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What is the new FTC rule on non-competes?

On Behalf of | May 15, 2024 | Employment Law |

The Federal Trade Commission’s recent decision to prohibit noncompete agreements for most employees signals a significant shift in labor market dynamics. The new rule aims to dismantle barriers that have long hindered worker mobility and suppressed wages. The president has signaled his support, and as such, when this the new rule is challenged, the administration will seek to defend it. But, what is the new rule, and what does it mean for employers and employees?

What does it mean?

Under the ban, noncompete clauses will be largely eliminated, liberating millions of workers from contracts that impede job changes and competition. However, senior executives in policy-making roles are exempted. The aim is to strike a balance between worker freedom and business interests. The FTC suggested confidentiality clauses as an alternative.

Why is it needed?

The argument is that economically, the ban could boost wages and benefits significantly over the next decade. The argument is that this demonstrates the FTC’s commitment to fostering a competitive environment and look to economically bolster the US workforce.

What about challenges?

Despite its potential benefits, legal challenges from employer groups like the United States Chamber of Commerce may delay or block the rule’s implementation. Challenges are likely because there is an ongoing debate over labor practices and business interests, and many businesses currently use noncompete agreements, even for low-level employees.


The FTC’s decision marks a pivotal moment in labor market reform. It prioritizes worker rights and economic growth. It sets a precedent for future regulations aimed at enhancing job mobility and fairness in the workplace.



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