Factz

BREAKING

FTC Proposes Ban on ‘Noncompete Agreements’

If you’ve ever had to sign a non-compete agreement for your place of employment, you’ve probably experienced how frustrating it can be.

Even after you severed ties with one job, they have a hold on you – preventing you from providing services to competitors or starting your own rival business for a period of time after your employment ends.

While it seems like a good thing from your former employer’s perspective, experts say it stifles healthy competition, stifles wages, and causes headaches for people who simply want to work in the sector they have experience in.

The FTC said in a press release over the last week that noncompete agreements violate Section 5 of the Federal Trade Commission Act, prohibiting unfair methods of competition. The agency says a new proposed rule to ban the agreements “could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.”

FTX Chair Lina Khan said in a statement, “The freedom to change jobs is core to economic liberty and to a thriving competitive economy. Noncompetes 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. By ending this practice, the FTC’s proposed rule would promote greater dynamism, innovation, and healthy competition.”

Noncompetes are usually reserved for executives, preventing them from taking their knowledge and experience to rivals. Still, in recent years businesses have begun extending this to lower-wage workers, including those in retail and food service.

In March 2022, the Treasury Dept noted that nearly 1 in 5 workers in America are bound to one of these agreements. Opponents say they limit competition by protecting large companies at the expense of entrepreneurial ventures, which causes a detrimental impact on the development of innovative new tech and services.



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