Current:Home > MarketsMillions of workers are subject to noncompete agreements. They could soon be banned -Legacy Profit Partners
Millions of workers are subject to noncompete agreements. They could soon be banned
View
Date:2025-04-27 20:28:37
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! (7)
Related
- What to know about Tuesday’s US House primaries to replace Matt Gaetz and Mike Waltz
- How Prince William Has Been Supporting Kate Middleton Throughout Her Health Battle
- Travis, Jason and Kylie Kelce attend Taylor Swift's Eras Tour show in London
- Woman ID'd 21 years after body, jewelry found by Florida landscapers; search underway for killer
- Toyota to invest $922 million to build a new paint facility at its Kentucky complex
- 2 killed in helicopter crash in Washington state, authorities say
- Ten Commandments law is Louisiana governor’s latest effort to move the state farther to the right
- Broadway's Baayork Lee: What she did for love
- Taylor Swift makes surprise visit to Kansas City children’s hospital
- IOC approves Oklahoma City to host Olympic softball, canoe slalom during the 2028 Los Angeles Games
Ranking
- NFL Week 15 picks straight up and against spread: Bills, Lions put No. 1 seed hopes on line
- Federal judge to consider a partial end to special court oversight of child migrants
- Thousands of refugees in Indonesia have spent years awaiting resettlement. Their future is unclear
- Emma Stone's New Brunette Hair Transformation is an Easy A
- The White House is cracking down on overdraft fees
- Biden campaign targets Latino voters with 'media blitz' around Copa America 2024
- Takeaways from AP’s report on access to gene therapies for rare diseases
- Level Up Your Outfits With These Target Clothes That Look Expensive
Recommendation
The White House is cracking down on overdraft fees
Super Bowl parade shooting survivors await promised donations while bills pile up
Why Heidi Klum Stripped Down in the Middle of an Interview
Messi and Argentina overcome Canada and poor surface, start Copa America title defense with 2-0 win
Meet the volunteers risking their lives to deliver Christmas gifts to children in Haiti
Don’t blink! Summer Olympics’ fastest sport, kitesurfing, will debut at Paris Games
Kate Middleton Celebrates Prince William's Birthday With New Family Photo
California implementing rehabilitative programs in state prisons to reshape incarceration methods