Current:Home > FinanceMillions of workers are subject to noncompete agreements. They could soon be banned -SecurePath Capital
Millions of workers are subject to noncompete agreements. They could soon be banned
View
Date:2025-04-11 14:29:25
The Federal Trade Commission took an a bold move on Thursday aimed at shifting the balance of power from companies to workers.
The agency proposed a new rule that would prohibit employers from imposing noncompete agreements on their workers, a practice it called exploitative and widespread, affecting some 30 million American workers.
"The freedom to change jobs is core to economic liberty and to a competitive, thriving economy," said FTC Chair Lina M. Khan in a statement. "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."
Noncompete agreements restrict workers from quitting their jobs and taking new jobs at rival companies or starting up similar businesses of their own within a certain time period — typically between six months and two years. They're used across a broad array of industries, including in high-paying white-collar fields such as banking and tech, but also in many low-wage sectors as well, as President Biden has pointed out.
"These aren't just high-paid executives or scientists who hold secret formulas for Coca-Cola so Pepsi can't get their hands on it," Biden said in a speech about competition in 2021. "A recent study found one in five workers without a college education is subject to non-compete agreements. They're construction workers, hotel workers, disproportionately women and women of color."
Employers have argued that they need noncompetes to protect trade secrets and investments they put into growing their businesses, including training workers.
A handful of states including California and Oklahoma already ban noncompetes, and a number of other states including Maryland and Oregon have prohibited their use among lower-paid employees. But those rules are difficult to enforce, with low-wage workers often reluctant to speak out.
The FTC estimates that a ban on noncompete agreements could increase wages by nearly $300 billion a year by allowing workers to pursue better opportunities.
The rule does not take effect immediately. The public has 60 days to offer comment on the proposed rule, after which a final rule could be published and then enforced some months after that.
The FTC will likely face legal challenges, including on whether it even has the power to regulate noncompete agreements. The agency says the proposed rule is based on a preliminary finding that noncompetes constitute an unfair method of competition and therefore are a violation of the Federal Trade Commission Act. The 1914 law gives the government power to prevent unfair methods of competition and investigate unfair or deceptive acts that affect commerce.
veryGood! (13541)
Related
- A South Texas lawmaker’s 15
- Proof Fast & Furious's Dwayne Johnson and Vin Diesel Have Officially Ended Their Feud
- Biden Put Climate at the Heart of His Campaign. Now He’s Delivered Groundbreaking Nominees
- Feeding 9 Billion People
- The White House is cracking down on overdraft fees
- Cancer drug shortages could put chemo patient treatment at risk
- This Is the Boho Maxi Skirt You Need for Summer— & It's Currently on Sale for as Low as $27
- Payment of Climate Debt, by Rich Polluting Nations to Poorer Victims, a Complex Issue
- Chuck Scarborough signs off: Hoda Kotb, Al Roker tribute legendary New York anchor
- California man sentenced to more than 6 years in cow manure Ponzi scheme
Ranking
- What to watch: O Jolie night
- Canada’s Tar Sands Province Elects a Combative New Leader Promising Oil & Pipeline Revival
- Pregnant Claire Holt Shares Glowing Update on Baby No. 3
- Jonah Hill Welcomes First Baby With Olivia Millar
- Israel lets Palestinians go back to northern Gaza for first time in over a year as cease
- Allow Homicide for the Holidays' Horrifying New Trailer to Scare You Stiff This Summer
- Climate Funds for Poor Nations Still Unresolved After U.S.-Led Meeting
- How Many Polar Bears Will Be Left in 2100? If Temperatures Keep Rising, Probably Not a Lot
Recommendation
New Zealand official reverses visa refusal for US conservative influencer Candace Owens
Is Trump Holding Congestion Pricing in New York City Hostage?
Canada’s Tar Sands Province Elects a Combative New Leader Promising Oil & Pipeline Revival
New Orleans Finally Recovering from Post-Katrina Brain Drain
Krispy Kreme offers a free dozen Grinch green doughnuts: When to get the deal
See Inside Millie Bobby Brown and Jake Bongiovi's Engagement Party
U.S. House Hacks Away at Renewable Energy, Efficiency Programs
Tax Overhaul Preserves Critical Credits for Wind, Solar and Electric Vehicles