FTC looks to restrict use of noncompetes

The Federal Trade Commission is considering a new regulation to tighten employers' use of noncompete clauses and plans to target the use of noncompete clauses in individual cases through enforcement, The Wall Street Journal reports. 

About 18 percent of all U.S. workers are affected by noncompete agreements, according to data analyzed by researchers cited by WSJ. Noncompete clauses are common practice in healthcare, particularly for executives and employed physicians, though the terms vary. In general, the covenants limit a person's ability to get a new job with a competitor via restrictions on geography, time or line of business.

The FTC's movement comes as companies increasingly make use of noncompete clauses in the hiring of hourly workers. President Biden in 2021 urged FTC Chair Lina Khan to exercise the agency's statutory rulemaking authority to curtail the use of noncompete clauses and other clauses that may unfairly curb worker mobility.

Ms. Khan said the FTC is considering drafting a regulation targeting the use of noncompete provisions, noting the agency needs to use all of its tools in regulating the use of restrictive covenants. The agency has also issued subpoenas to businesses suspected of imposing unnecessary noncompete clauses on workers, according to companies' lawyers. 

"We feel an enormous amount of urgency given how much harm is happening against the workers," Ms. Khan told WSJ. "This is the type of practice that falls squarely in our wheelhouse." 

Read the report in full here

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