaying the CARS Rule, the Commission cited “misunderstandings of the Rule” and the “uncertainty” that resulted as a reason for delay. A brief, voluntary delay would provide invaluable certainty as to the Rule’s potential effective date and conserve significant resources.

Although the Noncompete Rule’s legal fate remains in question, it is already imposing significant costs and uncertainty on the U.S. economy. Businesses are identifying existing noncompetes and notifying employees and former employees that their noncompetes may no longer be enforceable. Companies are incurring substantial legal costs as they explore other tools to attempt to protect their investments, and workers are losing training opportunities and bargaining power to negotiate compensation.

Noncompete agreements have been enforceable since before the country’s founding. A short implementation delay of a few months should impose no meaningful costs, and certainly no unexpected costs, on anyone. If the Commission ultimately succeeds in court, only a small number of noncompetes for policy-making senior employees entered into between September 4, 2024, and the final effective date would be impacted given the rule’s retroactivity requirements.

Finally, a brief delay would comport with the Commission’s mission of enforcing federal law in a cost-effective manner. As set forth in the Commission’s current strategic plan, the Commission “strives to efficiently address the competitive concerns raised by a merger or business practice and works toward a solution that maintains competition in the marketplace without unduly burdening legitimate business activity.” In keeping with this goal, a brief delay would provide invaluable certainty to the business community and, if the Rule ultimately is enjoined, potentially conserve significant resources around the country.

We thank you for your consideration of this request.

Sincerely,

National

ACA International

Advanced Medical Technology Association

Alternative Investment Management Association

American Bankers Association

American Coatings Association

American Council of Engineering Companies

American Foundry Society

American Hospital Association

American Hotel & Lodging Association

American Property Casualty Insurance Association

American Staffing Association

American Trucking Association

Associated Builders and Contractors

Associated Equipment Distributors

Associated General Contractors of America

Business Roundtable

Consumer Technology Association

Direct Selling Association

Federation of American Hospitals

FIA Principal Traders Group

FMI - The Food Industry Association

Foodservice Equipment Distributors Association

Futures Industry Association

HR Policy Association

Independent Electrical Contractors

Independent Insurance Agents & Brokers of America

Independent Lubricant Manufacturers Association

International Agribusiness Council

International Franchise Association

Investment Adviser Association

Meat Institute

MEMA, The Vehicle Suppliers Association

Metals Service Center Institute

MFA, Managed Funds Association

National Association of Business and Insurance Professionals

National Association of Convenience Stores

National Association of Manufacturers

National Association of Mutual Insurance Companies

National Association of Wholesaler-Distributors

National Automobile Dealers Association

National Federation of Independent Business

National Lumber & Building Material Dealers Association

National Mining Association

National Newspaper Association

National Pest Management Association

National Propane Gas Association

National Restaurant Association

National Tooling and Machining Association

National Waste & Recycling Association

NCTA - The Internet & Television Association

Precision Machined Products Association

Precision Metalforming Association

Reinsurance Association of America

Retail Industry Leaders Association

Securities Industry and Financial Markets Association

The Council of Insurance Agents and Brokers

U.S. Chamber of Commerce

U.S. Council for International Business

US Telecom - The Broadband Association

Wholesale & Specialty Insurance Association

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Prattville Area Chamber of Commerce

Selma and Dallas County Chamber of Commerce

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Alaska Chamber

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Arizona Chamber of Commerce and Industry

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Mesa Chamber of Commerce

Nogales Santa Cruz County Chamber of Commerce & Visitor Center

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Peoria Chamber of Commerce

Prescott Valley Chamber of Commerce

Queen Creek Chamber of Commerce

Southwest Valley Chamber

Tucson Metro Chamber

West Valley Chamber of Commerce Alliance

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AR State Chamber/AIA

Rogers-Lowell Chamber of Commerce

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Brea Chamber of Commerce

Carlsbad Chamber of Commerce

Chino Valley Chamber of Commerce

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Laguna Niguel Chamber of Commerce

Lincoln Area Chamber of Commerce

Long Beach Area Chamber of Commerce

Modesto Chamber of Commerce

Murrieta/Wildomar Chamber of Commerce

Newport Beach Chamber of Commerce

North San Diego Business Chamber

Palos Verdes Peninsula Chamber of Commerce

San Juan Capistrano Chamber of Commerce

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Tracy Chamber of Commerce

West Ventura County Business Alliance

Western States Trucking Association

Yorba Linda Chamber of Commerce

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Maine State Chamber of Commerce

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Maryland Chamber of Commerce

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Missouri Chamber of Commerce and Industry

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Business and Industry Association New Hampshire

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New Jersey State Chamber of Commerce

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Highlands Chamber of Commerce/Visit Highlands NC

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Bend Chamber of Commerce

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