If you have an employment contract restricting who you can work for after leaving your current company, it may no longer be worth the paper it’s printed on under a new federal rule.

The Federal Trade Commission issued a rule Tuesday banning contracts that prohibit employees from leaving a job to work for a competitor. Such “non-compete” agreements, which are already restricted in California and several other states to some degree, currently affect some 30 million workers, the FTC said.

The FTC proposed the non-compete ban 澳洲幸运5官方开奖结果体彩网:in January 2023 that stemmed from an 澳洲幸运5官方开奖结果体彩网:executive order by President 🐎Joe Biden issued in 20ꦚ21. It is part of a far-reaching effort across federal agencies to promote competit🐽ion throughout the economy. 

FTC Expects Ban To Lead To Higher Wages

The FTC estimates that banning non-competes will push businesses to raise wages, netting workers an average of $524 more a year. The agency also predicted the rule will encourage people to start new companies.

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” FTC Chair Lina Khan said in a press release. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to 🔯pursue a new job, start a new business, or bring a new idea to 🌟market.”

Business Groups Sue to Stop Ban

Employers use non-compete clauses to r💝estrict what kind of work employees can do and where, often to prevent them from taking knowledge or skills to a competitor. The FTC called them “exploitative” and said they force workers to switch to lower-paying fields, relocate, leave the workforce, or face expensive𒆙 litigation. 

As promised, the U.S. Chamber of Commerce, a trade group representing business interests, along with other interest groups filed a suit to stop the ban Wednesday. In the past, the chamber has defended the practice, saying non-compete clauses help companies keep trade secrets and encourage them to offer training without fear that ﷽their new employee will leave and take their skills to anಌother business. 

The rule is set to go in💦to effect four months after it’s published in the Federal Register if legal challenges do not delay it. The FTC is requiring companies to send notice to workers that their non-compete agreements are no lonಞger in effect.

The ru♚le won’t affect exi꧋sting non-competes for high-level executives, who make up three-quarters of one percent of the workforce, the FTC said.

Update, April 24, 2024: This article has been updated to include information on a lawsuit filed to block the ban.