FTC decides to prohibit noncompete agreements

The Federal Trade Commission (FTC) made a groundbreaking decision on Tuesday, voting 3-2 to ban noncompete agreements that have long restricted the job mobility of millions of American workers. These agreements, which prevent employees from working for competitors or starting their own businesses after leaving a job, have affected around 30 million people in the U.S. workforce, according to FTC estimates.

The new rule, set to go into effect in 120 days, would prohibit the use of noncompete agreements for all workers and require companies to inform current and former employees that they will not enforce such agreements. While some exceptions are made for senior executives, the majority of employees will no longer be bound by these restrictive contracts.

FTC Commissioner Rebecca Slaughter emphasized the unfairness of noncompete agreements, stating that they force workers to stay in jobs they want to leave, limiting their ability to seek better opportunities. However, the rule’s future is uncertain as pro-business groups, including the U.S. Chamber of Commerce, have vowed to challenge it in court.

The decision by the FTC is part of a larger effort by the Biden administration to address anti-competitive practices and protect workers’ rights. As the 2024 presidential election approaches, these policy battles are becoming increasingly important, with President Biden seeking to differentiate himself from former President Trump on economic issues. The outcome of this legal battle could have far-reaching implications for the future of labor rights and competition in the U.S. economy.