On January 5, 2023, the Federal Trade Commission proposed a new rule that would ban noncompete clauses. According to their official statement, it is a “widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses”. It’s estimated that wages in the US could increase nearly $300 billion per year with the new proposed rule.
At the moment, the FTC is inviting the public to submit comments on its preliminary proposal and will make changes to the rule based on the public opinion and further analysis of this issue. The comment period is open through Mar 10, 2023.
We will be following closely the developments on this rule proposal and how it could prompt a similar debate in other countries.
Source: FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition