Noncompete agreements have been banned in the United States

12 May 2024 · 1 min

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In this video, Jerry Taylor explains the Federal Trade Commission's new rule that bans non‑compete agreements across the United States. The ban will affect roughly one‑fifth of American workers—about 30 million people—by prohibiting clauses that prevent employees from moving to competing firms or starting competing businesses. Taylor outlines the historical use of non‑competes, which began with high‑level executives to protect trade secrets, but have since expanded to low‑wage workers earning under $20 per hour. He notes that three states, including California, had already prohibited such agreements. The segment also covers the backlash from business groups, highlighting that the U.S. Chamber of Commerce has already filed a lawsuit challenging the FTC’s authority, and anticipates further legal challenges from other industry groups.

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Non-compete agreements have been banned by the Federal Trade Commission. This is going to apply to 1 in 5 workers in the United States, or about 30 million people. Non-compete agreements bar workers from jumping to competition companies or starting their own competition companies. And if you've been in the workforce very long, you've probably seen these agreements in the documents you've signed with your employer. Prior to this ruling, non-compete agreements were already banned in 3 states, including California. These types of agreements started out applying to high-level executives to keep them from taking company secrets and company lists to competing companies. But they have become so widespread that they now often include lower-paid workers, even people making less than $20 an hour. Business groups are already arguing that the Federal Trade Commission has overstepped their boundaries, and in fact, the United States Chamber of Commerce has already filed litigation to challenge this ruling. And you can bet that's not going to be the only lawsuit filed against this ruling by big