The Federal Trade Commission (FTC) recently proposed a rule to effectively wipe out noncompete contracts between employees and employers. This ban would render existing noncompetes void and new noncompetes illegal. According to the FTC, a noncompete clause is a contractual term between workers and their employers that inhibits the worker's future employment or business opportunities. The FTC claims that noncompete contracts stunt competition in labor markets and result in lower wages for workers across the labor force.
It is estimated that one in every five employees is bound by a noncompete clause. If the ban is approved, roughly 30 million employees could be impacted, and total workers’ earnings could increase by $250 to $296 billion annually.
