FTC Bans Noncompetes; Freight Community Responds
In a landmark decision, the Federal Trade Commission (FTC) voted 3-2 to restrict noncompete agreements. These agreements previously prevented millions of American workers from pursuing opportunities with competing businesses or starting their own ventures after leaving a job.
The FTC estimates that a staggering 18% of the U.S. workforce, roughly 30 million individuals, were bound by noncompete clauses. This broad reach encompassed everyone from fast food workers to high-level CEOs.
The new FTC rule implements a two-pronged approach. Firstly, it prohibits companies from establishing new noncompete agreements with any employee, regardless of position.
Secondly, it requires employers to rescind existing noncompete agreements for most workers and notify both current and former employees that these restrictions will no longer be enforced.
Freight Impacts
The FTC's recent ban on noncompete agreements is a game-changer for freight brokers. Companies like TQL, known for aggressively enforcing non-competes, can no longer restrict brokers' movement within the industry. This means:
- Freed Mobility: Brokers trapped by non-competes can now freely leave their current brokerage, 3PL, 4PL, and pursue opportunities at competitors or even start their own brokerage.
- Retention Focus: Companies will have to prioritize keeping brokers happy and engaged, as competition for talent intensifies
The FTC's ban on noncompetes has sparked a legal battle with the Chamber of Commerce, the nation's largest business lobby. The Chamber plans to sue the FTC to block the noncompete ban. This lawsuit could determine the legality of the FTC's action and the future of noncompete agreements in the US.
Outsourcing & Nearshoring
This shift could indirectly contribute to the trend of outsourcing and nearshoring. With brokers free to move, companies might find it harder to retain talent in-house, potentially leading them to consider outsourcing logistics functions or nearshoring operations to regions with a readily available talent pool.
We reached out to lawyer Matthew Leffler for his comment:
