The Federal Trade Commission (FTC) and Department of Labor (DOL) recently issued two Final Rule documents that could have an impact on independent aftermarket and dealer operations.
The FTC announced on April 23 a Final Rule that effectively bans new non-competes for all workers, including senior executives, that would take effect 120 days after its publication in the Federal Register.
The FTR states non-competes are "an unfair method of competition — and therefore a violation of section 5" of the FTC Act. Under the terms of the Final Rule, the states FTC non-competes already in place for senior executives may remain in place, while existing non-competes with other workers "are not enforceable after the effective date."
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In its Final Rule fact sheet, the FTC states fewer than 1% of workers are estimated to be senior executives under the final rule, and the rule defines a senior executive as "workers earning more than $151,164 annually who are in a 'policy-making position.'"
The commission also estimates banning noncompetes will result in a 2.7% increase in the rate of new businesses formed and $400-$800 billion in increased wages for workers over the next decade, among other benefits.
The National Association of Wholesale Distributors (NAW) spoke out against the non-compete ban.
