FTC Bans Non-Compete Agreements
Jose Nino
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On April 23, 2024, the Federal Trade Commission prohibited employers from using non-compete contracts to bar the majority of workers from getting hired by rival businesses.
The FTC approved this measure by a 3-2 vote. Such a move is the first time in over 50 years that FTC officials have put forward a regulation to implement a national change in how companies compete against each other.
The rule prohibits companies from enforcing current non-compete agreements on any individual other than veteran executives. It also prohibits employers from imposing new non-compete agreements on senior executives in the future.
FTC Chair Lina Khan stated the rule restores rights to Americans that corporations have abrogated by imposing non-compete clauses in the workplace. “Robbing people of their economic liberty also robs them of all sorts of other freedoms,” she remarked.
The Biden regime launched a regulatory assault on non-compete agreements in 2021, when it put forward a blueprint for stronger enforcement of the anti-trust laws.
The FTC argued that non-compete clauses infringe a 110-year-old law that bans unfair methods of competition. The agency added that these restrictions limit competition for labor and bring about lower pay and benefits for workers.
The Chamber of Commerce is already suing the FTC over this new rule change. Non-compete agreements have become more common in the American economy and now impact roughly 20% American workers. The WSJ noted the following about what type of workers are affected by such measures:
The practice has grown more prevalent in the U.S. economy and now affects nearly one in five American workers. Even lower-wage workers such as restaurant employees and hair stylists, who lack access to intellectual property or trade secrets, have been subject to them.
The reported added:
Sales staff, engineers, doctors and salon workers are among the most common types of workers affected by companies’ enforcement of noncompete clauses, according to research published by Cornell University professor Matt Marx in 2022.
Banning non-competes has enjoyed great popularity among workers. Per FTC projections, this rule would increase worker earnings by roughly $400 billion or higher over 10 years. This FTC measure is reasonable in that it gives workers more power in an age where mass migration and managed trade undermines their power in the market.
Ultimately, the US needs economic nationalism across the board if it wants to fully bring back order to the American political economy.
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