A proposal for a new rule was announced by the Federal Trade Commission. A $300 billion increase in American wages is argued by the commission.
The FTC wants to prohibit employers from entering into, attempting to enter, or maintaining a noncompete with an employee. The rule could prohibit employers from re-presenting to a worker if the worker is subject to a noncompete.
The rule would protect future independent contractors while forcing current employees to give up their jobs. 30 million people are believed to be affected by the rule. Public comment on the proposal is being sought by the FTC.
The FTC Chair said in a press release that non-competes deprive businesses of a talent pool that they need to build and expand. The FTC proposed a rule to end this practice.
According to the Director of the Office of Policy Planning, research shows that noncompetes restrict workers' mobility and suppress their wages, even if they are not subject to noncompetes. She said that the proposed rule would make sure that employers can't limit workers' opportunities and stifle competition.
Workers are not allowed to work for a competitor or start a competing business if they have a non-compete clause. 30 million workers are bound by non-compete clauses according to the FTC. The commission believes that this restriction lowers wages because workers are forced to remain at their current position and unable to negotiate a higher salary with a competitor.
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