Black workers celebrate FTC rule change
13th May 2024 · 0 Comments
By Mason Harrison
Contributing Writer
A long-awaited rule from the Federal Trade Commission banning non-compete agreements in employment is placing Black advocates for worker’s rights and their Black counterparts in upper management on either side of a political and economic divide that will ultimately be decided in federal court.
The FTC issued a final rule April 23 “banning non-competes nationwide” to safeguard what the agency called “the fundamental freedom of workers to change jobs,” a move it hopes will increase innovation in the private sector and spur workers to create new businesses with their newfound career flexibility. The new rule is expected to prohibit all future agreements and void existing non-compete contracts.
A handful of business groups filed suit against the commission a day later contending that the rule exceeds its authority and that making such sweeping changes to the job market properly falls under the purview of Congress. Lawmakers on both sides of the aisle, however, have shown some sympathy for limiting non-compete agreements, particularly for low-wage workers who are often not privy to trade secrets.
For more than a year, federal regulators mulled putting an end to labor agreements that prevent employees from leaving their current job to work for a competitor or start their own business in the same industry as their existing employer, sometimes for years after they have tenured their resignation or been fired.
These restrictions, according to FTC Chairwoman Lina Khan, “keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once non-competes are banned.” The rule, Khan said, will help “bring [new ideas] to market.”
“These agreements are like indentured servitude,” said Nathaniel Alston, chair of the National Association of African Americans in Human Resources. “Gone are the days in which a person would spend decades of his or her life at a company. Millennial and Gen Z members of the labor force expect to change jobs often and are less likely to tolerate restrictive work environments than previous generations may have been.”
The motto, said Alston, for the current iteration of the workforce: “Have skills, will travel.”
Non-compete agreements are known to disproportionately restrict upward mobility for Black workers. “Our movement along the career ladder is rarely simply up or down,” said Tanya Wallace-Gobern, executive director of the National Black Worker Center, referring to how Black workers navigate the labor market. “Sometimes we move from left to right or from east to west, frequently changing jobs along the way.”
Wallace-Gobern said labor contracts that restrict job changes often lock Black workers into abusive work environments and restrict their negotiating power, an ability that is already diluted when contrasted with their white counterparts, and are increasingly being used outside of management roles and can be found among employment arrangements for wage employees working in home health and fast food sectors.
“Exploiting our labor is nothing new,” said Wallace-Gobern. “This has been the case since slavery.”
Keyda Netters worked for two and a half years in downstate Illinois as a mold specialist for Caterpillar, Inc., where, as a condition of her employment, she was required to sign a non-compete agreement. “I was honestly just so happy to be working that I was not concerned about the agreement,” she said.
She soon experienced harassment “on the basis of my skin color and sexuality,” she said, which eventually culminated in her termination from a mostly white workforce after she attempted to seek redress. Her non-compete agreement, however, meant she could not find another job at a construction firm.
“Why shouldn’t I be able to get a job at John Deere?” she asked. “Especially if they are paying a dollar more an hour and are going to provide a better working environment.”
Netters has filed an employment discrimination complaint against Caterpillar and has decided to leave the construction industry.
“I agree that low-level employees should not be forced into non-compete agreements,” said Larry Ivory, head of the Illinois State Black Chamber of Commerce, an affiliate of the National Black Chamber of Commerce. “But anyone with access to trade secrets or other sensitive data should be covered under such contracts.”
Backers of the FTC rule, however, contend employers can protect restricted information through non-disclosure agreements, which lack the chilling effect non-compete clauses have on the overall labor force.
Ivory joins a small, but influential, group of Black executives on the opposing side of the ledger in the skirmish between Black capital and Black labor, including members of the Business Roundtable, a New York-based trade group suing the FTC composed of high-profile corporate chiefs, among them nine Black CEOs.
“We don’t want to stifle Black innovation,” Ivory said. “We simply think there is a better way to protect workers and encourage new business creation than the decision the FTC has made under this rule change.”
This article originally published in the May 13, 2024 print edition of The Louisiana Weekly newspaper.
