Halting FTC’s Non-Compete Ban Will Hamper Entrepreneurship

We are extremely disappointed that a federal judge in Texas has blocked the Federal Trade Commission’s (FTC) final rule banning non-compete agreements from taking effect on September 4. 

Small Business Majority advocated for the ban because it will help fuel small business growth. In fact, Small Business Majority’s research revealed that more than 33% of small business owners were prevented from hiring an employee due to a non-compete agreement, and nearly half said that they have been subject to a non-compete agreement that prevented them from starting or growing a business of their own.  

Small Business Majority has long opposed non-compete agreements because they restrict individuals from pursuing opportunities for upward mobility and greater earning power through entrepreneurship. What’s more, arguments against non-compete prohibitions are unfounded. First, the FTC ban would still help to ensure that small businesses can protect their trade secrets while also creating space for entrepreneurship and small business growth. Second, states like California, Oklahoma and North Dakota, where these agreements cannot be enforced, have not reported any loss of business success or entrepreneurial spirit. 

Small businesses overwhelmingly want a level playing field, and non-competes are a threat to the free, fair and open competition that is essential to a thriving and equitable economy. That’s why Small Business Majority filed an amicus brief urging the court to uphold the FTC’s final rule. 

Last month, a federal judge in Pennsylvania ruled in favor of the FTC’s ban. With dueling court decisions, we must have clarity about the future of the FTC’s rule, and we urge the agency to appeal the Texas court’s decision. 

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