The Morning Call: Our tree service company took on the FTC; here is why

Twelve years ago, my son Adam started a small tree care company in our hometown of Perkasie, Bucks County. What started as a side business alongside his full-time job as a mechanical technician grew into ATS Tree Services, a successful company with a dozen employees that provides a wide range of residential and commercial tree care services. The Federal Trade Commission, with its attempted nationwide ban on noncompete agreements, is threatening to devastate our business and millions of businesses like it.

Most tree companies operate with a business model that employs a single skilled arborist or climber on a crew with several unskilled laborers. The benefit of this approach is only having to invest company resources into one skilled laborer. The downside is that hiring and retaining skilled workers is extremely difficult, as the skilled worker pool is limited.

Adam’s solution was to break from the usual mold and establish an apprenticeship program, training unskilled workers to become professional arborists. That way, rather than fighting for existing top talent, ATS trained its own talented workforce, along with creating a culture of employees invested in the company’s success.

Using this method, ATS has successfully trained over a dozen young people with no college education or trade experience. Each of them now has a career path and options they previously lacked. But this training is not cheap. ATS invests significant time and money in its training program. Training an apprentice means spending longer on many jobs — time that cannot be recouped from the customer — purchasing equipment and sending trainees to outside seminars. Tree work is dangerous. It isn’t the kind of skill that can be learned on your own or even attending a trade school. There is no substitute to on-the-job training.

What ATS asks in return is that employees sign a simple noncompete agreement that states they will not go across the street to do the same work for ATS’ competitor for one year. In return, ATS then invests in the employee, training them to be one of the best tree care industry professionals in the tri-state area.

This is a common arrangement used by employers across the nation. It’s also consistent with Pennsylvania law, which permits noncompete agreements with a reasonably limited scope protecting a legitimate interest — such as the significant training we provide. After one year, our former employees can work for any of our competitors. And, of course, should a former employee take a job with another tree service provider outside our local area or in a different capacity, the noncompete restriction does not apply.

However, in April of this year, the FTC moved to impose a nationwide ban on noncompete agreements. This decision to prohibit a common contractual agreement between employees and employers will make it much harder for small companies like my son’s to compete. That’s why we fought to protect our business by challenging the agency’s decision in federal court, represented by Pacific Legal Foundation.

If the FTC enacts a blanket prohibition on noncompete agreements, our closest competitors will endeavor to lure away our skilled employees, circumventing the significant investments we make in training and using our resources against us. Without the security of a reasonable agreement, ATS would be imprudent in continuing to provide the same high level of training investment.

The FTC and its defenders argue that ending these arrangements will promote competition, allowing employees more flexibility and mobility in the marketplace. However, if noncompete agreements are outlawed, instead of building up workers and providing quality service, ATS and the rest of the tree care industry will be forced into a race to the bottom for employees.

Fortunately, a federal court in Texas ordered the FTC rule to be set aside for now. But the fight is not over. We expect the FTC will continue to fight for broad power to tell small businesses how they should operate. And I will continue to stand up for my son’s right to organize his business in the best way for both ATS and its employees.

This op-ed originally appeared in The Morning Call on September 26, 2024.