The US Federal Trade Commission has made the decision to ban non-compete agreements nationwide. The FTC voted 3-2 to implement this measure after initially proposing it in January 2023. The goal of this ban is to prevent wage suppression and promote innovation. Non-compete agreements have become common in various industries due to limited oversight and a decrease in unionisation. It is estimated that around 30 million workers are currently bound by these clauses.
FTC chair Lina Khan emphasized that non-compete agreements are unfair methods of competition that limit workers’ personal freedoms and hinder competition in product and service markets. The agency received over 26,000 public comments on the matter. However, industry groups are opposed to the ruling, claiming that it is too severe and will lead to increased business costs and may compromise trade secrets.
Andrew Ferguson, a Republican FTC commissioner, argued that the agency did not have the authority granted by Congress to enforce such a ban. This decision has sparked controversy among stakeholders and it remains to be seen how it will impact the business landscape in the US.