The FTC proposes a rule banning non-compete clauses, saying the contracts harm healthy competition in the labor and product markets and block entrepreneurship
the latest move in Lina Khan's ambitious reform agenda. https://www.nytimes.com/... Elizabeth Warren / @ewarren : Imagine you hate your job. The pay is low. The benefits are crummy. But your boss made you sign a contract promising not to work for a competitor, so you're stuck. Well, I've been calling for banning those agreements, and now the FTC is taking action: https://www.nytimes.com/... Lina Khan / @linakhanftc : 1. @FTC has taken action against three firms for imposing noncompetes on their workers. As a result of these efforts, thousands of workers who'd been subject to noncompete restrictions can now freely switch jobs or start a competing business, without fear. https://www.ftc.gov/... Rob Bonta / @agrobbonta : While generally unenforceable in California, noncompete agreements drive down wages and disempower workers across the country. I'm thrilled that @FTC is considering taking action to make them a thing of the past. Every worker deserves a chance to pursue new opportunities. https://twitter.com/... Chuck Schumer / @senschumer : I'm proud to have supported in the Senate each of the members of the FTC who voted to restrict this troubling practice, and I applaud Chairwoman Khan and the FTC for their leadership on this new rule that will help working families get ahead. https://www.nytimes.com/... Ed Carson / @ibd_ecarson : This would be good U.S. policy. But probably bad for California! Despite high taxes, restrictive housing, poor schools and more, the state has maintained its tech leadership. A key reason is its ban on noncompete clauses. https://twitter.com/... Jathan Sadowski / @jathansadowski : “By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.” 👏👏👏 https://twitter.com/... Nick Hanauer / @nickhanauer : This is a huge deal, and is precisely what I'm talking about when I reference Biden's “middle-out” economic agenda. A thriving middle class is the CAUSE of economic progress, not its consequence. First administration in my lifetime to get that. https://twitter.com/... Hal Singer / @halsinger : The FTC's ban will eliminate hundreds if not thousands of hours of economic experts debating efficiency justifications for noncompetes— including quite possibly some of my own time—and that's a good thing. https://twitter.com/... Brian Hall / @isforat : Very happy to see that FTC is proposing making non-competes illegal. (note, not NDAs). They limit competition and are anti-employee. https://www.vice.com/.... Really hope they don't water things down and just go all the way. heads up @geekwire and @QuinnyPig https://twitter.com/... Jennifer Jacobs / @jenniferjjacobs : Biden in Cabinet meeting said the Federal Trade Commission taking “huge step forward in preventing the non-compete agreements that are designed simply to lower people's wages.” Retail workers, construction workers, etc shouldn't be blocked from working for competition, he said. https://twitter.com/... Tim Wu / @superwuster : This is a big one! The FTC has released their proposed ban on non-compete agreements, one of the signature goals in the President's EO on Competition (Sec. 5(g)). Non-competes are too often unfair or prevent firms from getting needed talent. https://www.ftc.gov/... Charles Haywood / @theworthyhouse : While I'd prefer this be done on the state level, non-competes for employees are an abomination, and should be totally forbidden. https://twitter.com/... Bozi Tatarevic / @bozitatarevic : This could be impactful for some contracts in racing. https://twitter.com/... Amie Rivers / @amierrivers : In its own words, the FTC calls noncompete clauses “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.” If it goes through, FTC estimates the rule will increase wages by $300B per year. https://twitter.com/... @the_blackrabb1t : I would love it if this passed. In my experience non-compete clauses have stifled innovation, and protect the wrong type of business people. Watching brilliant individuals having to sit on an innovative idea for whenever their clause expires is an aggregious waste. https://twitter.com/... Lina Khan / @linakhanftc : 5. To address these harms, @FTC's proposed rule would (1) prohibit employers from using noncompete clauses in their contracts with workers, and (2) require them to rescind existing noncompetes and actively inform workers that they are no longer in effect. https://www.ftc.gov/... Bobby Fijan / @bobbyfijan : I despise non-compete clauses I've removed in every employment contract offered and refused, on principle, to ever consider in mine. I believe in two-way clauses. If a co pays 1 year severance ... then maybe equal non-compete Very glad to see them go https://www.nytimes.com/... Liz Shuler / @lizshuler : Noncompete clauses are just one in an array of toxic practices corporations use to control workers, shrink wages & deny basic dignity. It's good that the FTC is using its authority to crack down on corporate abuses. We urge the agency to assess worker impacts in all decisions. https://twitter.com/... Congressman David N. Cicilline / @repcicilline : Noncompete clauses drive down wages and prevent workers from moving onto better job opportunities and, in some cases, can hinder an employee's ability from leaving a hostile work environment. The end of noncompete clauses is a win for workers and competition. https://twitter.com/... Jay B Sauceda / @jaybsauceda : Early on as I built Sauceda Industries I thought non-competes for employees were necessary. Now I think they're ridiculous. Non-solicitations are reasonable. Non-competes for employees are superfluous and unfairly tax the employee. https://www.wsj.com/... Nick Pisciottano / @pisciottanopa : This is fantastic news that will tear down barriers that hamper competitive markets and hurt workers ability to compete for the best wages! @linakhanFTC's efforts at the FTC continue to deliver for working families across the country. https://twitter.com/... Brian Boland / @brianboland : @linakhanFTC @FTC I agree with this effort to prohibit noncompete clauses in employment contracts. Thank you @FTC Jason Furman / @jasonfurman : Terrific to see @FTC moving ahead with a proposed rule banning non-compete agreements in labor markets—one of many steps that will help reduce the market power of employers and raise workers wages. https://www.ftc.gov/... @moreperfectus : New: The FTC has forced three companies to drop noncompete clauses for thousands of workers. This is the first time the agency has sued to halt unlawful noncompete restrictions, which can lead to lower wages, fewer benefits, and worse conditions for workers. 🧵 @ftc : FTC cracks down on companies that impose harmful noncompete restrictions on thousands of workers: https://www.ftc.gov/... /1 David Dayen / @ddayen : The important bit here is: “In its complaints, the FTC said the restrictions constituted an unfair method of competition under Section 5 of the FTC Act.” This is a prelude to using Sec 5 authority to ban the vast majority of noncompete agreements https://www.ftc.gov/... Sandeep Vaheesan / @sandeepvaheesan : Great to see FTC crack down on employers' use of non-compete clauses with their workers. These cases show that non-competes can both bind workers to their current job and unfairly exclude rivals. https://www.ftc.gov/... Basel Musharbash / @musharbash_b : 1. BFD ALERT: For the first time ever — in all of human history — the @FTC has initiated lawsuits to prohibit employers from forcing workers to sign noncompetes, in a actual f**king breakthrough for economic freedom and justice in this country. https://www.ftc.gov/... Matt Day / @mattmday : The FTC nods at Amazon suing former employees to enforce noncompetes in a fact sheet as it tries to ban the practice: https://www.bloomberg.com/... https://twitter.com/... Katie Van Dyck / @capitolkvd : To put a finer point on it, the proposed rule even bans de facto non-competes. E.g., your boss couldn't stop you from leaving by forcing you to repay certain training costs. Tricky lawyers couldn't write contracts so broadly that you can't work in the same field when you leave. https://twitter.com/... Brian Deese / @briandeesenec : Over 36M workers are subject to noncompete agreements. As @POTUS said when he signed his EO: “If your employer wants to keep you, he or she should have to make it worth your while to stay. That's the kind of competition that leads to better wages and greater dignity of work.” https://twitter.com/... Michael Beltzer / @beltzernyc : the 2020s is the decade of the worker https://twitter.com/... Keldon Bester / @keldonb : The FTC getting back into competition rulemaking is a big goddamn deal and a testament to the hard work of antitrust advocates, academics and policy makers in the US. Yuge. https://twitter.com/... @axios : The FTC estimates that the proposed rule could increase wages by nearly $300 billion a year. https://www.axios.com/... @ne0liberal : Non-competes stifle innovation, are bad for workers, and are objectively just a dumb thing. Abolishing them would be a very welcome change! https://twitter.com/... Lydia DePillis / @lydiadepillis : This is a pretty big deal. Props to @evanpstarr, who laid the groundwork with research showing just how prevalent these things are, especially in low-wage occupations. https://twitter.com/... Moira Donegan / @moiradonegan : Waiting for Lina Khan to become a cringe liberal folk hero à la RBG, complete with her face on votive candles and socks. https://twitter.com/... Steven Greenhouse / @greenhousenyt : This Is a Big Effing Deal >> Biden's Federal Trade Commission Moves to Bar Noncompete Agreements in Labor Contracts Studies show that noncompetes pull down workers' wages & affect 20% to 45% of private-sector U.S. workers https://www.nytimes.com/... Jared Wade / @jared_wade : Long overdue. Corporate protectionist bullshit that has become increasingly widespread for no reason whatsoever. It's unreal how much of this anti-worker nonsense exists in the “land of the free” https://twitter.com/... Chris Seaman / @cbseaman : This is a BFD. FTC appears to be proposing a sweeping ban on noncompetes nationally, with an exception only for sale of a business. Full text of proposed rule available here: https://www.ftc.gov/... https://twitter.com/... Kyle Russell / @kylebrussell : This is good, and removes one of California's tech labor market advantages https://twitter.com/... @moreperfectus : One of the companies named in the order is Prudential, where security guards typically earn at or near minimum wage, while the company's noncompete clause has a restriction that requires employees to pay $100,000 for violating the clause. https://www.ftc.gov/... Elissa Shevinsky / @elissabeth : happy to see this ruling against noncompetes https://twitter.com/... Matt Stoller / @matthewstoller : “In a far-reaching move that could raise wages and increase competition among businesses, the Federal Trade Commission on Thursday unveiled a rule that would block companies from limiting their employees' ability to work for a rival.” 😯😯😯👍 👍👍🔥🔥 🔥 https://www.nytimes.com/... Jules Roscoe / @julesaroscoe : BREAKING: the @FTC proposed a new rule today that would ban non-compete clauses, which currently prevent workers from joining competing companies once they leave their job. It estimates that the rule would increase workers' yearly earnings by $300 bil. https://www.vice.com/... Josh Kranzberg / @jekranzberg : Wow, this would be HUGE for journalists (and I'm betting a ton of other fields) https://twitter.com/... @julianamkaplan : The FTC wants to ban noncompete agreements, which stop workers from moving to competitors or starting businesses. In response to my question on labor market impact, FTC chair Lina Khan said the rule should lead to higher wages and better working conditions https://www.businessinsider.com/ ... Matt Stoller / @matthewstoller : I'm reading this new rule from the FTC barring non-compete clauses for employees and I'm floored. Wow. https://www.ftc.gov/...
Context & Ripple Effects
The proposal extends the FTC’s earlier technology-sector competition task force into labor-market restraints, treating worker mobility as a competition issue rather than solely an employment-contract question.
The related record shows the initiative later became an economywide noncompete ban before a Texas court struck down the rule, making this proposal the opening move in a contest over the FTC’s authority to remake employment practices through rulemaking.
First-order effects
- Employers using noncompetes face a proposed prohibition, while workers covered by those clauses gain a prospective path to switch jobs or start competing businesses without the restriction.
- The FTC puts its estimate of nearly $300 billion in annual wage gains and expanded opportunities for roughly 30 million Americans at the center of the rulemaking case.
Second-order effects
- Employer retention strategies would need to rely less on contractual exit barriers and more on pay, benefits, and other terms of employment if the proposal became final.
- The proposal shifts the dispute from individual noncompete enforcement toward a national challenge over whether the FTC can impose an economywide labor-market rule.
Third-order effects
- The later ban and court reversal indicate that broad FTC rulemaking can reshape employment markets only if its statutory authority survives judicial review.
- If that pattern persists, competition policy’s reach into talent mobility will be determined as much by court limits on agency power as by the FTC’s view of competitive harm.
The trend: US competition enforcement is expanding from merger review and corporate conduct into labor mobility, with agency rulemaking facing increasingly consequential judicial checks.