Possibly one of the most important and impactful decisions by the Federal Trade Commission(FTC) was issued last Tuesday on April 23. The FTC has officially banned entering into or enforcing any non-compete clause.
A non-compete clause is a common part of worker contracts that essentially prevents them from pursuing any jobs within the same field as their current job if the worker were to leave their current job. Currently, an estimated 18% of workers are under a non-compete contract.
Non-competes often significantly limit a worker’s ability to go against their employer or their ability to choose their place of work. Once you sign a non-compete, you essentially lock yourself to the same job with the same company and you have no way of leaving this job if it poses issues or you no longer agree with the policies in place.
The FTC’s decision to ban non-compete contracts will have a tremendous effect on the US workforce. Without non-compete clauses, workers will have greater negotiation power which will increase wages and give more freedom to workers.
Not only do workers have more negotiation power, but this decision will also create more market diversity in many different fields. With the absence of a non-compete, workers are now free to create their own businesses if they wish to not follow their current employer’s policies. Workers can now take their visions and ideas and put them to use instead of being shackled to a business owned by someone else.
This ban by the FTC is such a significant change to the US workforce. This ban makes working in the US more beneficial for the workers and it creates opportunity for market growth and diversity.
