FTC proposes full-scale ban on noncompete clauses

The Federal Trade Commission (FTC) on Thursday proposed a rule that would ban new and existing noncompete clauses by employers.

Noncompete clauses are legal promises employers, ranging from hair salons to medical practices to technology, require new workers to sign, stating they will not work at a similar company for a certain period after their employment ends. The clauses stifle healthy competition, dampen wages, and raise the price of goods, the FTC stated in a press release.

The clauses are an unfair method of competition and violate Section 5 of the Federal Trade Commission Act, according to the agency.