For decades, employers have used non-competition agreements to not only artificially lower the salaries of their employees but also to render those employees into something akin to indentured servitude.
On January 5, 2023, the Federal Trade Commission proposed a new rule – accessible at https://www.ftc.gov/legal-library/browse/federal-register-notices/non-compete-clause-rulemaking — that would ban employers from imposing non-competes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. The proposed rule provides that: “It is an unfair method of competition for an employer to enter into or attempt to enter into a non-compete clause with a worker; maintain with a worker a non-compete clause; or represent to a worker that the worker is subject to a non-compete clause where the employer has no good faith basis to believe that the worker is subject to an enforceable non-compete clause.” The proposed rule would also require the rescission of all non-competition agreements entered into before the date the new rule takes effect.
By stopping these unfair non-competition agreements, the FTC estimates not only that wages might be increased by nearly $300 billion per year but also that expanded career opportunities would abound for about 30 million Americans.