For the first time ever, the Federal Trade Commission has sued multiple companies and individuals claiming they imposed illegal noncompete restrictions on workers.
Included in the complaints are Prudential Security Inc. and Prudential Command Inc., as well as their owners, Greg Wier and Matthew Keywell. Also named are glass and packaging companies O-I Glass Inc. and Ardagh Group S.A.
The FTC said in a news release that the companies and individuals illegally imposed noncompete restrictions on workers, including low-wage security guards, manufacturing workers, engineers and glass plant employees.
A representative for O-I declined to comment and a representative for Titan Security Group, of which the Prudential companies are subsidiaries, denied imposing the restrictions on security officers.
The FTC said the restrictions prohibited the workers from looking for or accepting jobs with competing companies after leaving.
And the restrictions hurt both workers and competing businesses by leading to lower wages and salaries, reduced benefits, and unfavorable working conditions, the FTC said.
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More on the security companies sued by the FTC
In its complaint, the FTC said Prudential, Michigan-based security companies, “exploited their superior bargaining power against low-wage security guards.”
Prudential required workers to sign contracts that prevented them from working for competing businesses within a 100-mile radius of their job site for two years after leaving the company, the complaint said.
According to the FTC, Prudential’s workers typically earned minimum wage or close to it. Despite this, the company’s standard noncompete clause required employees to pay $100,000 if they violated the company’s clause.
Also noted are claims that Prudential tried to sue individual employees and competing security guard companies, and block workers from accepting jobs at significantly higher wages.
A Michigan state court found the company’s restrictions were “unreasonable and unenforceable under state law,” the FTC said. Still, the companies kept making security guard employees sign them.
The restrictions, the FTC said, were unfair and violated the FTC Act. The FTC has demanded Prudential stop enforcing the noncompete restrictions on relevant workers and make sure all affected employees know they are no longer required to abide by the restrictions.
“Titan does not and has never imposed non-compete restrictions on its security officers,” said Stephen Johnson, a marketing manager with Titan Security Group, which owns the Prudential companies involved.
“We applaud the FTC’s efforts to halt unlawful non-compete restrictions and to protect workers,” Johnson said.
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‘Freedom to seek higher wages’
The FTC also claimed O-I Glass Inc. imposed noncompete restrictions on employees that banned them from owning or being involved with similar U.S. businesses for one year after leaving the company.
If the workers were involved with other similar businesses within one year of leaving, they needed written consent from O-I Glass, according to the FTC.
More than 1,000 O-I Glass employees were impacted by the restrictions at the beginning of the FTC’s investigation, the agency said.
A representative for O-I declined to comment on the FTC claims.
Rahul Rao, Deputy Director of the FTC’s Bureau of Competition, said in the news release that “the FTC is committed to ensuring that workers have the freedom to seek higher wages and better working conditions without unfair restrictions by employers.”
Other moves by the FTC to eradicate unfair restrictions
Also this week, the FTC proposed a rule to ban U.S. businesses from imposing noncompete clauses on workers.
If approved, the rule would make it so employers cannot prohibit workers from joining competitors after they leave the companies.
President Joe Biden said the FTC’s proposal is “a huge step forward in banning non-compete agreements that are designed simply to lower people’s wages.”
“These agreements block millions of retail workers, construction workers and other working folks from taking better jobs and getting better pay and benefits in the same field,” he said.
Saleen Martin is a reporter on USA TODAY’s NOW team. She is from Norfolk, Virginia – the 757 – and loves all things horror, witches, Christmas, and food. Follow her on Twitter at @Saleen_Martin or email her at [email protected].