The FTC has voted to approve a ban on non-compete agreements. CNN reports that the Federal Trade Commission voted 3 – 2 on Tuesday to approve a ban on non-compete clauses, which prevents companies from making workers sign such agreements and makes currently-existing non-compete agreements unenforceable after the effective date of the rule, which is 120 days from the rule’s publication. The one exception is to allow currently existing non-compete agreements for “senior executives,” i.e those making over $151,164 annually who also are in a “policy-making position” — to remain in force.
It is important to note that independent contractors, such as those in WWE and AEW, would (at least on a quick read) appear to be covered under the new rule. The FTC’s rule classifies workers as follows:
The final rule defines “worker” as “a natural person who works or who previously worked, whether paid or unpaid, without regard to the worker’s title or the worker’s status under any other State or Federal laws, including, but not limited to, whether the worker is an employee, independent contractor, extern, intern, volunteer, apprentice, or a sole proprietor who provides a service to a person.” The definition further states that the term “worker” includes a natural person who works for a franchisee or franchisor, but does not include a franchisee in the context of a franchisee-franchisor relationship.
It is also important to note that the ban will almost certainly be challenged in court, with the US Chamber of Commerce stating it will sue the FTC this week over the ban, as it views the agency as exceeding its authority in the matter.
Around 30 million people, 18% of the US workforce, are subject to non-compete agreements currently.
BREAKING: The FTC just banned non-compete agreements.
The Federal Trade Commission has issued a final rule making it illegal for bosses to make workers sign noncompetes in any scenario, and voiding nearly all existing noncompetes.
This is a game changer for American workers. pic.twitter.com/9n1tJWpQl4
— More Perfect Union (@MorePerfectUS) April 23, 2024
