The proposal seeks feedback on a potential rule, which is not expected to take effect for several months or even longer.
Non-compete agreements “prevent workers from freely changing jobs, depriving them of higher wages and better working conditions, and depriving companies of a pool of talent they need to grow and thrive.” .
The proposed rule is the latest sign of the Biden administration’s support for the workforce, including support for a measure to make it more difficult for an employer to classify a person as an “independent contractor,” which would usually mean fewer benefits and legal protections.
The agency estimated that if the law goes into effect, the wages of American workers would increase by $300 billion a year and 30 million Americans would have better career opportunities.
The rule would also require companies with existing non-compete agreements with workers to remove them and notify current and former employees that they have been terminated.
It would also prevent companies from requiring workers to reimburse companies for certain types of training if they leave before a certain time, a strategy some companies started adopting as non-compete provisions began to prevail. Reimbursement for training would be prohibited if it “is not reasonably related to the costs incurred by the employer in training the worker”.
FTC Commissioner Rebecca Slaughter said in 2020 that polls estimated 16% to 18% of all American workers are subject to non-compete provisions. At the same time, nearly 10 percent of American workers surveyed in 2020 were covered by a training reimbursement arrangement, the Cornell Survey Research Institute said.
The move comes a day after the agency announced that two major glass container makers and a security firm have agreed to lower non-compete requirements.
