The Federal Trade Commission has voted 3-2 to ban non-compete agreements. NCA’s affect 18% of the work force, or about 30 million workers. They have been used for fast food workers and CEO’s alike. Perhaps as recently as 20 years ago, they were only used for senior executives. But, their use has since grown in popularity …. with Employers. There was a large hue and cry a few years ago when Jimmy John’s Sandwiches started using NCA’s for its low level workers. Soon after, Jimmy John’s dropped the NCA requirement.

Normally, the new regulation would go into effect 120 days after it is published in the Federal Register. But, it is certain that business groups will file suit to stop the new rule. The U.S. Chamber of Commerce has already vowed to file suit.

Various bills have been presented in Congress to ban or limit the use of NCA’s. It is unlikely the new regulation will survive judicial challenge. The Supreme Court has issued clear precedent stating that “major questions” cannot be addressed with agency regulations. Surely, a ban on NCA’s would be a text book example of a “major question.” Something needs to be done about the over-use of non-competes. They are more and more used for average, hourly wage type workers. It amounts to involuntary servitude. NCA’s impose a huge burden on hourly wage workers. Too, if the Republicans win back the White House, the rule is equally certain to be withdrawn.

See The Hill report here for more information.