Small Businesses Support FTC's Proposed Rule to Ban Non-Compete Agreements
FTC Chair Lina Khan joins Small Business Majority for a listening session on the harm non-compete agreements inflict on small business growth and entrepreneurship
Washington, D.C. – Today, Lina M. Khan, Chair of the Federal Trade Commission (FTC), joined Small Business Majority, small business owners, and business organizations for a listening session to discuss the negative impact of non-compete agreements on small businesses. The FTC has proposed to ban most non-compete agreements citing that they impede free and fair entrepreneurship, reduce competition, suppress wages and keep innovative ideas from breaking into the market. New Small Business Majority research, also released today, confirms that nearly 6 in 10 small businesses support this ban, while only 14% oppose it.
Click here to watch the recording from today's event.
Non-compete agreements hinder entrepreneurship, create a non-level playing field and suppress the ability of employees to maximize their skills. Our new research finds that more than 1 in 3 small business owners were prevented from hiring an employee due to a non-compete agreement, and nearly half say they have been subject to a non-compete agreement that prevented them from starting or growing a business. But even before the FTC's proposed rule, Small Business Majority research reported that more than half of small businesses found non-competes to be a serious issue.
"President Biden rightfully encouraged the FTC to ban non-compete agreements in his second State of the Union address, and our new research proves that small businesses support this proposal," said John Arensmeyer, Founder & CEO, Small Business Majority. "Non-compete agreements restrict individuals from pursuing opportunities for upward mobility and greater earning power. States like Oklahoma and North Dakota, where the enforcement of these agreements is prohibited, have not reported any loss of business success or entrepreneurial spirit. Non-competes are unnecessary for a business that wants to protect its proprietary assets. The proposed FTC ban will help to ensure small businesses can protect their trade secrets while also creating space for entrepreneurship and small business growth.”
"About one in five Americans is held back by non-compete agreements or restrictions, and Americans have long called for new policies that will create a level playing field for new businesses and entrepreneurs," said Victor Hwang, Founder and CEO, Right to Start and a member of Small Business Majority's Alliance for a Small Business Economy. "Non-compete agreements may seem like a niche topic, but they have a major impact on the U.S. economy and jobs. The ban provides the potential for Americans to increase their wages and create an entrepreneurial path. This could be particularly impactful for young entrepreneurs who create nearly all new job growth in America. The FTC’s proposed rule is a vital step toward expanding economic growth in the United States."
Small businesses overwhelmingly want a level playing field, and entrepreneurs want an opportunity to thrive. To date, more than 400 small businesses and small business organizations have signed a letter urging the FTC to enact its proposed rule to ban non-compete agreements. Discussions from today's listening session underscore support for measures that allow people who want to start new businesses more freedom to do so and remove restrictions that impede small businesses from accessing qualified workers.
“I strongly support banning non-compete clauses in our agreements,” said Tracy duCharme, owner, Color Me Mine, Colorado Springs, Colo. “As a small business owner, I’m very familiar with having to compete with large companies for quality talent. It’s unfair that small businesses like mine are hamstrung by non-compete agreements that limit who we can hire. A small business owner should be able to compete on a level playing field with big businesses and be given an opportunity to break through in this market. I’m glad the FTC has proposed to ban most non-compete agreements, creating a stronger pathway for innovation.”
“Non-compete agreements are unfair and tend only to benefit large companies. Too many people are prevented from starting or growing a business because they are subjected to non-compete agreements,” said Leo Carr, Executive President, Elite Group, Southfield, Mich. “I was only able to build my staffing business and develop a strong reputation for cultivating leaders after years of managing other corporations. It’s unjust not to allow potential entrepreneurs to pursue self-improvement opportunities in their industry to suit the selfish mandate of one employer. I’m hopeful that the FTC will move forward with a ban on non-competes and give entrepreneurs like me the security to grow.”
Before April 18, small businesses and business organizations can sign our support letter and tell the FTC that small businesses and entrepreneurs should not have to endure causeless layers of restrictions that unfairly deny them their right to negotiate better pay or start a new business.
About Small Business Majority
Small Business Majority is a national small business organization that empowers America's diverse entrepreneurs to build a thriving and equitable economy. We engage our network of more than 85,000 small businesses and 1,500 business and community organizations to advocate for public policy solutions and deliver resources to entrepreneurs that promote equitable small business growth. Our deep connections with the small business community along with our scientific research enable us to educate the public about key issues impacting America’s entrepreneurs, with a special focus on advancing the smallest businesses and those facing systemic inequalities. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.