10:55 AM EDT, 04/01/2024 (MT Newswires) -- PDD (PDD) is allegedly using noncompete agreements to sue ex-employees to thwart potential competition, The Wall Street Journal reported, citing court data and former employees.

PDD -- which owns shopping website and app Temu -- is allegedly going after even low and mid-level workers to mete out noncompete penalties, the report said.

PDD said it uses noncompete agreements in a "limited and responsible manner" and adheres to the law and best practices, according to the Journal report.

Former employees who were sued for noncompete breaches in the six months to February represented less than 2% of the people who left the company during that period, the company said, according to the Journal report.

While China's Labor Contract Law says noncompete restrictions should apply only to senior executives and others with confidentiality obligations, some 20 mostly lower-level former PDD employees have voiced grievances on Chinese social media after the company hit them with noncompete penalties, the Journal report said.

PDD didn't immediately respond to a request for comment by MT Newswires.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Price: 119.99, Change: +3.74, Percent Change: +3.22