June 15, 2024 3:19 pm
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Public Weighs In on How Non-Complete Agreements Impact Workers

Credit: iStock

Nadia Ramlagan

Earlier this year, the Federal Trade Commission said it intends to ban non-compete agreements, and hundreds of people have submitted comments on the proposed rule change.

Non-compete terms bar workers from joining a competing business or starting their own for a set period of time after leaving a job.

Chris White – director of the Restaurant Opportunities Center United in Michigan – said many businesses want a thriving marketplace, and notes more than 900 restaurants are part of Restaurants Advancing Industry Standards in Employment or ‘RAISE’ – an initiative dedicated to promoting fair wages, better benefits and racial and gender equity in the restaurant field.

“Employers are trying to cut down competition,” said White, “but the restaurants we work with, in our RAISE program, are for expanding the industry. And we know that if we don’t do that, then the industry suffers.”

The FTC estimates around 30 million American workers are subjected to non-compete agreements.

The public comment period on the rule change ended this week. If approved, the ban could go into effect this fall.

Supporters of non-compete clauses argue they protect confidential information, trade secrets and intellectual property.

Teófilo Reyes – chief program officer at Restaurant Opportunities Centers United – said non-compete terms rob workers of the freedom and power to move without restrictions to different employers within an industry, or even start their own business.

“Because there’s been a labor shortage, wages are actually increasing,” said Reyes. “And so this is another tool that employers use to keep wages artificially low, because if you can’t move from your low-wage job to a higher paying job, that means that it keeps everybody’s wages a little lower.”

According to FTC estimates, the proposed rule would boost workers’ earnings across industries and job levels by $250 billion per year or more.

Researchers also have found that banning non-competes nationwide would shrink racial and gender wage gaps.

References:  

Restaurant Staff Shortage: How Food Service Workers Feel About the Industry in 2023 KURU Footwear 1/19/23

This story was written by Nadia Ramlagan, a producer at Public News Service, where this story first appeared.