The Federal Trade Commission has recently passed a rule that bans noncompete agreements across all sectors of the economy. The rule, which was approved by a three to two vote, aims to eliminate these restrictive agreements and lead to more new businesses and higher earnings for workers. Currently, approximately one in five Americans are subject to noncompete agreements, most of which could disappear in late August if the final rule is implemented.
However, it is likely that the noncompete ban will face legal challenges and may not take effect for years, if ever. The contentious nature of the rule means that it will likely be tied up in litigation before it can be fully enforced.
One important aspect of the noncompete ban is that it does not apply to nonprofit companies. The FTC only has jurisdiction over for-profit companies, so the ban will not affect most hospitals, which are nonprofit, and some of the largest health insurers in the country. This means that the ban may not have as broad of an impact on the health care industry as originally thought. Despite this limitation, however, many experts believe that the ban could still have a significant impact on the industry by reducing barriers to entry for new businesses and increasing competition among existing ones.
