FTC Moves to Ban Non-Compete Clauses, Potentially Impacting Millions of Workers
Nationwide Ban Enacted
The Federal Trade Commission (FTC) has enacted a nationwide ban on non-compete clauses, a move that could significantly impact millions of workers across the United States. The rule was passed by a narrow vote of 3-2 on Tuesday, May 2, 2023.
Background and Public Input
The FTC first proposed the ban in January 2023, initiating a 90-day public comment period. During this time, the agency received over 26,000 comments, mostly expressing support for the ban. Proponents argued that non-compete clauses unfairly restrict workers' mobility and depress wages.
Employer Obligations
The new rule will prevent most for-profit US employers from making employees sign agreements with non-compete clauses. Exceptions may apply for certain highly paid employees and in cases where the employer can demonstrate a legitimate business need for the restriction.
Impact on Workers and Economy
Experts believe the ban on non-compete clauses will have far-reaching implications. They anticipate increased job mobility, which could lead to higher wages and greater economic growth. It could also make it easier for workers to start their own businesses or switch careers.
However, some opponents of the ban argue that it may harm employers by limiting their ability to protect confidential information and trade secrets.
Next Steps
The FTC's proposed final rule will now undergo further legal review. Once finalized, it is expected to take effect in several months.
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