FTC Approves Ban Of Noncompete Agreements In 3-2 Vote

LOADING ERROR LOADING The Federal Trade Commission on Tuesday voted 3-2 in favor of adopting a historic and far-reaching ban on noncompete agreements, potentially giving more leverage in the job market to millions of U.S. workers. “The FTC estimated that the ban would boost wages by between $400 billion and $488 billion over 10 years.” Lina Khan, the commission’s chair and a progressive appointee of President Joe Biden, said Tuesday that non-compete clauses “keep wages low, suppress new ideas, and rob the American economy of dynamism.” “The FTC’s 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,” Khan said. The agency estimated that the ban would boost wages by between $400 billion and $488 billion over 10 years, and lead to the creation of more than 8,500 new businesses per year. When proposing the rule, the FTC noted that noncompetes could hurt low-wage workers in particular, citing use of the contracts at the sandwich chain Jimmy John’s, which HuffPost had revealed in 2014. It defined a competitor as any business that is located within 3 miles of a Jimmy John’s and derives at least 10% of its revenue from “submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches.” Biden had urged the FTC to take action against noncompete agreements not long after taking office, signing an executive order in July of 2021.