FTC votes to ban non-compete clauses

In a 3-2 vote Tuesday, April 23, the Federal Trade Commission voted to ban non-compete agreements nationwide, affecting an estimated 30 million workers. This rule prohibits new non-compete clauses and nullifies existing ones, except for certain high-earning senior executives.

“We heard from employees who, because of non-competes, were stuck in abusive workplaces,” FTC Chair Lina Khan said. “One person noted when an employer merged with an organization whose religious principles conflicted with their own, a non-compete kept the worker locked in place and unable to freely switch to a job that didn’t conflict with their religious practices.”

“The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market,” Khan added.

While supporters applaud the decision as a victory for worker rights, opponents, including Suzanne P. Clark, CEO of the U.S. Chamber of Commerce, criticized the FTC’s new rule as an overreach that threatens American business competitiveness, announcing plans to sue to block the rule.

“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 FTC’s ban is set to take effect in 120 days but is expected to be challenged in court.