The US Federal Trade Commission has voted to ban non-compete agreements, taking aim at contracts that limit employees’ freedom to quit for a new job at a different employer.
The regulator’s commissioners voted 3-2 on Tuesday to implement the far-reaching measure first proposed in January 2023 in a bid to avoid wage suppression and protect innovation. But the move sparked immediate legal pushback.
Non-compete agreements have become pervasive across industries, amid limited oversight and a decline in unionisation, experts say. The FTC said approximately 30mn workers are subject to such contracts, which prohibit employees from working for a competitor or setting up a competing business for a period of time or within a geographical area after they leave a job.