In a historic decision, the US Federal Trade Commission (FTC) has banned non-compete agreements nationwide. The vote was 3-2 in favor of implementing the measure, which aims to prevent wage suppression and promote innovation.
Non-compete contracts have become increasingly common across various industries, with limited oversight and a decline in union membership. It is estimated that around 30 million workers are currently bound by these agreements. FTC chair Lina Khan emphasized that non-compete clauses are unfair and hinder competition in markets for products and services.
The agency considered over 26,000 public comments before reaching this decision. Industry groups have criticized the ruling, arguing that it is too extreme and will lead to higher business costs and potential risks to trade secrets. One of the opposing FTC commissioners, Andrew Ferguson, stated that the rule is unlawful because the agency lacks the authority granted by Congress.
Despite the opposition, the ban on non-compete agreements marks a significant shift in labor practices and could have far-reaching implications for workers across the country.