Biden administration seeks to ban noncompete agreements

The Federal Trade Commission voted 3-2 on Tuesday to ban noncompete agreements that prevent workers from taking expertise learned with one company to another company or from starting their own business using the proprietary information.

Around 18%, or 30 million employees are covered by noncompete agreements.

The rule would ban new noncompetes as well as existing agreements for all employees except senior executives.

The reason given for the rule is to encourage competition and give people a way to change jobs without having to leave their profession or their homes.

“It is so profoundly unfree and unfair for people to be stuck in jobs they want to leave, not because they lacked better alternatives, but because noncompetes preclude another firm from fairly competing for their labor, requiring workers instead to leave their industries or their homes to make ends,” FTC Commissioner Rebecca Slaughter (D) said in prepared remarks.

The rule must be published in the Federal Register and can take effect after 120 days, but the U.S. Chamber of Commerce President and CEO Suzanne Clark is leading a coalition of business groups to sue the FTC to block the rule, so its future is uncertain.