FTC proposes rule that would ban employee noncompete clauses

By ALEXANDRA OLSON and MICHELLE CHAPMAN
AP Business Writers

The Federal Trade Commission is proposing a rule that would prevent employers from imposing noncompete clauses for workers. The clauses prohibit employees from joining a competitor, typically for a period of time, after they leave a company. The proposed rule released Thursday follows an executive order signed by President Joe Biden in 2021 targeting what he labeled anticompetitive practices in technology, health care and other parts of the economy. The order included a call for banning or limiting noncompete agreements to help boost wages. Opponents of the ban say noncompete clauses have encouraged companies to promote workers and invest in training, especially in a tight labor market.