Law & Order

FTC Considers Banning Non-Compete Clauses

By SEMA Washington, D.C., Staff

The Federal Trade Commission (FTC) has issued a proposed rule that would ban employers from including non-compete clauses in worker contracts. The agency contends that the provisions are an unfair method of competition that have the effect of suppressing wages, hampering innovation and thwarting entrepreneurs from starting up new businesses. The FTC argues that removing them would allow workers to more freely switch jobs, seek higher wages and better working conditions and expand the talent pool from which other businesses hire employees. Opponents argue that non-compete provisions encourage companies to retain and promote workers and invest in training. The FTC estimates that at least 30 million Americans are subject to non-compete clauses.

The proposed rule would not apply to other types of employment restrictions, such as non-disclosure agreements. SEMA is reviewing the proposed rule and welcomes member feedback. Comments are due 60 days after it is officially published in the Federal Register.

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