U.S FTC Chair Lina Khan Bans Non-Compete Agreements For Nearly All Jobs

The Federal Trade Commission Chair Lina Khan is set to ban nearly all noncompetes, employment agreements that prevent workers from switching jobs or launching their own businesses.

Chair Lina Khan referenced on Tuesday some of the stories she had heard from workers.

“We heard from employees who, because of noncompetes, were stuck in abusive workplaces.

“One person noted when an employer merged with an organization whose religious principles conflicted with their own, a noncompete kept the worker locked in place and unable to freely switch to a job that didn’t conflict with their religious practices.

These accounts, she said, “pointed to the basic reality of how robbing people of their economic liberty also robs them of all sorts of other freedoms.”

The FTC estimates about 30 million people, or one in five American workers, from minimum wage earners to CEOs, are bound by non competes, It says the policy change could lead to increased wages totaling nearly $300 billion per year by encouraging people to swap jobs freely.

The ban, which will take effect later this year, carves out an exception for existing noncompetes that companies have given their senior executives, on the grounds that these agreements are more likely to have been negotiated.

The FTC says employers should not enforce other existing noncompete agreements.

The vote was 3 to 2 along party lines.

The dissenting commissioners, Melissa Holyoak and Andrew Ferguson, argued that the FTC was overstepping the boundaries of its power.

Holyoak predicted the ban would be challenged in court and eventually struck down.

Shortly after the vote, the U.S. Chamber of Commerce said it would sue the FTC to block the rule, calling it unnecessary, unlawful and a blatant power grab.

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