FTC Bans Non-Compete Agreements: Why FTC Chairwoman Lina Khan Is Good For Black America

The Federal Trade Commission (FTC) has enacted a sweeping ban on new noncompete agreements, marking a pivotal moment in labor rights advocacy. Spearheaded by FTC Chairwoman Lina Khan, this bold regulatory action represents a crucial step towards fostering greater economic mobility and empowering workers, particularly within Black communities disproportionately affected by restrictive employment practices.

A non-comPete agreement is a legal provision within a contract that outlines restrictions on an individual’s ability to engage in comPetitive activities with their employer after their employment terminates. These agreements typically prohibit the employee from disclosing proprietary information or trade secrets to third parties during or after their employment period, Investopedia reported.

The FTC projects that prohibiting non-compete agreements could potentially raise worker wages by $300 billion and spur the creation of 8,500 additional businesses annually. The removal of non-competes is particularly significant for Black entrepreneurs, as it paves the way for fresh innovations, enhanced creativity, and more equitable competition within the marketplace, The Atlanta Voice reported.

Often, these agreements stipulate a specific duration during which the employee is prohibited from working for a competitor after leaving their position. Employers may implement non-compete agreements to safeguard their position in the market and protect sensitive information. Individuals who may be required to sign such agreements include employees, contractors, and consultants, CBS News reported.

Noncompete agreements, long criticized for stifling job mobility and suppressing wages, have been a pervasive feature of employment contracts across various industries, from minimum-wage earners to corporate executives. These agreements, which effectively bar employees from switching jobs within their respective industries, have been cited as impediments to career advancement and entrepreneurial endeavors, particularly for marginalized communities seeking to overcome systemic barriers to economic prosperity.

Chairwoman Khan, an advocate for antitrust enforcement and consumer protection, has championed the cause of dismantling restrictive employment practices since assuming leadership of the FTC. The former Business reporter and researcher specializing in market consolidation, has spearheaded initiatives aimed at curbing anticomPetitive behavior and promoting fair comPetition in the marketplace, according to her FTC bio. Prior to joining the FTC, Khan served as counsel to the U.S. House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law.

Khan, born on March 3, 1989, in London, hails from a British family with Pakistani roots. At the age of 11, her parents relocated to the U.S.

Lina Khan, photo via Federal Trade Commission