FTC Proposes Banning Noncompete Clauses, Protecting Workers

Following a December letter from consumer advocates and labor, the Federal Trade Commission (FTC) today took the first step in banning the use of coercive, anti-worker non-competes in employment contracts. Tens of millions of workers are vulnerable to economic disempowerment through employers’ use of, or threat to use, non-compete clauses. Matt Kent, competition policy advocate for Public Citizen, released the following statement:

“The FTC’s action today is thrilling. The rule was long in the making but the strength of this proposal makes the wait worthwhile. If finalized in this form, the rule would be wide ranging, applying to independent contractors and requiring an employer to actively inform workers that existing noncompete clauses are no longer in effect. The legal backing for the rule is also an exciting and overdue use of the FTC’s power to police unfair methods of competition using authority granted by Congress in Section 5 of the FTC Act.

“The agency is once again taking bold action where necessary to protect competition in the labor markets. As stated in the consumer advocates letter encouraging the FTC to move forward, ‘Employers’ use of non-compete clauses inflict real and substantial harms on the American worker and the overall U.S. economy without any legitimate justification.’ The FTC should issue a final rule that mirrors the quality of this initial effort.”