The Federal Trade Commission has proposed a rule prohibiting “non-compete clauses” in employment contracts. The FTC proposes a broad ban on any practice that prevents workers from seeking or accepting alternative employment. The ban would extend to all jobs and all employers not exempt from the FTC’s jurisdiction (e.g., airlines and banks).
The FTC cites an English court decision from 1711 as the foundation of current U.S. law on non-competes. The court in that case enforced a clause under which the seller of a London bakery pledged not to open a new bakery nearby. The court, however, also declared that non-competes were unenforceable when unrelated to a legitimate transaction like the sale of a business.
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