Noncompete ban abandoned by Trump’s FTC : NPR
The president of the Federal Trade Commission, Andrew Ferguson, testifies to Capitol Hill on May 15, 2025 in Washington, DC
Kevin Dietsch / Getty Images from North America
hide
tilting legend
Kevin Dietsch / Getty Images from North America
The Federal Trade Commission borrows to cancel its rules prohibiting non-competition agreements, reversing what was considered to be a signature of the Commission under the President Biden.
Non-concurrents are employment agreements that prevent workers from taking new jobs with a competing company or starting one of their own, generally in a certain geographic area and a delay after leaving their jobs.
The ban, defended by the former president of the FTC, Lina Khan, was finalized in 2024 but never took effect. Following a trial brought by the tax service company based in Dallas, Ryan LLC, a federal judge in Texas concluded that the FTC had probably exceeded its authority to issue the prohibition and interrupt it on a national level.
Last fall, the Biden administration called on this decision to the 5th Circuit Court of Appeals. But in March, the Trump administration asked the court for a 120 -day break on the appeal. Government lawyers have cited change in the administration and comments made by the new president of the FTC, Andrew Ferguson, that the agency should reconsider its defense of the rule.
Then in July, the Trump administration told court that it took even more time. The court approved another 60 -day break which was to end on September 8.
Late Friday afternoon, just before this deadline, the FTC announced that it had voted 3-1 to reject the appeal and take measures to leave the rule.
“The illegality of the rule was clearly obvious,” wrote Ferguson in a joint statement with his colleague Republican Commissioner Melissa Holyoak. “He prevented the laws of all fifty states and actively moved hundreds of existing laws in forty-six states.”
The dissident vote was expressed by Rebecca Kelly Slaughter, which Trump had tried to fire earlier this year. Now the only Democrat in the Commission, she returned to her headquarters on Wednesday following a decision of the DC circuit court of appeal.
30 million people bound by non-bonuses
The FTC estimated that some 30 million people, or 1 in 5 American workers, employees of the minimum wage to CEOs, are bound by non-competition agreements.
The agency’s rule, closely approved by the Commission according to the party’s parties in April 2024, would have invalidated almost all existing non-confidence and prohibited news, except in rare circumstances. Khan said that because workers would be able to freely pursue new opportunities without fear of being brought to justice by their former employers, this could lead to Increase in wages totaling nearly $ 300 billion per year And The annual creation of 8,500 new companies.
Lina Khan, president of the Federal Trade Commission under President Biden, testifies to Capitol Hill on May 15, 2024 in Washington, DC
Kevin Dietsch / Getty Images from North America
hide
tilting legend
Kevin Dietsch / Getty Images from North America
From the business world, there was immediately a decline. In his trial, Ryan LLC argued that the prohibition of non-competition would inflict irreparable damage by allowing his employees to leave for competition, which could take with them precious skills and information acquired at work. The Chamber of Commerce of the United States, which joined the Ryan trial, argued that the rule constituted an illegal overcoming of the FTC authority and warned that it would harm the economy.
Ferguson, one of the two Republican Commissioners of the FTC at the time, voted against the rule, arguing that the FTC did not have the power to issue a national ban on a secular commercial practice. In His written dissentHe called on the ban “by far the assertion of the most extraordinary authority in the history of the Commission” and a violation of the Constitution.
However, since he became president of the FTC under Trump, Ferguson clearly indicated that he was not a fan of non-competition agreements.
“The non-competition agreements can be pernicious,” he wrote in his declaration published on Friday. “They can be, and sometimes abused for the effect of inhibition severely inhibited by workers to earn a living.”
Earlier this year, Ferguson told Fox Business that one of his main priorities would be, instead of a general ban, to send FTC applicators in search of non-concurrents and non-Idiot contracts which violate the Sherman law, the 1890 law prohibiting activities that restrict competition on the market.
On Thursday, the FTC gave an example of the type of application it now plans to continue. The Commission announced that it had ordered the largest company cremation company in the country to stop applying non-concretes against nearly 1,800 employees.
While recognizing that this type of application is important, Slaughter says that it does not replace a national rule.
“This does nothing to help the person working at the Minnesota hair salon, or the engineer in Florida, or the fast food worker in Washington,” she said. “These people also deserve protection.”
This week, the FTC also invited the public to present information to help the commission “to better understand the scope, the prevalence and the effects of the non-competition agreements for employers, as well as to collect information to clarify future future actions”, according to a press release.
Slaughter points out that during the regulatory process, the FTC received 26,000 public comments on non-concurrents, almost entirely to support a national ban.
An architect of the non -competing rule warns that the application strategy will fail
Elizabeth Wilkins, the former Khan chief of staff and one of the architects of the FTC non-competition rule, predicts the Ferguson plan to continue non-concurrents using the agency executors will prove to be terribly insufficient.
“The FTC has something like 1,400 employees to control the whole economy – not just workers, not just the labor markets, but everything,” said Wilkins, who is now president and chief executive officer of the Roosevelt Institute on the left.
Wilkins notes that even in states that have adopted their own laws, which makes non-competition agreements inapplicable, companies are still using them.
“You find them almost as often as in states where they are enforceable, that is to say that workers do not know their rights,” explains Wilkins. “A clear and simple prohibition of non-compliance is, in my opinion, the only way to really protect workers.”
Non-competition in a real estate company presents a difficult choice
In Grand Junction, in Colorado, Rebecca Denton signed a non-competition when she took a job as a transaction coordinator with a real estate company in 2019.
Finding herself overloaded during the push of the era of the pandemic in the sales of housing, she wanted to leave her job, which involved managing all the documents for the closures. But there was a problem. Due to her non-competition, she knew that she would not be able to do similar work in a three-state area for a year.
“You feel trapped,” says Depon. “Passed with a ball and a chain.”
Denton, which was 52 at the time, weighed its options. She decided what she considered as the least of two ailments: rather than staying in a job that made her run in the ground with 4 p.m., she resigned. She has taken less paid concert work for a year, moving away from the work line in which she has an expertise. She feels lucky to have had the financial resources to make this choice, a luxury that she says that many of her friends in real estate do not have.
In 2022, Colorado promulgated a law considerably limiting the use of non-concurrents. Denton was satisfied and said that she knows people who were able to leave their jobs accordingly. She hopes that the law will encourage employers to find other ways to keep workers.
“If you are a good company and you pay for your employees on a large scale or better, and you treat them well, you have nothing to fear that they leave,” explains Denton. “You don’t need non-competition because they will stay happy there.”
