Recent enforcement action shows the U.S. Federal Trade Commission (FTC) is squelching noncompete agreements that some employers require workers to sign as a condition of employment.
Noncompete agreements ban employees from working for a competing employer or starting a competing business within a certain geographic area and period of time after their employment ends.
On Feb. 21, the FTC issued an order settling charges that two glass container manufacturers, O-I Glass in Perrysburg, Ohio, and Ardagh Group in Indianapolis, illegally imposed noncompete restrictions on workers across a variety of positions. The settlement directs the companies to tell workers that their noncompete agreements are nullified.
The FTC charged the companies with violations of Section 5 of the Federal Trade Commission Act, which prohibits ''unfair or deceptive acts or practices in or affecting commerce.'' The agency alleged that the companies' noncompete agreements restricted job mobility and unlawfully harmed competition.
The two companies must submit a series of compliance reports for the next nine years so the FTC can determine whether they have complied with the settlement. O-I Glass declined to comment. Ardagh Group didn't respond to a request for comment.
"The settlements clearly reflect the FTC's intent to move forward with its aggressive effort to ban noncompete agreements," said Matt Durham, an attorney with Dorsey & Whitney in Salt Lake City. "Because it is a settlement, it does not...
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