NJ, DC Attorneys General Lead Support for FTC's Noncompete Ban Amid Legal Pushback

AGs Argue Rule Change Will Boost Worker Mobility and Innovation

Attorney General Matthew J. Platkin of New Jersey and Attorney General Brian Schwalb of the District of Columbia co-led a multistate amicus brief on November 13, 2024, defending the Federal Trade Commission’s (FTC) recent rule barring noncompete agreements in employment contracts. The brief supports FTC efforts to make it easier for workers to transition between jobs and foster economic growth by preventing companies from limiting employees’ ability to work for competitors after leaving a job.

In April 2024, the FTC enacted the Noncompete Clause Rule, which prohibits employers from restricting workers through noncompete agreements that can depress wages and limit career advancement. By stopping these contracts, the FTC rule aims to create a more competitive and dynamic labor market, especially benefiting regions where job markets cross state lines, such as the Camden-Philadelphia and DC-Bethesda metro areas.

“Noncompete agreements prevent millions of American employees from taking new jobs or creating businesses, depressing innovation and preventing workers from improving their economic situation for themselves and their families as they build their careers,” said Attorney General Platkin. “We are grateful that the FTC rightly applied federal law to prevent these anticompetitive and antiworker measures, and stand ready to defend workers even if the Federal Government changes direction.”

The rule, however, has faced swift legal challenges. One such case, Properties of the Villages, Inc., vs the Federal Trade Commission, saw a federal judge in Florida issue a limited preliminary injunction in August 2024, temporarily blocking aspects of the rule. The multistate coalition, led by AGs Platkin and Schwalb, submitted their amicus brief to the U.S. Court of Appeals for the Eleventh Circuit, advocating for the injunction to be overturned.

The rule’s impact is expected to be particularly significant in healthcare, an industry with high use of noncompetes. With fewer healthcare employers consolidating markets, competition for medical professionals has decreased, driving up costs for patients and limiting provider choices. Many healthcare workers who commented during the FTC’s proposal period described challenges in switching jobs without relocating significant distances to comply with noncompete restrictions.

Joining Platkin and Schwalb in support of the rule are Attorneys General from 15 other states, including California, Maryland, and Pennsylvania. Representing New Jersey’s position in this case are Deputy Attorneys General Marcus Mitchell, Bryce K. Hurst, and Leslie Prentice, under the supervision of key leaders in the Division of Law’s Affirmative Civil Enforcement Practice Group.

For those who believe their rights under New Jersey’s antitrust laws have been violated, the Office of the Attorney General encourages filing a complaint via its Complaint Portal, underscoring the state's commitment to fair labor competition.