Amidst the multitude of documents a new employee receives during the onboarding process, one document could impact a person’s future career moves: this is called a non-competition. .
“A non-competition clause is a contractual clause between a worker and an employer which limits the worker’s ability to accept or seek other employment or to establish his or her own business for a certain period of time or in a geographical location after the termination of employment,” says Milana Dostanitch, employment lawyer at Lipsky Lowe LLP.
The debate over the use and abuse of non-compete has come to a head, with the Federal Trade Commission proposing a new ban on non-compete. The ban would prevent future non-competitions from being issued, while voiding all existing contracts. The FTC estimates that a non-competition ban would expand career opportunities for 30 million Americans and raise wages by nearly $300 billion a year.
Non-competition contracts were first granted to senior executives as a means of protecting trade secrets. Today, non-competition can be found in almost every industry in America. It is estimated that 18% of American workers are bound by non-competition agreements.
“Congress has given the FTC the power to audit unfair methods of competition,” FTC Chair Lina Khan said in a January 2023 interview with CNBC. “They told us that we could do it in different ways, by filing lawsuits, but also by imposing rules, by enacting market-wide rules. So we are convinced that the text and the structure of the law FTC clearly gives us the power to do that.”
Watch the video above to learn more about the FTC’s battle to ban non-compete contracts