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The Trump administration is weighing whether to continue defending the federal government's ban on noncompetes. Those are employment agreements that restrict workers from taking a new job with a competing business or starting one of their own. An estimated 30 million workers in America are bound by them. The ban enacted under President Biden has been held up in court, but now under President Trump, it could end. NPR's Andrea Hsu explains.
ANDREA HSU, BYLINE: Rebecca Denton's experience with a noncompete illustrates the harm such agreements can do to workers. Denton signed a noncompete in 2019 when she took a job in real estate, handling paperwork for closings. She was 52 at the time.
REBECCA DENTON: I was older. I knew what I was signing. I just didn't realize what that implication could actually be for me.
HSU: In the midst of the pandemic's surge in housing sales, she found herself working 16-hour days. She wanted out, but her noncompete meant she couldn't do similar work in a three-state area for a year.
DENTON: You feel trapped, shackled with a ball and chain.
HSU: Fearing for her health, she quit anyway and resorted to lower-paying gig work till her noncompete was up. She knows many people don't have the luxury to wait it out. Last year, the Federal Trade Commission under President Biden narrowly approved a new rule banning nearly all noncompetes nationwide. Here's then-chair Lina Khan talking about it on CNBC.
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LINA KHAN: At the end of the day, what noncompetes do is they keep talent locked up. And so getting rid of noncompetes will be good for workers, it'll be good for the labor market, but it's also going to be good for our economy.
HSU: But the rule never took effect. A federal judge in Texas found the FTC had likely exceeded its authority in issuing it and blocked it entirely. The Biden administration appealed, but now Trump's FTC chair, Andrew Ferguson, looks to be taking a different approach. As a commissioner, he voted against the ban last year, saying he doesn't believe the FTC has the power to nullify tens of millions of employment contracts. He reiterated that position on Fox Business after becoming chair.
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ANDREW FERGUSON: I think that rule is unconstitutional. I think it violates other laws as well.
HSU: At the same time, Ferguson is not exactly a fan of noncompetes. He has spoken about how they can help companies protect the investments they make in their workers, but he's also cited examples of how they can be harmful to workers, limiting their opportunities. He told Fox Business, on his watch, the FTC will police them.
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FERGUSON: One of my top priorities is getting our super-talented enforcers at the FTC out there looking for noncompete agreements, no-poach agreements that violate the Sherman Act and making sure that the FTC is enforcing those laws to protect America's workers.
HSU: The Sherman Act is an 1890 law prohibiting activities that restrict competition. Elizabeth Wilkins doesn't think that approach is going to work. She's former chief of staff to Lina Khan and one of the architects of the FTC's noncompete rule.
ELIZABETH WILKINS: The FTC has something like 1,400 employees to police the entire economy - not just workers, not just labor markets, but everything.
HSU: And noncompetes, she says, are everywhere. She says some employers go to great lengths to keep workers under their thumb, even getting people to sign noncompetes in states where such agreements are unenforceable under state law.
WILKINS: A clear and simple ban on noncompetes is, to my mind, the only way to truly protect workers.
HSU: The FTC did not respond to NPR's questions about its enforcement strategy. Ban or no ban, Rebecca Denton has advice for companies about how to retain employees.
DENTON: If you're a good company and you're a good place to work, and you are paying your employees at scale or better, and you're treating them well, you have nothing to fear of them leaving.
HSU: Five years on, she's back to handling paperwork for real estate closings but working for herself.
Andrea Hsu, NPR News.
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