1 month ago
FTC bans noncompete agreements
Employment prospects conscionable sewage brighter for nan estimated 30 cardinal U.S. workers who are presently bound by alleged noncompete agreements. U.S. regulators connected Tuesday banned astir each noncompetes, which restrict astir 1 successful 5 labor astir nan U.S.
Here are 5 things to cognize astir what nan Federal Trade Commission norm intends for workers.
What nan norm states
- Noncompetes are an unfair intends of competition, and truthful employers are prohibited from entering into immoderate caller specified arrangements pinch workers. Employers will nary longer beryllium capable to enforce existing noncompetes, different than pinch elder executives, which nan norm defines arsenic personification earning much than $151,164 per twelvemonth and successful a "policy-making position."
- Employers are required to notify workers pinch noncompetes that they are nary longer enforceable.
- Noncompetes are allowed betwixt nan seller and purchaser of a business.
When nan norm takes effect
The norm takes effect 120 days from nan clip it is published successful nan Federal Register, nan charismatic regular publication for rules, projected rules, and notices of national agencies and organizations, arsenic good arsenic executive orders. The FTC submits nan rule, follows nan procedures and waits for publication to happen, pinch nan nonstop timing up to nan Federal Register.
The reasons down nan FTC's decision
- Noncompete agreements tin restrict workers from leaving for a amended occupation aliases starting their ain business.
- Noncompetes often efficaciously coerce workers into staying successful jobs they want to leave, and moreover unit them to time off a occupation aliases relocate.
- Noncompetes tin forestall workers from accepting higher-paying jobs, and moreover curtail nan salary of workers not taxable to them directly.
- Of nan much than 26,000 comments received by nan FTC, much than 25,000 supported banning noncompetes.
Why galore wellness attraction workers whitethorn beryllium exempt
Nonprofits typically autumn extracurricular nan FTC's jurisdiction, meaning nan noncompete prohibition whitethorn not use to galore of nan nation's wellness attraction supplier organizations.
As galore arsenic 45% of physicians are restricted by noncompetes, according to nan American Medical Association, which has voiced support for banning astir of them.
What happens next
In voting against transition of nan rule, nan 2 Republican FTC commissioners connected nan five-person sheet based on that nan agency lacks nan authority to prohibition noncompetes. The aforesaid lawsuit is being made by nan U.S. Chamber of Commerce, which revenge suit against nan FTC connected Wednesday.
The ineligible challenges are viewed arsenic a reliable threat, meaning a lawsuit could extremity up successful nan U.S. Supreme Court, wherever blimpish justices person a majority.
Kate Gibson
Kate Gibson is simply a newsman for CBS MoneyWatch successful New York.
