The Federal Trade Commission is proposing a nationwide ban on noncompete clauses that restrict employees from working for rival firms or starting competing businesses.
on Thursday proposed a rule that would prohibit employers from requiring workers to sign noncompete clauses that restrict them from working for competitors or starting new businesses that offer similar services for a period of time.as a "widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.
FTC commissioner nominee Lina M. Khan testifies during a Senate hearing on Capitol Hill, April 21, 2021. The FTC's proposed noncompete ban wouldn't apply to other types of employment restrictions that companies commonly require workers to comply with, such as non-disclosure agreements to protect intellectual property or other confidential information. However, the FTC's announcement noted that those types of restrictions "could be subject to the rule if they are so broad in scope that they function as noncompetes.
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'Victory for American Workers': FTC Proposes Ban on Noncompete ClausesSen. Elizabeth Warren noted that 'noncompete clauses give companies unfair power over workers, enabling them to cut wages and benefits without fear of workers finding a new job or starting their own business.'
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