Federal
Trade
Commission
Chair
Lina
Khan
testifies
before
a
House
Judiciary
Committee
hearing
on
Oversight
of
the
Federal
Trade
Commission,
on
Capitol
Hill
in
Washington,
D.C.,
July
13,
2023.
Kevin
Wurm
|
Reuters
The
Federal
Trade
Commission
on
Tuesday
voted
3-2
for
a
nationwide
ban
against
noncompete
agreements,
which
companies
use
to
prevent
employees
from
taking
jobs
with
competitors
in
the
same
industry.
The
new
rule
is
slated
to
go
into
effect
120
days
after
it
is
officially
published
in
the
Federal
Register,
though
business
groups
are
expected
to
challenge
it.
Within
hours
of
the
vote,
the
U.S.
Chamber
of
Commerce
pledged
to
sue
the
agency
over
the
rule.
If
officially
implemented,
the
rule
will
not
only
prohibit
new
noncompete
clauses,
but
will
also
force
companies
to
scrap
their
existing
noncompetes
for
all
employees
except
senior
executives
who
earn
more
than
$151,164
annually
and
who
are
in
policy-making
roles.
“Workers
ought
to
have
the
right
to
choose
who
they
want
to
work
for,”
President
Joe
Biden
said
Tuesday.
The
FTC
estimates
that
30
million
American
workers,
or
roughly
18%,
are
currently
subject
to
a
noncompete.
The
noncompete
provision
of
an
employee’s
contract
may
prevent
someone
from
going
to
work
for
a
competing
company
within
the
same
industry,
in
pursuit
of
a
better
career
opportunity,
higher
compensation
or
a
more
suitable
geographic
location.
“Noncompete
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,”
said
Federal
Trade
Commission
Chair
Lina
Khan
in
a
press
release.
The
FTC
initially
proposed
the
noncompete
ban
in
January
2023.
It
has
since
received
over
26,000
comments
on
the
proposal,
the
large
majority
of
which
were
in
support,
according
to
the
agency.
The
FTC
claims
that
noncompetes
impede
the
efficiency
of
the
labor
market
and
can
lead
to
“increased
market
concentration
and
higher
prices
for
consumers.”
Meanwhile,
business
trade
groups
claim
that
noncompetes
help
preserve
intellectual
property
and
company
secrets.
The
FTC
suggests
that
companies
lean
on
other
avenues
like
non-disclosure
agreements
to
secure
proprietary
information.
Tuesday’s
vote
comes
as
the
latest
move
from
an
FTC
that
has
been
at
the
forefront
of
President
Joe
Biden’s
broader
crusade
against
corporate
behemoths
and
the
rules
that
help
them
dominate
markets.
The
agency,
along
with
the
Department
of
Justice’s
antitrust
division,
has
filed
dozens
of
lawsuits
against
proposed
corporate
deals
over
the
past
several
years.
In
March,
Biden
launched
a
task
force
on
corporate
pricing
practices,
to
be
jointly
led
by
the
FTC,
an
independent
agency,
and
the
DOJ.
Biden
has
repeatedly
accused
companies
of
artificially
keeping
prices
high,
in
part
to
help
the
president
explain
why
inflation
has
remained
so
sticky
over
the
past
several
years.
