The Federal Trade Commission has banned noncompete clauses for most U.S. workers, The Washington Post reported April 23.
The FTC voted 3-2 to issue the rule, which makes it illegal to include noncompetes in employment contracts unless the employer is a nonprofit, requires companies with noncompetes to inform workers that they are void.
The rule, which will take effect in 120 days, was proposed in January 2023 and received more than 26,000 comments. Private parties, including the U.S. Chamber of Commerce, have signaled they will challenge the ban in court.
Under the rule, existing noncompetes can remain enforceable only for senior executives.
The FTC estimates that banning noncompetes could raise wages by nearly $300 billion per year, according to the Post. It also estimates $74 billion to $194 billion in reduced spending on physician services over the next 10 years.
The American Medical Association estimates that between 35% and 45% of physicians in the U.S. are bound by noncompete clauses.
"[Signing a noncompete] absolutely causes strife and stress in physicians' lives and limits fair market competition," John Nelson, MD, a pathologist at Merit Health Biloxi (Mo.), told Becker's in October. "Physicians are not versed enough coming out [of medical school] to realize these issues."