F.T.C. Issues Ban on Worker Noncompete Clauses

The Federal Trade Commission on Tuesday banned employers from limiting their workers’ abilities to work for rivals, a sweeping change that the agency says could help raise wages and increase competition among businesses.

The move bars contracts known as noncompetes, which prevent workers from leaving for a competitor for a certain amount of time, in most circumstances. The agency has said the proposal would raise wages by forcing companies to compete harder for talent.

The proposal was approved by the agency in a 3-to-2 vote. Commissioners Melissa Holyoak and Andrew N. Ferguson, two Republicans, voted against the measure.

“The F.T.C.’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,” the trade commission’s chair, Lina M. Khan, said in a statement. She estimated the decision would lead to 8,500 new start-ups created in a year.