Should the FTC Ban Non-compete Clauses?, A Debate

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Summary

In early 2023, the Federal Trade Commission (FTC), the U.S. government agency that protects consumers from unfair business practices, floated a radical proposal: banning companies from requiring wo...

In early 2023, the Federal Trade Commission (FTC), the U.S. government agency that protects consumers from unfair business practices, floated a radical proposal: banning companies from requiring workers to sign non-compete clauses. These clauses, which affect some 30 million American workers, are essentially contracts between employers and employees that prohibit workers from competing with the business after they leave the company. Supporters of non-compete clauses argue that employers need them to protect their investments in training workers and to safeguard their trade secrets, both of which spur economic growth. Without these clauses, they contend, ex-employees could take their skills and knowledge to other companies and compete unfairly against them. Opponents of non-compete clauses reject these arguments. Such clauses undermine workers' rights, they contend, and hinder employees from switching jobs or starting their own businesses. Non-compete clauses lock workers into undercompensated positions, they charge, depress labor mobility and wage growth, and contribute to race and gender gaps. Should the FTC ban non-compete clauses?

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