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FTC intends to ban noncompete clauses that bind 30 million US workers

Noncompetes are “an unfair method of competition” and violate US law, FTC says.



Enlarge / Lina Khan at a Senate confirmation hearing in April 2021, before she was confirmed as chair of the FTC. (credit: Getty Images | Pool)

The Federal Trade Commission today proposed a rule that would prohibit employers from imposing noncompete clauses on workers, arguing that “noncompetes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act.”

The contract clauses currently “bind about one in five American workers, approximately 30 million people,” the FTC said in a fact sheet, writing that noncompetes prevent workers from seeking better jobs and prevent employers “from hiring qualified workers bound by these contracts.”

“Noncompetes undermine core economic liberties,” FTC Chair Lina Khan wrote. “Evidence suggests noncompetes also suppress earnings and opportunity even for workers who are not subject to a noncompete. FTC economists estimate that noncompetes lower US workers’ collective income by $250-$296 billion [per year].”

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