New federal rule would bar companies from forcing 'noncompete' agreements on employees

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U.S. companies would no longer be able to bar employees from taking jobs with competitors under a rule approved by a federal agency, though the rule is sure to be challenged in court.

FILE - The Federal Trade Commission building is seen, Jan. 28, 2015, in Washington. U.S. companies would no longer be able to bar employees from taking jobs with competitors under a rule approved by the FTC on Tuesday, April 23, 2024, though the rule seems sure to be challenged in court. – U.S. companies would no longer be able to bar employees from taking jobs with competitors under a rule approved by a federal agency Tuesday, though the rule is sure to be challenged in court.

The Federal Trade Commission voted Tuesday to ban measures known as noncompete agreements, which bar workers from jumping to or starting competing companies for a prescribed period of time. According to the FTC, 30 million people — roughly one in five workers — are now subject to such restrictions.

When it proposed the ban in January 2023, FTC officials asserted that noncompete agreements harm workers by reducing their ability to switch jobs for higher pay, a step that typically provides most workers with their biggest pay increases. By reducing overall churn in the job market, the agency argued, the measures also disadvantage workers who aren't covered by them because fewer jobs become available as fewer people leave jobs.

Business groups have criticized the measure as casting too wide a net by blocking nearly all noncompetes. They also argue that the FTC lacks the authority to take such a step. The U.S. Chamber of Commerce has said it will sue to block the measure, a process that could prevent the rule from taking effect for months or years. And if former President Donald Trump wins the 2024 presidential election, his administration could withdraw the rule.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

 

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