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President Biden stands on stage as Vice President Kamala Harris introduces him during a campaign rally Wednesday at Girard College in Philadelphia. Andrew Harnik/Getty Images hide caption

Trump supporters and their opponents spar outside of the criminal court where the former president is on trial on Wednesday in New York City. Stephanie Keith/Getty Images hide caption

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Tuen Kit Lee is led away in handcuffs on Tuesday, May 28, 2024, in Danville, Calif. The fugitive dubbed the "bad breath rapist" was arrested in the San Francisco Bay area more than 16 years after he fled following his conviction for sexually assaulting a co-worker in Massachusetts, authorities said this week. U.S. Marshals Service/AP hide caption

Former U.S. President Donald Trump sits at the defendant's table inside the courthouse as the jury is scheduled to continue deliberations for his hush money trial at Manhattan Criminal Court on May 30, 2024 in New York City. Justin Lane - Pool/Getty Images hide caption

Robert F. Kennedy Jr.'s independent presidential campaign has drawn supporters who don't see themselves represented by Democrats or Republicans. Although he likely won't win the 2024 presidential election, who shows up to vote for him could help determine if President Biden or former President Donald Trump do. Josh Edelson/AFP via Getty Images hide caption

A recent Russian space launch placed a satellite onto the same orbital plane as a U.S. satellite, the Pentagon says. Here, a Soyuz-2.1a rocket booster with the Soyuz MS-24 spacecraft sits at the launch pad at the Russian-leased Baikonur cosmodrome in Kazakhstan last September. Andrey Borodulin/AFP via Getty Images hide caption

Minnesota forward Michela Cava, middle right, celebrates with defender Abby Cook, right, and teammates after scoring during the second period of a PWHL hockey game against Montreal on Wednesday night in St. Paul, Minn. Abbie Parr/AP hide caption

People gather outside the Savage Sisters' community outreach storefront in the Kensington neighborhood of Philadelphia. The area is being hit hard by Medetomidine and Xylazine, powerful sedatives most often used by veterinarians that are moving through the illicit drug supply triggering "mass overdose" events and causing gruesome skin wounds. Matt Rourke/AP hide caption

Scottie Scheffler speaks during a news conference after the second round of the PGA Championship golf tournament at the Valhalla Golf Club, in Louisville, Ky., on May 17. Criminal charges against Scheffler have been dismissed. Matt York/AP hide caption

Former President Donald Trump leaves Manhattan Criminal Court at the end of the day's proceedings during his criminal trial for allegedly covering up hush money payments in New York City on Tuesday.

Charly Triballeau//AFP via Getty Images hide caption

Giant Panda Tian Tian rests in its enclosure at the Smithsonian's National Zoo in Washington, D.C., on Nov. 7, 2023, on the final day of viewing before returning to China. All three of the zoo's pandas left for China, bringing at least a temporary end to a decades-old connection between the cuddly animal and the U.S. capital. Jim Watson/AFP via Getty Images hide caption

Wymon Johnson, poses for a portrait at his residence in Bakersfield, Calif. Johnson is currently renting a room from a friend while he is waiting for long term housing through the Kern County Housing Authority. Alyson Aliano for NPR/Alyson Aliano hide caption

Clouds obscure the view of the setting sun on 42nd street in New York, Tuesday, May 28, 2024. Twice per year, New Yorkers and visitors are treated to a phenomenon known as Manhattanhenge, when the setting sun aligns with the Manhattan street grid and sinks below the horizon framed in a canyon of skyscrapers. Mary Conlon//AP hide caption

This photo provided by South Korea Defense Ministry, shows balloons with trash presumably sent by North Korea, in South Chungcheong Province, South Korea, on Wednesday. AP/South Korea Defense Ministry hide caption

Explore the multidisciplinary, collaborative work of UC Davis researchers. These immersive In Focus stories reveal how we confront pressing problems and connect ideas from the obvious to the unexpected.

The Backdrop podcast is a monthly interview program featuring conversations with UC Davis scholars and researchers working in the social sciences, humanities, arts and culture. Hosted by public radio veteran Soterios Johnson, the conversations feature new work and expertise on a trending topic in the news.

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Today, the Federal Trade Commission issued a final rule to promote competition by banning noncompetes nationwide, protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.

The FTC estimates that the final rule banning noncompetes will lead to new business formation growing by 2.7% per year, resulting in more than 8,500 additional new businesses created each year. The final rule is expected to result in higher earnings for workers, with estimated earnings increasing for the average worker by an additional $524 per year, and it is expected to lower health care costs by up to $194 billion over the next decade. In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 years under the final rule.

In the final rule, the Commission has determined that it is an unfair method of competition, and therefore a violation of Section 5 of the FTC Act, for employers to enter into noncompetes with workers and to enforce certain noncompetes.

The Commission found that noncompetes tend to negatively affect competitive conditions in labor markets by inhibiting efficient matching between workers and employers. The Commission also found that noncompetes tend to negatively affect competitive conditions in product and service markets, inhibiting new business formation and innovation. There is also evidence that noncompetes lead to increased market concentration and higher prices for consumers.

Trade secret laws and non-disclosure agreements (NDAs) both provide employers with well-established means to protect proprietary and other sensitive information. Researchers estimate that over 95% of workers with a noncompete already have an NDA.

Under the final rule, existing noncompetes for senior executives can remain in force. Employers, however, are prohibited from entering into or enforcing new noncompetes with senior executives. The final rule defines senior executives as workers earning more than $151,164 annually and who are in policy-making positions.

Additionally, the Commission has eliminated a provision in the proposed rule that would have required employers to legally modify existing noncompetes by formally rescinding them. That change will help to streamline compliance.

The Commission vote to approve the issuance of the final rule was 3-2 with Commissioners Melissa Holyoak and Andrew N. Ferguson voting no. Commissioners Rebecca Kelly Slaughter, Alvaro Bedoya, Melissa Holyoak and Andrew N. Ferguson each issued separate statements. Chair Lina M. Khan will issue a separate statement.

The Federal Trade Commission develops policy initiatives on issues that affect competition, consumers, and the U.S. economy. The FTC will never demand money, make threats, tell you to transfer money, or promise you a prize. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.

In particular, read about our efforts to call attention to platform dominance and the need for appropriate monetization by the platforms. Visit the JCPA Resource Center to learn more about the Journalism Competition & Preservation Act, which would allow news publishers to protect local news through collectively negotiating with the tech platforms for better business terms.

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