International Courant
The Federal Commerce Fee narrowly voted Tuesday to ban non-compete agreements, a measure that might have an effect on as much as 30 million People — one in 5 employees — in jobs starting from executives to minimal wage earners.
Whereas the ban, which handed by a 3-2 vote, was celebrated by unions, pro-business teams have strongly opposed it and threatened authorized motion.
Non-compete agreements are clauses in employment contracts that prohibit an worker from working at a rival firm, normally inside a sure geographic space or for a sure time frame.
FTC Chair Lina Khan stated in an announcement after Tuesday’s vote that the non-compete ban, which was first proposed final yr, would “give People the liberty to discover a new job, begin a brand new enterprise or to convey a brand new concept to the market.”
“Non-compete agreements maintain wages low, stifle new concepts and rob the American financial system of dynamism, together with the greater than 8,500 new startups that will be created a yr after non-compete agreements could be banned,” Khan stated.
The FTC rule would take impact in 120 days. However that timeline will doubtless be delayed by a high-stakes authorized battle. The U.S. Chamber of Commerce informed ABC Information it plans to sue the FTC inside the subsequent day.
The Federal Commerce Fee constructing in Washington DC, January 28, 2015.
Alex Brandon/AP, FILE
“The Federal Commerce Fee’s determination to ban non-compete agreements from employers throughout the financial system is just not solely unlawful, however a blatant energy seize that may undermine the power of American firms to stay aggressive,” the chamber’s CEO stated , Suzanne Clark, in an announcement.
However the AFL-CIO, the nation’s largest labor group, praised the FTC’s “sturdy” ban in an announcement, saying that “[n]on-compete agreements stop employees from discovering higher jobs, drive down wages and stifle competitors .’
The FTC stated the ban, if it survived courtroom evaluate, would apply to all staff who enter into new employment contracts after they settle for new jobs.
For workers with present agreements, non-compete agreements would now not be enforceable, so firms may now not stop their staff from taking jobs with rivals.
One exception is made for “senior executives” with present non-competitors incomes greater than $151,164 per yr, which the FTC estimates is lower than 1% of staff.
The FTC stated it expects the ban to extend employees’ mixed wages by as much as $488 billion over the subsequent decade, with common employee earnings estimated to extend by $524 per yr.
