Written by Sullivan & Cromwell LLP on March 7, 2025
On February 26, 2025, the Federal Trade Commission (“FTC”) announced a new “Joint Labor Task Force” to combat deceptive, unfair, and anticompetitive labor market practices. FTC Chairman Andrew N. Ferguson issued a memorandum directing the FTC’s Bureau of Competition, Bureau of Consumer Protection, Bureau of Economics, and Office of Policy Planning “to work together to prioritize rooting out and prosecuting unfair labor-market practices that harm American workers.”
In the memorandum, Chairman Ferguson emphasizes that the FTC has a dual mandate to protect the American people from unfair or deceptive practices and unfair methods of competition as consumers, as well as “consumers in their roles as workers.” The memorandum lists the following examples of “widespread” deceptive, unfair, and anticompetitive labor practices that the memorandum states falls under the FTC’s jurisdiction:
- “No-poach, non-solicitation, or no-hire agreements, where employers agree to refrain from hiring each other’s employees. Courts have found these agreements can be so pernicious as to be a per se violation of the competition laws.
- Wage-fixing agreements, where employers agree to fix the level of wages they offer to employees. These agreements represent a hardcore violation of the competition laws subject to the per se standard.
- Noncompete agreements, which employers can use to impose unnecessary, onerous, and often lengthy restrictions on former employees’ ability to take new jobs in the same industry after they leave their employment.
- Labor-contract termination penalties, through which an employer can impede its workers from switching to a competing employer by imposing unjustified fees when workers want to end their contracts.
- Labor market monopsonies, where a business uses anticompetitive methods to create or maintain significant buyer power in a market for labor. This can be a particular problem in rural areas, where employment opportunities are already limited.
- Collusion or unlawful coordination on DEI metrics, which may have the effect of diminishing labor competition by excluding certain workers from markets, or students from professional-training schools, on the basis of race, sex, or sexual orientation.
- Harming gig economy workers, through unfair or deceptive trade practices.
- Deceptive job advertising, including job postings that lure potential employees with false promises regarding important issues like rates of pay or benefits.
- Deceptive business opportunities, which lure Americans into buying a business on the basis of false or misleading representations about the value and potential earnings of the business.
- Misleading franchise offerings, which can lead workers or potential employers to invest savings in ways that never ultimately bring benefits anticipated to the American worker.
- Harmful occupational licensing requirements, where employers or professional associations advance or promote needless occupational licensing restrictions that can serve as an unwarranted barrier to entry and reduce labor mobility.
- Job scams, including fraudulent job placement scams and online ‘task scams,’ that lure job seekers to complete small online tasks but instead trick consumers into paying money that is never recovered.”
The memorandum also sets forth the various responsibilities of the Task Force, including:
- prioritizing the investigation and prosecution of deceptive, unfair, or anticompetitive labor market conduct, and coordinating all such actions across the Bureaus;
- creating information-sharing protocols across the Bureaus to exchange best practices for uncovering and investigating such conduct;
- promoting research of deceptive, unfair, or anticompetitive labor market conduct to inform the FTC and public; and
- identifying opportunities for advocacy on legislative or regulatory changes that would remove barriers to labor market participation, mobility, and competition.
Notably, during the Biden administration, Chairman Ferguson publicly opposed the FTC’s Non-Compete Clause Rule (discussed here and here), which was set aside by federal courts last year (as discussed here), on the grounds that it is unconstitutional and violates the Administrative Procedures Act. Recently, Chairman Ferguson stated that he believes the FTC should reconsider its defense of the Non-Compete Clause Rule: “My view is that the Commission . . . basically needs to decide whether it’s a good idea [and] it’s in the public interest to continue defending this rule. . . . I’m going to be presenting at some point to my colleagues the decision about whether to continue defending this Rule.” He also stated, however, that he believes “there are non-competes out there in the world that are violating the Sherman Act . . . [and] it is really important . . . that the Trump-Vance FTC continue taking antitrust enforcement in labor markets very seriously.” Similarly, during confirmation hearings, FTC Commissioner nominee Mark Meador stated that non-compete agreements “have been overused and abused” and that “there’s a lot more the FTC can do, including with competition enforcement actions.”
With the announcement of the newly formed Task Force, the FTC signals that it will continue to focus on anticompetitive labor practices under the new Trump administration, including scrutinizing restrictive covenant agreements for potential enforcement actions.
