FTC Votes to Ban Noncompete Clauses, Chamber of Commerce Vows to Sue
Summary from the AllSides News Team
The Federal Trade Commission voted to ban noncompete clauses.
For Context: Noncompete clauses are contractual agreements barring an employee from going to work for a competing company for a set period of time.
Details: The FTC board voted 3-2 in favor of banning noncompete clauses. These clauses are already banned in certain states, such as California, but this rule will ban them nationally and take effect in four months. The rule will prohibit employers from entering into new noncompete clauses or enforcing preexisting ones, apart from those pertaining to “senior executives.” The U.S. Chamber of Commerce announced its intention to sue the FTC, aiming to block the new rule.
Key Quotes: FTC Chair Lina Khan said in a statement after the vote, “Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned.” U.S. Chamber of Commerce President and CEO Suzanne P. Clark called the rule change “a blatant power grab that will undermine American businesses’ ability to remain competitive.”
How the Media Covered It: Fox Business (Lean Right bias) noted Republican opposition to the rule change, noting that critics argue the clauses are a “critical tool for companies to protect trade secrets and that they promote competitiveness.” The New York Times (Lean Left bias) noted that “Studies have shown that noncompetes suppress wages.”
Featured Coverage of this Story
From the Left
F.T.C. Issues Ban on Worker Noncompete ClausesThe Federal Trade Commission on Tuesday banned employers from limiting their workers’ abilities to work for rivals, a sweeping change that the agency says could help raise wages and increase competition among businesses.
The move bars contracts known as noncompetes, which prevent workers from leaving for a competitor for a certain amount of time, in most circumstances. The agency has said the proposal would raise wages by forcing companies to compete harder for talent.
The proposal was approved by the agency in a 3-to-2 vote. Commissioners Melissa Holyoak and Andrew...
From the Center
FTC Bans Noncompete Clauses That Restrict Job SwitchingThe Federal Trade Commission on Tuesday banned employers from using noncompete contracts to prevent most workers from joining rival firms, achieving a policy goal that is popular with labor but faces an imminent court challenge from business groups.
The measure, approved by the agency’s Democratic majority on a 3-to-2 vote, marks the first time in more than 50 years that FTC officials have issued a regulation to mandate an economywide change in how companies compete. The commission has historically operated like a law enforcement agency, investigating and suing individual companies...
From the Right
FTC votes to ban noncompete agreementsThe Federal Trade Commission (FTC) on Tuesday approved a regulation that would ban noncompete agreements nationwide on the grounds that they unfairly limit workers' mobility and lead to lower pay.
The FTC, which currently has a Democratic majority under President Joe Biden, voted 3-2 to approve the final noncompete rule. The agency first proposed the ban on noncompete agreements in January 2023, arguing they unfairly limit competition.
Noncompete agreements generally prohibit an employee from leaving their current company to work for a competitor and are more commonly used in more...
AllSides Picks
May 3rd, 2024
May 3rd, 2024
April 28th, 2024