FTC to Vote on Banning Noncompete Clauses
Proposed Rule Receives Over 26,000 Public Comments
Commission to Finalize Decision After Public Input
The Federal Trade Commission (FTC) will vote on Tuesday on a final rule that would prohibit most U.S. employers from imposing noncompete clauses on employees. The proposed rule was issued in January 2023 and was subject to a 90-day public comment period during which the FTC received over 26,000 comments.
Noncompete clauses are legal agreements that restrict employees from working for competing businesses after leaving their current employment. The FTC argues that these clauses can stifle competition by limiting workers' ability to move to better-paying or more fulfilling jobs. According to the FTC, noncompete clauses can also lead to wage suppression and reduced innovation.
In a 3-to-2 vote, the FTC's Democratic commissioners approved the proposed rule. Republican commissioners Melissa Holyoak and Andrew N. Ferguson voted against it. The final rule will be subject to further public comment before it goes into effect.
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