Wednesday, a sharply divided Federal Trade Commission voted 3-2 to ban non-compete clauses in employment contracts.
“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” said FTC Chair Lina M. Khan. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”
The ban affects an estimated 30 million US workers who are subject to non-compete agreements, but the exact number is uncertain. A Labor Department study published in June 2022 estimated that non-compete agreements bind 18 percent of Americans, while other research suggests it could be closer to 50 percent.
BACKGROUND: Federal Trade Commission Votes to Kill Employers’ Ability…
