The Federal Trade Commission (FTC) has taken a groundbreaking step by enacting a nation-wide ban on new noncompete agreements. The ban, which will come into effect in 120 days, applies to all workers across the United States. However, existing noncompete agreements for senior executives will still be enforceable.
The main aim of the ban is to protect workers and prevent noncompete agreements from limiting their economic freedom and ability to switch jobs. It is estimated that the ban could impact tens of millions of workers and potentially boost worker wages by nearly $300 billion annually.
Despite the potential benefits for workers, the U.S. Chamber of Commerce has announced its intention to sue to block the new rule. Noncompete agreements have long been criticized for stifling competition, discouraging employees from starting their own businesses, and even harming consumers.
The final rule from the FTC comes more than two years after President Biden directed the agency to address the unfair use of noncompete agreements. Real-life examples have shown how these agreements can negatively impact workers, including blocking job changes and preventing them from earning higher wages.
The ban is particularly aimed at protecting low-paid workers who are often the most vulnerable to being restricted in seeking better pay or job opportunities. It is seen as a step towards ensuring greater fairness and economic freedom for workers across the country.
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