The American Hospital Association is asking the FTC to withdraw its proposal to ban noncompete agreements.
The rule would apply to full-time employees and independent contractors, both paid and unpaid.
According to a Feb. 22 letter to the FTC, many hospital employees, "especially physicians and senior executives, do not present the same considerations with respect to noncompete agreements as other types of employees."
"The proposed regulation errs by seeking to create a one-size-fits-all rule for all employees across all industries, especially because Congress has not granted the FTC the authority to act in such a sweeping manner," the letter said. "Even if the FTC had the legal authority to issue this proposed rule, now is not the time to upend the healthcare labor markets with a rule like this."
The rule would force companies to discontinue existing noncompete agreements and inform employees they no longer apply. It would also be illegal to falsely suggest an employee is bound by one.
Noncompete agreements limit a person's ability to get a new job with a competitor through restrictions on geography, time or line of business. About half of states strictly limit these agreements, but companies often still use them despite the fact they are largely unenforceable, according to The New York Times.
"It would instantly invalidate millions of dollars of existing contracts, while exacerbating problems of health care labor scarcity, especially for medically underserved areas like rural communities." the letter said.