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Should noncompete agreements be banned?

On Behalf of | Feb 24, 2023 | Non-compete Agreements

President Joe Biden’s proposed ban on noncompete agreements could significantly impact the private sector. Noncompete agreements limit workers’ ability to leave their job for a competitor or start their own enterprise.

This practice has become particularly prevalent in the healthcare industry. However, non-compete agreements are common in all sectors of the United States workforce. According to NBC News, 1 in 5 workers is bound to a non-compete.

Arguments for the ban

Opponents argue these agreements suppress wages, contribute to doctor shortages in rural areas, and stifle competition. In response, President Biden directed the Federal Trade Commission (FTC) to ban or limit noncompete agreements in 2021 as part of a broader effort to improve worker competitiveness. Last month, the FTC proposed a rule to widely ban noncompete agreements for all industries. They will take feedback from the public until March 20 before making a final determination.

Arguments against the ban

The move might draw opposition from companies in various sectors, including the healthcare industry. The American Hospital Association and 100 other industry groups are asking the FTC for more time to respond to the plan. They worry about the economic and legal implications it could have. However, many healthcare professionals argue that noncompete agreements harm workers and competition.

If the proposed rule passes, it could significantly impact the healthcare industry, particularly for doctors and nurses who may have greater freedom to move to a competitor or start their own practice. However, the rule will affect all industries, not just healthcare, and could provide more significant opportunities and bargaining power for workers across the labor force.