Ftc Non Compete Rulemaking April 2024

FTC Bans Non-Compete Clauses, Boosting Wages and Competition

Chair Lina M Khan Leads Effort to Promote Economic Mobility

Key Takeaways:

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FTC issues rule banning new non-compete clauses

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Less than 1% of workers to be designated as senior executives

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Estimated wage and benefit boost of up to $488 billion over a decade

On April 23, 2024, the Federal Trade Commission (FTC) announced a historic decision to ban new non-compete clauses. This move, led by Chair Lina M. Khan, aims to enhance economic mobility and boost competition in the labor market.

The FTC estimates that its non-compete ban will have a significant positive impact on workers. It is projected to increase wages and benefits by up to $488 billion over the next decade.

The rule was approved by the FTC in a 3-to-2 vote, with Commissioners Melissa Holyoak and Andrew N. Strote dissenting. The ban applies to employers with a minimum revenue threshold and exempts a small number of senior executives and independent contractors from its provisions.

"The freedom to change jobs is core to economic liberty and to a competitive economy," said Chair Khan in a statement. "Non-compete clauses have stifled competition and restricted economic mobility for far too long, and the FTC is taking action to protect the rights of workers."