Employment prospects just got brighter for the estimated 30 million U.S. workers who are currently bound by so-called noncompete agreements. U.S. regulators on Tuesday banned nearly all noncompetes, which restrict about 1 in 5 employees around the U.S.
Here are five things to know about what the Federal Trade Commission rule means for workers.
The rule takes effect 120 days from the time it is published in the Federal Register, the official daily publication for rules, proposed rules, and notices of federal agencies and organizations, as well as executive orders. The FTC submits the rule, follows the procedures and waits for publication to happen, with the exact timing up to the Federal Register.
Nonprofits typically fall outside the FTC's jurisdiction, meaning the noncompete ban may not apply to many of the nation's health care provider organizations.
As many as 45% of physicians are restricted by noncompetes, according to the American Medical Association, which has voiced support for banning most of them.
In voting against passage of the rule, the two Republican FTC commissioners on the five-person panel argued that the agency lacks the authority to ban noncompetes. The same case is being made by the U.S. Chamber of Commerce, which filed suit against the FTC on Wednesday.
The legal challenges are viewed as a credible threat, meaning a case could end up in the U.S. Supreme Court, where conservative justices have a majority.
Kate GibsonKate Gibson is a reporter for CBS MoneyWatch in New York.
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