FTC Cracks Down on Illegal Noncompete Restrictions for Thousands of Workers

The Federal Trade Commission (FTC) won three quick cases against companies imposing harsh noncompete clauses on their employees. In a statement, they say these restrictions hurt workers and new entries into various markets.

In short, Prudential Security, Inc and Prudential Command, Inc; O-I Glass, Inc; and Ardagh Group S.A. imposed harsh, and the FTC says illegal, contracts on their employees which prevented them from seeking employment at rival companies.

Per the statement, Prudential required their security guards to sign noncompete clauses, which barred them from working for a competing business within a 100-mile radius of their job site with Prudential for two years after leaving the company. If they did, they could face a $100,000 penalty. These guards made hourly wages at or near the legal minimum.

O-I Glass required over a thousand of its workers to sign noncompete contracts barring them from working for, owning, or being involved in any other way with any business in the United States selling similar products and/or services without the prior, written consent of O-I Glass.

Ardagh Group imposed similar restrictions on its workers prohibiting them, for two years after leaving Ardagh, from directly or indirectly performing “the same or substantially similar services” for Ardaugh’s competitors. 

The FTC says that these clauses not only hurt workers in suppressing their wages, but also hurt competition in consumers. They argue that prohibiting experienced workers from leaving to work elsewhere prevents new entrants to the market, especially in engineering-heavy fields like glass-making. 

Per the proposed agreements, the aforementioned companies are barred from imposing and enforcing noncompete clauses on all former, current, and future employees. They are also required to to inform all current and past employees subject to said noncompete clauses of these settlements and to current and future hiring managers. Finally, these companies are required to inform all future employees of their right to leave and seek similar work elsewhere.