Yesterday, the Federal Trade Commission proposed a rule that would prohibit companies from including noncompete provisions in employment agreements. The FTC asserts that noncompetes—even those that are not necessarily enforceable—impair productivity, lower wages, and trap workers in jobs that they might desire to leave. Studies estimate that between 20% and 45% of private sector workers in the United States are affected by noncompetes. The Federal Trade Commission is optimistic that this rule will increase wages by approximately $300 million per year.
Although noncompetes appear to be more common among more highly paid and more educated workers, many companies have used them for low-wage hourly workers and even interns.