UNITED STATES OF AMERICA

Federal Trade Commission

PREPARED REMARKS

Non-Compete Clauses in the Workplace: Examining Antitrust and 

Consumer Protection Issues

Commissioner Noah Joshua Phillips1

U.S. Federal Trade Commission

U.S. Federal Trade Commission

Washington, D.C.

January 9, 2020

Good afternoon. Today’s workshop is a great example of one this agency’s 

most important functions: convening experts to inform policy-making about 

competition and consumer protection issues impacting the American economy. 

It’s great to see familiar faces like Professors Orly Lobel and Evan Starr, and 

to learn from them and the rest of the incredible group gathered here today. Thanks 

to all our presenters and to Bilal, Sarah and the rest of the staff behind this 

workshop. 

This workshop comes at a critical time. America has a labor mobility 

problem. Over the past several decades, American workers have been increasingly 

unlikely to move to new places and start new jobs,2 or even to switch jobs in the 

 

1 The views expressed in these remarks are my own and do not necessarily reflect the views of the 

Federal Trade Commission or any other commissioner.

2 Steven J. Davis & John Haltiwanger, Labor Market Fluidity and Economic Performance (Nat’l 

Bureau of Econ. Research, Working Paper No. 20479, Dec. 2014), https://www.nber.org/ 

papers/w20479; Ryan Nunn, Americans Aren’t Moving to Economic Opportunity, THE HAMILTON 
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same location.3 The New York Times’ Sabrina Tavernise recently reported, citing 

data from the Census Bureau, that Americans are moving at the lowest rate since 

the government started keeping track, in the 1940s.4 In a world of declining 

transportation and communications costs, where moving ought to be easier, those 

are surprising—and, I think, troubling—facts.

Labor mobility is good for the economy. It helps businesses, by allowing labor 

to allocate itself more efficiently. As David Schleicher describes in his article 

“Stuck!”, it allows the federal economic policies we choose—whatever they are—to 

work better.5 And, critically, labor mobility helps workers. Evidence shows that 

people get bigger raises when they switch jobs than they do when they stay where 

they are.6 But labor mobility isn’t just about leaving for the job you want 

tomorrow—it’s about making the job you have today better. A.O. Hirschman 

described three responses employees have to declining working conditions: exit, 

voice, and loyalty.7 When you can exit a job, you have greater leverage to improve 

 

PROJECT: BLOG (Nov. 19, 2018), https://www.hamiltonproject.org/blog/ 

americans_arent_moving_to_economic_opportunity.

3 David W. Perkins, Declining Dynamism in the U.S. Labor Market, CONG. RESEARCH SERV. INSIGHTS

(June 15, 2016), https://fas.org/sgp/crs/misc/IN10506.pdf (showing “churn” rates are in long-term 

decline).

4 Sabrina Tavernise, Frozen in Place: Americans Are Moving at the Lowest Rate on Record, N.Y.

TIMES (Nov. 20, 2019), https://www.nytimes.com/2019/11/20/us/american-workers-moving-states-

.html.

5 See, generally, David Schleicher, Stuck! The Law and Economics of Residential Stagnation, 127 

YALE L.J. 1 (2017).

6 Bourree Lam, The Special Few Who Are Getting Raises in this Economy, THE ATLANTIC (Feb. 8, 

2016), https://www.theatlantic.com/business/archive/2016/02/job-switchers-raise/460044/. 

7 See, generally, ALBERT O. HIRSCHMAN, EXIT , VOICE, AND LOYALTY: RESPONSE TO DECLINE IN FIRMS,

ORGANIZATIONS, AND STATES (1970).
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the terms of your employment. It is therefore unsurprising that scholars point to 

declining labor mobility as a culprit in slow wage growth.8

The story of declining labor mobility is a complex one, and the non-compete 

clauses we are discussing today are, I believe, a part of it. As we at this agency well 

know, competition matters a great deal, and labor markets are no exception. The 

more mobile workers are, the more firms effectively compete for their labor. Policies 

that favor labor mobility increase that competition; practices that inhibit it—

including non-competes—reduce it, and prevent work from getting to where it needs 

to go.

Over the past several years, empirical research, by Professor Starr and 

others, has advanced our understanding of the prevalence and potential effects of 

non-compete clauses. We do not know if non-competes have been increasing in 

frequency, but they are certainly more ubiquitous than many thought.9 And they 

appear in contexts where the traditional justifications for non-competes are not 

obvious: for example, some twelve percent of workers earning less than $40,000 per 

 

8 See, e.g., Alan Krueger, Opening Remarks at the Federal Trade Commission Hearings on 

Competition and Consumer Protection in the 21st Century, No. 3: Multi-Sided Platforms, Labor 

Markets, and Potential Competition (Oct. 16, 2018), https://www.ftc.gov/news-events/eventscalendar/2018/10/ftc-hearing-3-competition-consumer-protection-21st-century. People already 

working in an industry protected by occupational licensing regulations will typically earn higher 

wages. See e.g., Ryan Nunn, How Occupational Licensing Matters for Wages and Careers, THE 

HAMILTON PROJECT (Mar. 2018), https://www.brookings.edu/wp-content/uploads/2018/03/ 

es 3152018 how occupational licensing matters for wages and careers.pdf. However, all those 

who are unable to enter the field are hurt. Non-compete agreements also result in reduced wages. 

See Michael Lipsitz & Evan Starr, Low-Wage Workers and the Enforceability of Non-Compete 

Agreements (Sept. 10, 2019), https://papers.ssrn.com/sol3/papers.cfm?abstract id=3452240.

9 See, e.g., Evan Starr, J.J. Prescott & Norman Bishara, Noncompetes in the U.S. Labor Force 17 

(Univ. of Michigan Law & Econ. Research, Paper No. 18-013, Sep. 2019), https://papers.ssrn.com/ 

sol3/papers.cfm?abstract id=2625714. 
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year,10 or seasonal Amazon warehouse workers.11 They also appear where they are

not allowed or are not enforced. All that concerns me. At the same time, noncompetes can serve good purposes, incentivizing investment in workers and 

protecting trade secrets—worthy goals in our increasingly knowledge-driven 

economy. Evidence on the effects of non-competes seems to tell both sides of the 

story, indicating harms to workers,12 but also benefits in some contexts.13

Today, federal and state legislators, Republicans and Democrats alike, are 

grappling with how to address non-compete agreements. I was honored in October 

to testify before the House Subcommittee on Antitrust, Commercial, and 

Administrative Law about competition in labor markets, and I focused on the role of 

non-competes.14 Above all, I hope today’s workshop informs that policy-making 

process. 

 

10 U.S. DEP’T OF THE TREASURY, COUNCIL OF ECON. ADVISORS & DEP’T OF LABOR, OCCUPATIONAL 

LICENSING: A FRAMEWORK FOR POLICY MAKERS 3 (2015), https://obamawhitehouse.archives.gov/sites/ 

default/files/docs/licensing_report_final_nonembargo.pdf. 

11 Spencer Woodman, Exclusive: Amazon makes even temporary warehouse workers sign 18-month 

non-competes, THE VERGE (Mar. 26, 2015), https://www.theverge.com/2015/3/26/8280309/amazonwarehouse-jobs-exclusive-noncompete-contracts. 

12 See, e.g., Lipsitz & Starr, supra note 8. U.S. DEP’T OF THE TREASURY, COUNCIL OF ECON. ADVISORS 

& DEP’T OF LABOR, supra note 10 at 19.

13 See, e.g., Evan Starr, Consider This: Training, Wages, and the Enforceability of Covenants Not to 

Compete, 72 CORNELL INDUS. REL. REV. 783, 785 (2019); Starr, et al., supra note 9 at 8 (note that the 

authors find that there is only an increase in training when workers are notified of the non-compete 

before accepting the job offer). For a thorough and current review of the economic literature on noncompetes, see John M. McAdams, Non-Compete Agreements: A Review of the Literature (Dec. 31, 

2019), https:// papers.ssrn.com/sol3/ papers.cfm?abstract id=3513639.

14 Antitrust and Economic Opportunity: Competition in Labor Markets: Hearing Before the Subcomm. 

on Antitrust, Commercial, and Administrative Law of the H. Comm. on the Judiciary, 116th Cong. 

(2019) (statement of Noah Joshua Phillips, Commissioner, Federal Trade Commission).
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Do non-competes present a policy problem? If so, is law enforcement or 

changing the law the way to address it? Federal or state law? Are there grounds for 

a blanket prohibition? Or, how and where should the law demarcate legality and 

illegality—or tip the scales through legal presumptions? Would disclosure 

requirements increase the likelihood that workers share in the benefits that noncompetes can foster? 

While legislators consider these questions, some stakeholders are pushing for 

the FTC itself to address non-competes through a rulemaking. We heard some of 

those calls this morning. We heard a little less, however, about the legal basis for 

doing so. This is a real issue which gives me—someone concerned about noncompetes—pause, and about which I want to learn more. To the extent the 

rulemaking in question regards “unfair methods of competition”, how we proceed

may implicate not only the policy of non-compete clauses, but also more 

fundamental questions about the Constitution and its separation of powers. 

The FTC has issued a competition rule just once in its history, in the 1960s.15

That rule, which was never enforced and was withdrawn in the 1990s,16 proscribed 

conduct barred by the Robinson-Patman Act.17 To reach non-competes, by contrast, 

 15 FTC Men’s and Boy’s Tailored Clothing Rule, 16 C.F.R. § 412 (1968).

16 Notice of Rule Repeal, 59 Fed. Reg. 8527 (1994).

17 That language, which the Robinson-Patman Act added to the Clayton Act, prohibits upstream 

firms from discriminating—in terms of payments, facilities, services, or other support—among 

downstream distributors and resellers of the upstream firms’ products. See 15 U.S.C. § 13(d), (e) 

(2012).
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we would have to rely, for the first time, solely on the FTC Act’s prohibition of 

“unfair methods of competition”.

That broad language raises the specter of the non-delegation doctrine, which 

requires Congress to provide “an intelligible principle” to guide the agency to which 

it has delegated legislative discretion.18 As Justice Gorsuch wrote in his recent 

dissent in Gundy v. United States, enforcing the Constitution’s separation of powers 

to prohibit unconstitutional delegations of legislative power is “about respecting the 

people’s sovereign choice to vest the legislative power in Congress alone . . . it’s 

about safeguarding a structure designed to protect their liberties, minority rights, 

fair notice, and the rule of law”.19 Justice Gorsuch cited the Schechter Poultry case, 

in which the Supreme Court struck down Congress’s delegation under the National 

Industrial Recovery Act, the New Deal law that gave the President authority to 

approve “codes of fair competition”—almost the exact wording at issue here.20

Justice Cardozo dubbed it “delegation running riot”.21 In Schechter Poultry, the 

Court explicitly distinguishes the NIRA from the FTC Act.22 But the key distinction 

that saved the FTC was its adjudicative process, in which the Commission, acting 

as “a quasi judicial body”, determines what are unfair methods of competition “in 

particular instances, upon evidence, in light of particular competitive conditions” 

 18 J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928).

19 See Gundy v. United States, 139 S. Ct. 2116, 2135 (2019) (Gorsuch, J., dissenting). 

20 Id. at 2137–38 (Gorsuch, J., dissenting) (citing A.L.A. Schechter Poultry Corp. v. United States, 295 

U.S. 495 (1935)).

21 Schechter Poultry, 295 U.S. at 553 (Cardozo, J., concurring).

22 Id. at 531–34.
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via a process of formal complaint, fair notice and hearing, and findings supported by 

evidence—all subject to judicial review.23

That is different from rulemaking. Non-delegation concerns may also be

exacerbated by other factors here, including the lack of clarity in the rulemaking 

authority, the traditional commitment of the issue to the states, the fact that 

neither the FTC nor any court has found non-competes to violate the FTC Act’s 

prohibition against “unfair methods of competition”, and the lack of a good 

historical precedent.

All of that concerns me as well, and I hope to hear more. Today’s proceedings 

have been great in general. I look forward to hearing what the upcoming presenters 

have to say on all of these important questions, as well as to reviewing comments 

that are submitted.

 23 Id. at 532–34.