Thu. Feb 2nd, 2023

From today’s Bloomberg News:

The US Federal Trade Commission is proposing a ban on non-compete clauses in employment contracts that keep workers from switching jobs — a sweeping rule likely to affect millions of Americans.

The proposal would bar employers from entering into or enforcing such clauses with employees or independent contractors and require companies to nullify any existing ones within six months. The ban would exempt companies that want to require an owner or partner selling a business from immediately re-entering the field. 

“Non-competes are bad for workers and undermine labor competition,” FTC Chair Lina Khan told reporters in a news conference announcing the proposed rule. “When one set of workers are locked in place, that reduces churn overall.”

About one in five Americans is bound by a non-compete agreement, a March 2022 Treasury Department report found. The figure is higher in some industries, such as technology and health care where studies have found as many as 45% of primary care physicians and between 35% and 45% of tech workers are bound by non-compete clauses.

The agency will accept public comment on the proposal for 60 days and consider those submissions before it issues a final version of the rule.

In a press release announcing the proposal on Thursday, the FTC said the restrictions “block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand.”

Sean Heather, head of international regulatory affairs and antitrust for the US Chamber of Commerce, called the proposal “blatantly unlawful” and described non-compete clauses “an important tool in fostering innovation and preserving competition.”

Read the complete story here.

By Editor