In the latest example of workers finding relief from restrictive non-compete agreements, the Federal Trade Commission (FTC) has taken action against Anchor Glass Container Corporation, telling the manufacturing company that the agreements they required of more than 300 workers were illegal and unfair.
When used correctly, restrictive employment covenants are meant to protect an employer’s business interests, such as trade secrets, confidential information, investment in training, and customer goodwill. Unfortunately, they have increasingly been applied in ways that cause real and sustained harm to workers, keeping wages and other forms of compensation low and even subjecting employees to adverse working conditions that prove essentially inescapable once the contracts have been signed. In the case of Anchor Glass, employees across a wide range of positions and responsibilities were kept from working for another employer in the same industry for a period of one year. The FTC ordered the company and its owners to drop these restrictions.
The non-compete agreement that Anchor had required their workers to sign specified that employees in positions as diverse as quality assurance and glass production could not work for another U.S. employer to provide the “rigid packaging sales and services which are the same or substantially similar to those in which Anchor deals.” Workers were also barred from selling products or services to “any customers or prospective customers of Anchor with whom the worker had any interaction.”
Calling these restrictions an unfair method of competition, the FTC banned Anchor from using these agreements in the future. They not only prohibited the company from maintaining, enforcing, or attempting or threatening to enforce any restrictive covenant required of these workers in the past, they also are not allowed to tell an involved employee or any other employees that a non-compete agreement is in place. Perhaps most notable of all, for the next decade the company is required to provide conspicuous notification to new employees that no restrictive covenant is in place, and that they are free to look for or take a job with any other company. They also can start their own company, whether it competes with Anchor or not.
The FTC has been assertively pursuing companies whose non-compete agreements are egregious. This is the fourth action they’ve taken against a company this year, and they’ve also pursued two individuals. While these actions against illegal restrictive covenants have helped thousands of workers, the agency is actively considering a comprehensive ban on their use.
If you have been subjected to a non-compete restriction that you believe violates your rights, our experienced attorneys are here to help. Contact us today to learn more.