The Federal Trade Commission has proposed a rule that would effectively prohibit the use of non-compete agreements, leaving employers with fewer legal options for safeguarding their classified information.<\/p>\n
A non-compete clause is a contractual agreement between an employer and a worker that prohibits the worker from working for a competing employer or starting a competing business, typically with geographic and time constraints.<\/p>\n
With a limitation, the FTC’s newly proposed rule prohibits employers from imposing non-compete clauses on employees. It is founded on an initial determination that non-compete agreements are an unfair method of competition and thus violate Section 5 of the FTC Act.<\/p>\n
According to the proposed rule, non-compete agreements currently impede approximately 30 million American workers, or one in every five, and that prohibiting them “would increase American workers’ earnings between $250 billion and $296 billion per year.” It would thus prohibit employers from requiring employees to accept non-compete clauses and require them to rescind existing non-competes within 180 days of the final rule’s publication.<\/p>\n
\u201cBy design, noncompetes often close off a worker\u2019s most natural alternative employment options: jobs in the same geographic area and professional field,\u201d FTC Chair Lina Khan wrote in a statement joined by Commissioners Alvaro Bedoya and Rebecca Slaughter. \u201cThese restrictions can undermine core economic liberties, burdening Americans\u2019 ability to freely switch jobs.\u201d<\/p>\n