FTC proposes a new rule banning non-compete agreements
By Donna January 14, 2023 6:13 am Category: News (0.0 from 0 votes)
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I've never been required to sign a non-compete agreement, but I hope this goes through.
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Have you ever been forced to sign a non-compete agreement when you started a job?
About 30 million Americans are trapped by contracts that say if they leave their current job, they can’t take a job with a rival company or start a new business of their own.
These clauses deprive workers of higher wages and better working conditions. In effect, they’re a form of involuntary servitude.
Last week, while America was fixated on Kevin McCarthy’s travails, the Federal Trade Commission (FTC) proposed a sweeping new rule that would ban these non-compete agreements.
This is a big deal. The FTC estimates that such a ban could increase wages by nearly $300bn a year (about $2,000 a worker, on average) by allowing workers to pursue better job opportunities.
Non-competes also harm the economy, depriving growing businesses of talent and experience they need to build and expand. California’s ban on non-competes has been a major reason for Silicon Valley’s success.
Employers say they need non-compete agreements to protect trade secrets and investments they put into growing their businesses, including training workers.
Rubbish. Employers in the states that already ban them (such as California) show no sign of being more reluctant to invest in their businesses or train workers.
The real purpose of non-competes is to make it harder (or impossible) for workers to bargain with rival employers for better pay or working conditions.
As we learn again and again, capitalism needs guardrails to survive. Unfettered greed leads to monopolies that charge high prices, suppress wages and corrupt politics.
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