Ending Noncompete Agreements Will Benefit All Workers

View Amicus Brief

TRENTON – Attorney General Matthew J. Platkin and District of Columbia Attorney General Brian Schwalb led a multistate brief today supporting the Federal Trade Commission’s (FTC) rule to eliminate noncompete clauses in employment contracts nationwide. The multistate brief reflects efforts by New Jersey and other States to protect important recent federal policies, including those that support workers.

In April 2024, the FTC issued the final Noncompete Clause Rule, which bars employers from preventing workers from working for or starting a competing business within a certain time period after leaving a job. The rule notes that noncompetes can depress worker wages, create legal hurdles for employees looking to grow their careers, and undermine economic innovation and growth by trapping individuals in their jobs.

“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 noncompete ban was immediately met with several legal challenges. Today’s multistate amicus brief addresses one of those challenges, Properties of the Villages, Inc., vs the Federal Trade Commission. In August 2024, a federal judge on the U.S. District Court for the Middle District of Florida, Ocala Division, issued a limited preliminary injunction against the FTC concerning the noncompete rule. The multistate coalition filed this amicus brief in the U.S. Court of Appeals for the Eleventh Circuit, supporting the reversal of that preliminary injunction.

Before the rule, the legality of noncompete agreements was left to the states. This patchwork approach created confusion for workers and distorted labor markets that covered more than one area, including in places such as Camden, New Jersey, and Philadelphia, Pennsylvania, or the District of Columbia and Bethesda, Maryland.

Notably, the rule particularly benefits the healthcare industry, including doctors and patients, and complements existing state laws concerning healthcare providers. Non-competes are widely used in the healthcare industry, which is becoming increasingly concentrated with fewer employers. This concentration stifles competition for the labor force and between healthcare providers. This lack of competition leads to greater costs for patients as well as payers, which includes the states themselves.

Hundreds of physicians and healthcare practitioners submitted public comments when the FTC rule was proposed, detailing the hardships they experienced, of being unable to change jobs without moving significant distances, or even out of state, to comply with the geographical restrictions of existing noncompetes.

Attorneys General Platkin and Schwalb were joined in the amicus brief by the Attorneys General of California, Colorado, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Pennsylvania, Vermont, and Washington.

New Jersey is represented in this matter by Deputy Attorney General Marcus Mitchell of the Labor Enforcement Section, Deputy Attorney General Bryce K. Hurst of the Special Litigation Section, and Leslie Prentice of the Antitrust Litigation and Competition Enforcement Section in the Division of Law’s Affirmative Civil Enforcement Practice Group, under the supervision of Assistant Section Chief Isabella Pitt, Assistant Attorney General Jennifer Schiefelbein, Assistant Attorney General Mayur Saxena, and Deputy Director Sara M. Gregory.

The Office of the Attorney General investigates violations of the New Jersey Antitrust Act to prevent unlawful restraints of trade and to promote competition in the State of New Jersey. Attorney General Platkin invites workers who believe their rights have been violated to file a complaint by visiting the Attorney General’s Complaint Portal.

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