Nearly all noncompete employment contracts that prohibit employees from switching to rival firms or starting their own have been prohibited by the Federal Trade Commission (FTC ).
After receiving more than 26, 000 people responses, some of which head Lina Khan made reference to, the ban just passed three to two in a Tuesday voting.  ,
” We heard from people who, because of noncompetes, were stuck in harsh organizations”, she said, according to NPR. One employee observed that when an employer merged with a group whose spiritual principles were in conflict with their own, a noncompete prevented the employee from being able to easily transfer to a career that did n’t discord with their religious beliefs.
The FTC’s fresh law, which will go into effect 120 days after publishing in the Federal Register, calls noncompete agreements an “unfair process of contest”.
According to Khan, the public’s experience “pointed the way that robbing citizens of their monetary independence even robs them of a variety of different rights.”
1. A final guideline was issued today that would outlaw noncompetes for employees across the nation.
The law will give Americans the freedom to start a new company, work from home, or market a fresh idea. ssl: //t. co/Ax9QQtHuvn
— Lina Khan ( @linakhanFTC ) April 23, 2024
The commission claimed that more than 25 000 information from the general public were “in help of the FTC’s proposed restrictions on noncompetes” during the 90-day public opinion windows that opened in January 2023.
Around 30 million people — 20 percent of U. S. staff — are bound by noncompetes, authorities estimated. The FTC claimed that the new policy could result in a total wage increase of nearly$ 300 billion annually by giving workers more work freedom.
” Noncompete phrases keep wages low, control new concepts, and rob the National economy of vitality, including from the more than 8, 500 innovative companies that would be created a time once noncompetes are banned”, Khan said in a speech. The FTC’s last principle to outlaw noncompetes will give Americans the freedom to work from home, launch a new company, or introduce a fresh idea to the market.
The FTC projects that the typical worker’s profits will increase by an further$ 524 per year in addition to the expansion of thousands of new businesses.
Additionally, according to the organization, their choice is anticipated to reduce healthcare costs by up to$ 94 billion and result in an allegedly annual increase of 17 000 to 29 000 inventions over the next ten years.
The FTC has also made an exception to the existing noncompete law for organizations that have senior executives who only represent 0. 75 % of employees.  ,
” But businesses are banned from entering into or attempting to enforce any fresh noncompetes, even if they involve older executives”, the firm stated. Companies will be required to give notice to employees who are not top executives and are bound by an existing noncompete that they will not be imposing any noncompetes on them.
Melissa Holyoak and Andrew Ferguson, the single dissenters and just Republicans on the committee, argued the FTC was going outside its limitations of strength in the selection, NPR reported.
The forecast that Holyoak made for the court may challenge the rule soon after the vote was confirmed.  ,
On Wednesday, business organizations led by the U.S. Chamber of Commerce filed a lawsuit against the FTC in a Texas federal court, contending that the payment is not able to challenge a rule of this nature.  ,
The organization has been vocal in opposition to the proposed ban for more than a year, arguing that some companies require noncompetes to do so in order to protect business strategies. According to Bloomberg, they have also asserted that noncompetes benefit employees by giving them a greater opportunity to spend money on labor development and training, according to Bloomberg.
” This judgement sets a dangerous precedent for federal bureaucracy of enterprise and can harm businesses, employees, and our economy”, wrote Suzanne P. Clark, president and CEO of the U. S. Chamber, in a speech.
The Federal Trade Commission’s decision to outlaw employer noncompete agreements across the economy is” not only unlawful but also a clear power grab that will undermine American businesses ‘ ability to remain competitive.”
Read @SuzanneUSCC‘s statement on why we will sue the FTC … pic. twitter.com/IdGgWQnaQR
— U. S. Chamber ( @USChamber ) April 23, 2024
Meanwhile, Rep. Matt Gaetz ( R- FL ) applauded the FTC’s decision as a “vindication of economic freedom and free enterprise”.
The FTC Act of 1914 gives the congressman authority to regulate to outlaw “u]nfair methods of competition …and unfair or deceptive acts or practices in or affecting commerce,” according to Sections 5 and 6.
” This law, in effect for over a century, reflects that our Constitution contemplates limiting all power concentrations in the country, whether public or private”, Gaetz continued. The last thing we need are corporations limiting the ability of free Americans to engage in side hustles or change jobs as housing costs continue to rise and wages continue to remain stagnant under President Biden.
” The @FTC’s rule is a win for American workers and consumers”.
Yesterday, the United States Federal Trade Commission, under the leadership of Chairwoman Lina Khan, issued a final rule prohibiting most non- compete clauses nationwide. I applaud the FTC’s decision as a victory over free enterprise and economic freedom.
Under Sections 5 and … https ://t.co/ZPuWNXxez Q
— Rep. Matt Gaetz ( @RepMattGaetz ) April 24, 2024
Rep. Thomas Massie (R-KY ) argued that” states have been and should be regulated by such employment contracts,” not “bureaucratic rule.”
Similar employment agreements should be governed by the states.
However, if one thinks that the federal government should outlaw these contracts, it should be done through a law that has been passed by elected representatives rather than a bureaucratic rule based on 100+ years of law.
— Thomas Massie ( @RepThomasMassie ) April 24, 2024
