The Biden administration has issued a nationwide ban on the ability of employers to make their workers sign noncompete agreements, a move regulators said would help boost employee pay but which is set to be challenged in court by business groups.<\/p>\n
In a ruling Tuesday afternoon, the Federal Trade Commission (FTC) said noncompete clauses would henceforth be illegal. The measure was necessary, it said, for \u2018protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.\u2019<\/p>\n
\u201cNoncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism,\u201d said FTC chair Lina M. Khan in a statement. \u201cThe FTC\u2019s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.\u201d<\/p>\n
The FTC estimates nearly one in five Americans are subject to noncompetes. They have grown increasingly common in lower wage or hourly work industries like fast food franchises, restaurants, and security firms, where some employers have sought to limit the ability of workers to effectively raise their pay by looking for work at competing establishments. <\/p>\n
In addition to banning all new noncompetes, the FTC\u2019s rule applies to all existing noncompete agreements. Employers will now have to provide notice to workers bound to a current noncompete that it will not be enforced against them.<\/p>\n
The rule was hailed by labor groups and left-leaning policy experts.<\/p>\n
\u2018Noncompetes are about reducing competition, full stop.\u00a0It\u2019s in their name,\u2019 said Heidi Shierholz, president of the progressive nonprofit Economic Policy Institute. \u2018Noncompetes are bad for workers, bad for consumers, and bad for the broader economy. This rule is an important step in creating an economy that is not only strong but also works for working people.\u2019<\/p>\n
The AFL-CIO, America\u2019s largest labor group, praised the new rule in a post on X Tuesday, saying noncompete agreements \u2018trap workers from finding better jobs, drive down wages, and stifle competition.\u2019<\/p>\n
But business groups are already hitting out at the ban, saying noncompetes are essential to protecting trade secrets and proprietary information. The groups also say noncompetes ultimately help workers by engendering a more collaborative firm environment and limiting so-called \u2018free riders,\u2019 or employees who seek to capitalize on a specific company\u2019s methods and taking that knowledge elsewhere. <\/p>\n
The U.S. Chamber of Commerce, the country\u2019s largest business lobby, said it plans to sue the FTC over the ruling. In a statement, it called the ban an \u2018unlawful power grab.\u2019<\/p>\n
\u201cThis decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy,\u2019 it said.\u00a0<\/p>\n
Separately. a Dallas-based tax services firm filed a lawsuit in Texas federal court \u2014 which has proven hostile to Biden administration rulings \u2014 challenging not only the ban but the very structure of the FTC itself. <\/p>\n
\u2018We stand firm in our commitment to serve the rightful interest of every company to retain its proprietary formulas for success taught in good faith to its own employees,\u201d said chairman and CEO G. Brint Ryan said in a statement. <\/p>\n
The FTC\u2019s rule is set to go into effect in August, but is unlikely to be enforced until the court challenges are resolved, something that could take years. <\/p>\n<\/p>\n
The Biden administration has issued a nationwide ban on the ability of employers to make their workers sign noncompete agreements, a move regulators said would help boost employee pay but which is set to be challenged in court by business groups. In a ruling Tuesday afternoon, the Federal Trade Commission (FTC) said noncompete clauses would […]<\/p>\n","protected":false},"author":0,"featured_media":3514,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-3513","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/3513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=3513"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/3513\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/3514"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=3513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=3513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=3513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}