FTC Proposes Ban on Non-Compete Clauses for American Workers
Extended Deadline for Public Comment
Notice of Proposed Rulemaking
The Federal Trade Commission (FTC) has proposed a rule that would prohibit employers from entering into non-compete clauses with their workers. This proposed rule aims to increase competition and protect worker mobility, with the FTC estimating that non-compete clauses cover approximately 30 million American employees (one-in-five).
Pursuant to Sections 5 and 6g of the Federal Trade Commission Act, the FTC has extended the deadline for filing public comments on its Notice of Proposed Rulemaking. The original deadline was September 12, 2023, but has now been extended to March 10, 2023, to allow for more time for stakeholders to provide input.
Defining Senior Executives
Specifically, the proposed rule defines the term "senior executive" as an employee who:
- Earns more than $250,000 annually (adjusted for inflation)
- Has "substantial decision-making authority within a business organization," and
- Has responsibilities that "affect the strategic direction or operation of the business"
The FTC estimates that fewer than 1% of workers would be considered senior executives under the proposed rule.
Benefits of Banning Non-Compete Clauses
The FTC argues that a ban on non-compete clauses would have several benefits for workers and the economy as a whole, including:
- Increased worker mobility and job opportunities
- Higher wages and salaries
- Reduced economic inequality
- Enhanced innovation and competition
The proposed rule is open for public comment until March 10, 2023. The FTC encourages all interested parties to submit their views on the proposed rule, which can be done online at regulations.gov.
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