The FTC Has Banned Noncompete Agreements That Restrict Job Switching
The FTC has banned noncompete agreements that restrict job switching. This is a policy goal that is popular with labor. But it faces an imminent court challenge from business groups. The measure was approved by the agency’s Democratic majority on a 3 to 2 vote.
This marks the first time in more than 50 years that FTC officials have issued a regulation to mandate an economy wide change in how companies compete. As a result, it will be easier for millions of Americans to change jobs within their industries.
An estimated 30 million people, one in five US workers, are bound by noncompete restrictions, according to the FTC. The FTC claims that the new rule could boost worker wages by nearly $300 billion a year. “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.
If what the FTC is saying is true, this would be a win for members of the working class. Something that hardworking Americans need after news that there is unlikely to be an interest rate cut in the near future. But we still have to wait and see the true effect that banning noncompete agreements will have.
The FTC has banned noncompete agreements that restrict job switching. They say that this action will help working class Americans. Only time will tell if they are proven right.
