The United States’ Federal Trade Commission is banning non-compete clauses.
In its ruling, the organisation pointed out that these do nothing by stymy people’s creativity. The FTC also argued that trade secret laws and non-disclosure agreements did enough to protect companies worried about knowledge leaving the building with workers after they left.
The organisation’s research shows that more than 95 per cent of workers under non-compete clauses were also subject to NDAs.
The commission voted 3-2 in favour of axing the practice; the organisation’s two Republication commissioners, Melissa Holyoak and Andrew Ferguson, objected.
“Non-compete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina Khan wrote in announcing the news.
“The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”