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Why the FTC Wants to Ban Non-Compete Agreements
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The US government wants to ban non-compete contracts in an effort to put more power in the hands of some 30 million workers. But many employers and business groups see it differently. Bloomberg's Ritika Gupta has more.
The US Federal Trade Commission is proposing a ban on non-compete clauses in employment contracts that keep workers from switching jobs — a sweeping rule likely to affect millions of Americans.
The proposal would bar employers from entering into or enforcing such clauses with employees or independent contractors and require companies to nullify any existing ones within six months. The ban would exempt companies that want to require an owner or partner selling a business from immediately re-entering the field.
“Non-competes are bad for workers and undermine labor competition,” FTC Chair Lina Khan told reporters in a news conference announcing the proposed rule. “When one set of workers are locked in place, that reduces churn overall.”
About one in five Americans is bound by a non-compete agreement, a March 2022 Treasury Department report found. The figure is higher in some industries, such as technology and health care where studies have found as many as 45% of primary care physicians and between 35% and 45% of tech workers are bound by non-compete clauses.
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The US Federal Trade Commission is proposing a ban on non-compete clauses in employment contracts that keep workers from switching jobs — a sweeping rule likely to affect millions of Americans.
The proposal would bar employers from entering into or enforcing such clauses with employees or independent contractors and require companies to nullify any existing ones within six months. The ban would exempt companies that want to require an owner or partner selling a business from immediately re-entering the field.
“Non-competes are bad for workers and undermine labor competition,” FTC Chair Lina Khan told reporters in a news conference announcing the proposed rule. “When one set of workers are locked in place, that reduces churn overall.”
About one in five Americans is bound by a non-compete agreement, a March 2022 Treasury Department report found. The figure is higher in some industries, such as technology and health care where studies have found as many as 45% of primary care physicians and between 35% and 45% of tech workers are bound by non-compete clauses.
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QUICKTAKE ON SOCIAL:
Quicktake by Bloomberg is a global news network delivering up-to-the-minute analysis on the biggest news, trends and ideas for a new generation of leaders.
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