FTC Moves to Ban Noncompete Clauses
Proposed Rule Aims to Protect Workers, Boost Competition
Commission to Vote on Rule After Year-Long Deliberation
Washington, D.C. - The Federal Trade Commission (FTC) is set to vote on Tuesday, April 23rd, on a proposed rule that would ban noncompete clauses in employment contracts.
Noncompete clauses are agreements that prevent workers from leaving their jobs to work for competing businesses. The FTC argues that these clauses suppress competition and limit worker mobility, ultimately harming consumers.
The proposed rule defines "senior executive" as workers earning more than $100,000 per year. These executives will still be subject to noncompete clauses under the rule.
The FTC first proposed the rule in January 2023. After a year of review and feedback, the agency is now ready to vote on the final rule.
FTC Chair Lina M. Khan has been a vocal proponent of banning noncompete clauses. She argues that these clauses "have solidified the hold of large incumbents." The ban, she believes, will "unleash the power of competition to drive innovation and economic growth."
The proposed rule has received support from workers' rights advocates and labor unions. However, some businesses argue that noncompete clauses are necessary to protect trade secrets and confidential information.
The FTC estimates that the proposed ban would affect approximately 30 million workers in the United States. If the rule is approved, it would be a significant victory for workers' rights and a major blow to noncompete clauses.
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