Federal Trade Commission Chairman Andrew N. Ferguson sent a warning letter to national mortgage services provider Mortgage Connect on May 8, urging the company to review its employment contracts for compliance with the law.
The issue is significant because noncompete agreements can affect workers' mobility and competition in the labor market. The FTC's involvement highlights ongoing concerns about potentially anticompetitive practices in employment contracts.
The letter from Ferguson responds to information made public in an ongoing lawsuit, where Mortgage Connect is seeking to enforce a noncompete agreement against a former employee and her new employer. According to the letter, details from the lawsuit suggest that Mortgage Connect may have used unjustifiable noncompete clauses that could harm both workers and competition.
Ferguson encouraged Mortgage Connect "to review and discontinue the use of any noncompete or other agreements that are not reasonably necessary and to notify relevant workers of their discontinuance." He also said this action demonstrates the FTC’s commitment "to actively investigate potentially anticompetitive noncompete agreements and bring enforcement actions to restore competition."
Earlier this year, the FTC launched a Joint Labor Task Force focused on prosecuting deceptive, unfair, and anticompetitive labor-market practices. The agency also recently ordered Rollins Inc., one of the largest pest-control companies in the United States, to stop enforcing noncompete agreements affecting more than 18,000 employees nationwide.
The Federal Trade Commission says it works "to promote competition, and to protect and educate consumers." The agency advises consumers that it will never demand money or make threats related to payments.
