The US Federal Trade Commission (FTC) voted 3-2 to ban noncompete agreements — which bar employees from working for competing companies either in a specific area or time frame — for an estimated 30M employees, ranging from minimum wage workers to executives.
The ruling by the Democrat-majority panel bans companies from enforcing existing non-competes for all non-senior executive employees and bans them from writing new ones for future senior executives.
Noncompete contracts rarely protect company secrets, but they do shackle employees to their existing companies or force them to switch careers or move far away to find a new job — something most people can't afford to do. By prohibiting employees from starting their own businesses, these contracts also weaken competition. If we want employees and entrepreneurs to thrive, these agreements should be banned at all levels of business.
Despite what these anti-business government officials claim, noncompete clauses actually do promote competition and help, not hinder, employees. This is also an egregious, unconstitutional power grab by three unelected regulators who think they can decide what is and isn't a competitive market. The FTC has never been granted such overarching authority, which is why actual American businessmen and women will fight this in court.