-The U.S. Federal Trade Commission on Tuesday approved a rule to ban agreements commonly signed by workers not to join their employers' rivals or launch competing businesses, which it says limit worker mobility and suppress wages.
FTC Chair Lina Khan during the meeting said noncompetes not only restrict workers’ opportunities but can infringe on other fundamental rights by blocking them from changing jobs. “We are not a legislature,” Ferguson said. “I do not believe we have the power to nullify tens of millions of existing contracts."Major business groups representing an array of industries have criticized the rule, saying noncompetes are a crucial way for companies to protect trade secrets and that they promote competitiveness.
"This decision sets a dangerous precedent for government micromanagement of business and can harm employers, workers, and our economy," said Suzanne Clark, the Chamber's president and CEO. Left-leaning advocacy groups also praised the change, calling it a major victory for workers that will bolster the national economy by spurring entrepreneurship. "The FTC has abolished a modern form of involuntary servitude," said Sandeep Vaheesan, legal director of the Open Markets Institute, a think tank that focuses on antitrust issues.
California, Minnesota, Oklahoma and North Dakota have banned noncompete agreements and at least a dozen other states have passed laws limiting their use.