FTC Proposes Rule to Ban Non-compete Clauses

“The freedom to change jobs is core to economic liberty and to a competitive, thriving economy,” said Chair Lina M. Khan. “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. By ending this practice, the FTC’s proposed rule would promote greater dynamism, innovation, and healthy competition.” Under the guise of increasing workers’ earning, the Federal Trade Commission proposed a new rule that would ban employers from imposing noncompete clauses on their workers – irrespective of their position in the company and their access to Company confidential and proprietary information. The proposed rule would also apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.