WASHINGTON, D.C. – A recent rule by the Federal Trade Commission (FTC) designed to boost wages and worker mobility by banning most non-compete agreements is facing potential derailment following legal challenges from the U.S. Chamber of Commerce and other business groups, backed by the Trump administration. The FTC rule, finalized in April 2024, would have freed an estimated 30 million american workers from restrictions limiting their ability to seek better employment opportunities.
The legal battle underscores a broader pattern of the Trump administration’s actions that, despite campaign promises to champion the American worker, have consistently undermined labor protections.While President Trump campaigned on a pledge to create a “golden age” for workers, actions taken by his administration-particularly through the Department of Labor-have demonstrably worked against their interests, according to reports from the Center for American Progress. the FTC’s non-compete ban aimed to address a significant constraint on labor market competition,where these clauses frequently enough suppress wages and stifle innovation.
The FTC rule prohibits employers from entering into new non-compete agreements with workers,and requires employers to rescind existing non-competes. The agency estimates the ban will increase wages by $300 billion per year and encourage the creation of new businesses. The U.S. Chamber of Commerce, representing a wide range of businesses, argues the rule oversteps the FTC’s authority and will harm innovation.
The Department of Justice (DOJ) under the Trump administration has sided with the business groups challenging the FTC’s authority, filing a brief supporting a preliminary injunction to halt the rule’s implementation. This stance directly contradicts the FTC’s assessment that non-compete clauses harm competition and worker earnings. Alvaro Bedoya, an FTC Commissioner, has been a vocal advocate for the rule, emphasizing its potential to empower workers and foster a more dynamic economy. Sandeep Vaheesan, another FTC Commissioner, has highlighted the historical use of non-competes to suppress wages and limit worker bargaining power.
The outcome of the legal challenge remains uncertain, but a favorable ruling for the business groups and the Trump administration would effectively nullify the FTC’s ban, preserving the status quo of restricted labor mobility for millions of American workers. The case is currently before the Fifth Circuit Court of Appeals.
