The Federal Trade Commission (FTC) has recently approved a new rule to ban non-compete agreements.
CNN is reporting that the FTC voted 3-2 in favor of the new rule that will prevent companies from making their employees sign non-compete clauses.
The new rule will come into effect 120 days after the date of publication, after which all existing non-compete agreements will become unenforceable, except for the “senior executives” who earn more than $151,164 annually and hold a “policy-making position” within the company. They will still be bound by their existing non-compete agreements.
It is important to note that independent contractors, such as the talents in WWE and AEW, will apparently be protected under the new rule.
The FTC’s rule classifies workers as,
“The final rule defines “worker” as “a natural person who works or who previously worked, whether paid or unpaid, without regard to the worker’s title or the worker’s status under any other State or Federal laws, including, but not limited to, whether the worker is an employee, independent contractor, extern, intern, volunteer, apprentice, or a sole proprietor who provides a service to a person.” The definition further states that the term “worker” includes a natural person who works for a franchisee or franchisor, but does not include a franchisee in the context of a franchisee-franchisor relationship.”
It should be noted that the recently imposed ban is likely to be contested in court. The US Chamber of Commerce has expressed its intention to initiate legal action against the FTC this week over the ban, arguing that the agency has exceeded its jurisdiction in this matter.
Currently, non-compete agreements apply to approximately 30 million people, which accounts for 18% of the US workforce.
BREAKING: The FTC just banned non-compete agreements.
The Federal Trade Commission has issued a final rule making it illegal for bosses to make workers sign noncompetes in any scenario, and voiding nearly all existing noncompetes.
This is a game changer for American workers. pic.twitter.com/9n1tJWpQl4
— More Perfect Union (@MorePerfectUS) April 23, 2024
