A federal judge in Texas has nullified the Federal Trade Commission’s (FTC) ban on non-compete agreements. This decision could have significant implications for low-income workers, an expert warns.
What Happened: U.S. District Judge Ada Brown has prevented the FTC rule from being implemented, which aimed to ban agreements that restrict workers from joining competing companies or starting their own rival businesses, as reported by Reuters on Wednesday.
Joanne Lipman, a lecturer at Yale University, expressed that the ruling would primarily affect those in low-income jobs.
“The people who actually will be impacted the most, it appears, would be those who are in low-income jobs… hourly wage jobs,” Lipman stated during CNBC’s “Squawk Box” on Thursday.
Lipman further elaborated that the FTC’s rule was designed to curb the growing prevalence of non-compete agreements among lower-income workers, including those in sectors like fast food, retail, and hairdressing. The FTC estimates that around 30 million American workers, or one in five, have been subject to these non-compete clauses.
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Judge Brown, however, decided that the FTC lacked the authority to ban practices it considers unfair methods of competition by adopting broad rules. The FTC has expressed disappointment with the ruling and is considering a potential appeal.
Why It Matters: The FTC’s attempt to ban non-compete agreements was a move to protect low-income workers from being unfairly restricted in their employment options. With the ban now blocked, these workers may find themselves bound by these agreements, limiting their ability to seek better employment opportunities.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
