The American Hospital Association and the Federation of American Hospitals joined about 230 organizations to urge the Federal Trade Commission to delay its ban on noncompete agreements.
FTC's ban on noncompete agreements is set to go into effect Sept. 4, but hospitals and others asked in a Friday letter that the FTC hold off until lawsuits over the rule have been decided. On Tuesday, the AHA also said the FTC should voluntarily push back the ban due to a lack of clarity around exemptions and how the ban applies to executives.
Related article: How the FTC noncompete ban affects nonprofit providers
The letter, which was signed by organizations from nearly every industry, marks the latest push against the controversial noncompete ban. The rule, finalized in April, would ban employers from using noncompete agreements and nullify any existing agreements, except for those with certain senior executives.
The rule is only applicable to for-profit organizations, but non-profit hospitals may still feel the effects of the ban if they engage with for-profit businesses, which could involve subsidiaries, joint ventures, health plans and clinically integrated networks. The FTC estimates the rule would reduce consumer healthcare costs by up to $148 billion per year due to increased competition.
Multiple lawsuits, including one from the U.S. Chamber of Commerce, have been filed since the rule was finalized. The organizations that signed the letter told the FTC that while the noncompete ban's future is uncertain due to the litigation, it continues to add costs for businesses and create economic uncertainty.
"Businesses are identifying existing noncompetes and notifying employees and former employees that their noncompetes may no longer be enforceable," the letter said. "Companies are incurring substantial legal costs as they explore other tools to attempt to protect their investments, and workers are losing training opportunities and bargaining power to negotiate compensation."
The organizations also said FTC should consider delaying the rule as it did with its Combating Auto Retail Scams rule, which was delayed under similar circumstances and uncertainty, according to the letter.
