If you are doing job you should be free to work for company says FTC

Key Tajeaways:

• The US government enjoys making it unlawful for companies to enter into agreements that limit their employees’ ability to work for competitors.
• The US Chamber of Commerce, one of the most influential business advocacy organisations, called the proposal “blatantly unlawful.
• The FTC was given the task of finding ways to restrict their use in 2021 by US President Joe Biden, who has positioned himself as a leader who is pro-labor.

The US government likes to make it illegal for businesses to enter into contracts restricting employees’ ability to work for rival companies.

Non-compete clauses were deemed “exploitative” by the Federal Trade Commission (FTC) and unfairly constrained the opportunities of an estimated 30 million Americans.

A ban would promote a more dynamic economy, according to the FTC, which upholds competition law.

The business community contested the proposal right away.

It will now start a protracted rule-making procedure.

Non-compete clauses were created to stop departing employees from joining competitors and disclosing trade secrets.

The proposal was labelled “blatantly unlawful” by one of the most potent business advocacy groups, the US Chamber of Commerce.

According to Sean Heather, senior vice president of the organisation, “Since the agency’s creation more than a century ago, Congress has never delegated anything to the FTC remotely close to the authority it might need to promulgate such a competition rule.” The Chamber is sure that this illegal action won’t stand.

According to the FTC, non-compete agreements have permeated the US labour market and now affect one in five employees.

Although the practice has traditionally been reserved for the ranks of business executives and high-tech workers, the agency claimed that it has now spread to occupations like warehousing and hair styling.

US President Joe Biden, who has positioned himself as a pro-labour leader, directed the FTC to look into ways to limit their use in 2021.

Lina Khan, the agency’s director and a well-known critic of the power of major tech companies like Amazon, referred to the ability to change jobs as being “core to economic liberty as well as a competitive, thriving economy” on Thursday.

Non-compete agreements prevent employees from freely changing jobs, depriving them of better pay and working conditions, as well as the talent pool that businesses need to develop and grow.

“The FTC’s proposed rule might promote greater dynamism, innovation, as well as healthy competition by ending this practice,” she stated.

The rule-making plans were revealed after the FTC declared legal actions against several businesses that had coerced workers, including security guards, into signing non-compete agreements.

According to official estimates, workers would collectively receive nearly $300 billion (£251 billion) more in wages annually if the rule were to become law.