The Federal Trade Commission on Tuesday voted to ban noncompete agreements. The ban would prohibit new noncompete agreements for every employee and mandate that companies inform both current and former staff that they won\u2019t be enforcing such agreements. Additionally, businesses will be obligated to revoke existing noncompete agreements for the majority of their employees. Senior level executives\u2019 agreements, however, may remain intact. <\/p>\n\n\n\n
The FTC view<\/strong><\/p>\n\n\n\n Commission members backing the ban argue that noncompete agreements are unfair for workers. <\/p>\n\n\n\n \u201cIt 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,\u201d FTC Commissioner Rebecca Slaughter (D) said. <\/p>\n\n\n\n The chairwoman of the FTC argued that the ban will foster new business formation.<\/p>\n\n\n\n \u201cNoncompete 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,\u201d said FTC Chair Lina M. Khan. \u201cThe FTC\u2019s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.\u201d<\/p>\n\n\n\n Businesses strongly disagree<\/strong><\/p>\n\n\n\n Business groups blasted the rule, arguing that noncompetes are important to the protection of intellectual property and that the FTC lacks the authority even to issue such a ban. <\/p>\n\n\n\n Bills have been introduced in Congress to reform noncompete agreements, but no authority has been explicitly granted to the FTC. <\/p>\n\n\n\n Suzanne Clark, president and CEO of the U.S. 小红帽直播app of Commerce said that the ban is \u201ca blatant power grab that will undermine American businesses\u2019 ability to remain competitive.\u201d<\/p>\n\n\n\n