U.S. President Joe Biden attends the White House Correspondents' Association (WHCA) dinner in Washington, D.C., U.S., on Saturday, April 30, 2022. The annual dinner raises money for WHCA scholarships and honors the recipients of the organization's journalism awards. Photographer: Jim Lo Scalzo/EPA/Bloomberg via Getty Images
On Tuesday, the Federal Trade Commission (FTC) banned noncompete agreements in a 3-2 vote.
The FTC estimates that 18% of the U.S. workforce is covered by noncompete agreements, which prevents about 30 million employees from working for competitors or starting a competing business after they leave a job.
The final rule would ban new noncompete agreements for all workers and require companies to let current and past employees know they won’t enforce them. Companies will also have to throw out existing noncompete agreements for most employees, though agreements may remain in place for senior executives.
“It is so profoundly unfree and unfair for people to be stuck in jobs they want to leave, not because they lacked better alternatives, but because noncompetes prelude another firm from fairly competing for their labor, requiring workers instead to leave their industries or their homes to make ends meet,” FTC Commissioner Rebecca Slaughter said in her remarks.
Subscribe to our free weekly newsletter!
A week of political news in your in-box.
We find the news you need to know, so you don't have to.
The new rule will go into effect 120 days after it’s published in the Federal Register, though its future remains uncertain as pro-business groups opposing the rule are expected to take legal action to block the ruling.
Business groups claim noncompete agreements are critical for protecting proprietary information and intellectual property, although the rule would not ban other methods for protecting such information.
The U.S. Chamber of Commerce, the largest pro-business lobbying group in the country, said it will sue to block the rule. Chamber President and CEO Suzanne Clark called the FTC vote to ban noncompetes “a blatant power grab that will undermine American businesses’ ability to remain competitive.”
“This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers and our economy,” Clark said. “The Chamber will sue the FTC to block this unnecessary and unlawful rule and put other agencies on notice that such overreach will not go unchecked.”
The lawsuit would mark the latest battle between the business community and President Joe Biden’s administration, with agencies including the FTC introducing measures to crack down on corporate price gouging, junk fees and alleged anticompetitive behavior.
Tesla CEO Elon Musk has apologized for his public falling out with President Donald Trump.…
Sen. Chris Murphy (D-Connecticut) has launched a new political action committee (PAC), the American Mobilization…
Brit Hume, the Fox News chief political analyst, contradicted President Donald Trump's statement to the…
FBI Director Kash Patel has revealed that his home was "swatted" last week. "As Director…
Commerce Secretary Howard Lutnick announced the launch of the $5 million "gold card" U.S. residency…
In a new study, nearly 50% of Tesla owners report their vehicles have been vandalized,…