Federal Trade Commission Approves Ban Of Noncompete Agreements

by Dave Jamieson at huffpost.com

The Federal Trade Commission on Tuesday voted 3-2 in favor of adopting a historic and far-reaching ban on noncompete agreements, potentially giving more leverage in the job market to millions of U.S. workers.

The agency has said that the agreements, in which workers are forbidden from seeking a job with a competing business for a certain period of time, lead to an “unfair method of competition” and violate federal law. The vote by the agency’s five commissioners this week means the ban will move forward.

The FTC’s three Democratic members were in favor of adopting the regulation, while its two Republican members were against it.

Noncompetes have been under fire for years because of the way they can lock workers into jobs and suppress wages by reducing mobility in the labor market. And they are not strictly the domain of well-compensated executives and engineers; these days, even fast-food workers can find themselves barred from taking a job at a competing business.

Lina Khan, the commission’s chair and a progressive appointee of President Joe Biden, has said that the contracts undermine the “core” of economic liberty.

“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,” Khan said when proposing the ban in early 2023.

The agency estimated that the ban would boost wages by between $400 billion and $488 billion over 10 years, and lead to the creation of more than 8,500 new businesses per year.