Federal Trade Commission votes to ban noncompete agreements

"Business people handshake noncompete"

Federal Trade Commission votes to ban noncompete agreements

HUNTSVILLE, Ala. – A major vote on a federal rule impacts roughly one in five workers. Tuesday, the Federal Trade Commission voted to ban non-compete agreements, which for decades has barred workers from jumping to or starting competing companies. The FTC estimates 18 percent of the U.S. workforce is covered by noncompete agreements, which equates to nearly 30 million people. Those numbers can span from fast food workers to CEOs.

Implications of the Vote

With today’s vote from The Federal Trade Commission, U.S. companies will no longer be able to bar employees from taking jobs with competitors. President Biden supported the measure, saying workers ought to have the right to choose who they want to work for. The FTC said non-compete clauses have kept wages low.

Huntsville Workplace Litigation Attorney, Eric Artrip, agrees. He’s fought non-competes before and says they’ve been holding workers captive. “I think this is going to make a huge difference in the American workforce. People should be able to sell their time, their labor, their day to a person who is going to pay them the most money. What non-competes have done has kept these artificially low, and now it’s going to give these workers the opportunity to go out and find somebody who might pay them more, doing the same job,” said Artrip.

Legal Challenges Ahead

This rule will take effect in four months; however, it’s very likely this will end up in a legal challenge. The U.S. Chamber of Commerce is already planning to file a lawsuit to block the rule after accusing the FTC of overstepping its authority and casting too wide a net to include all non-competes in this vote.